The future of business is value sharing
Every now and then, the future arrives. But the future always arrives in pieces, tiny little morsels that lead to a larger trail. I’ve been following the trail to the superhighway.
A few days ago, there was an announcement that Airbnb is requesting that the SEC to change the rules to allow them to offer long term ownership to hosts. My feeling has always been that a massive change like this would take quite a bit of external pressure from a new blockchain technology platform which competed with lower fees and the offer of ownership to super guests and hosts. With plans in motion to do an IPO in 2019, this is certainly interesting timing for Airbnb. While Airbnb might ditch their plans and simply be using this opportunity to seem altruistic like Uber seems to have done in 2017, they are among the first major companies to lead the way on the inevitable of value distribution and shared ownership.
Brian Chesky said “Airbnb believes that twenty-first century companies are most successful when the interests of all stakeholders are aligned,” the company said in the letter. “For sharing economy companies like Airbnb, this includes our employees and investors, but also the hosts who use our marketplace.”
While the SEC isn’t allowing this type of hybrid currently — perhaps they will or there’s another hack, which will allow for existing organizations to convert at least part of their stock to a security using cryptocurrency.
Enter the STO. As opposed to an ICO (an initial coin offering), the STO represents the opportunity to back a token with a security such as an asset, ownership, and offer people who invest some rights to the company. According to Polymath, STOs may reach as much as $10T by 2020 by converting existing companies to this model.
The evolution of the sharing economy
As the sharing economy has evolved, value sharing has become more and more imminent. Years ago I visualized headlines about several Fortune 500 companies announcing their desire to give equity to users, hosts, drivers, media creators, and other providers. This is finally coming to fruition!
In my recent TEDx talk on the future of blockchain, you can see me discussing some of these ideas:
For years, I’ve known that pressure would either come from the inside out (Airbnb or other larger companies pushing the industry toward a new standard) or the outside in (new tech, making value distribution and networked business more free and open).
The convergence of equity crowdfunding, blockchain, and ICOs, value sharing is a means for competitive advantage for newer companies who have the ability to raise large amounts of capital and operate in a more agile way.
Sharing 2.0 starts with Couchsurfing, founded in 2004— mostly because Couchsurfing gave the internet and global culture a new awareness around the real life advantage of peer-to-peer connections. Before Couchsurfing, people were trading files, digital goods, auctioned items, and handmade goods, but they weren’t showing up in each others homes while on vacation, business trips, or solo adventures or hopping in each others cars to get across town.
Airbnb simply followed on the coat tails of Couchsurfing and added a price tag. They even used similar tagline to Couchsurfing, “belong anywhere” instead of “share your life.” Airbnb arrived in August of 2008, followed by Uber in March of 2009. And let’s not forget, it wasn’t until 2012 that Uber created UberX for peer-to-peer version instead of just black car, professional drivers. By 2011, YouTube created a partner program, offering those with video channels the ability to share in the proceeds of advertising. Then Patreon stared in May of 2013, challenging the status quo of media creation and value distribution amongst writers, artists, and creators, flipping the script on advertising.
In September of 2014, Reddit raised $50 million with the promise to share 10% of their equity with users. While that never happened, Reddit was one of the first major companies to publicly discuss this idea.
In 2016, Juno attempted to compete with Uber in NYC, offering equity to drivers. The company later sold in 2017 and is facing a legal battle for securities fraud with their drivers. Apparently, they were offering 50% equity to drivers by 2026, but had a liquidation event pretty immediately, so drivers walked away with pennies when they were the main value creators, sold on a better ownership structure.
Sharing 3.0 is now in motion. This is where things will really mix up.
This is where entire companies with securities will reorganize — existing companies will push for new policies that support their users, and new companies will play on the edge of social incentives over never ending growth oriented ideals.
The consciousness is raising… Just as the veil of “stranger danger” shifted with digital and peer-to-peer networks, so too will the idea of sharing value where value is created become an accepted business standard.
In May of 2016, the SEC officially allowed companies to not only crowd fund, but also share ownership with investor who could also be users, enthusiasts, customers, and anyone else interested in supporting the growth of (typically smaller) companies. What’s revolutionary about this is that there is no minimum investment (except those instituted by the platforms themselves) and one doesn’t have to be an accredited investor to participate. This change meant that everything from local breweries to digital platforms and communities could support themselves instead of seeking outside investment from venture capital firms or major banks. In other words, businesses could form through their respective communities rather than center around top-down hierarchal organizations.
Alongside and even parallel to all of this change, blockchain has been at the gaining mainstream momentum. The Bitcoin white paper written by Satoshi Nakamoto was distributed in October of 2008. While blockchain technology still isn’t a household term, the first DAO fund was initiated in April of 2016, attracting a whopping 11,000 investors, raising $150M in just a month or so. DAO (stands for decentralized autonomous organization) and in this case, the DAO was to operate as a fund that invested in blockchain technology companies. Unfortunately, just a month after the DAO was formed, there was a loophole found and a hacker stole more than 30% of the money invested.
Up next, ICOs took center stage — disrupting traditional venture capital in most of 2017. While the first token sale for Mastercoin happened in 2014, token sales weren’t popularized until 2017, when they raised a collective $5.6B according to Business Insider, followed by an even bigger year in 2018 according to Coindesk. Some of the sharing economy examples that are attempting to buck peer-to-peer platforms like Airbnb include The Bee Token, Origin, and ShareRing. These companies are experimenting with payment percentages, ownership, and fluidity of sharing economy platform creation.
In the media department, Medium started a partner program, paying contributors a share of advertising proceeds, determined by the engagement of claps on particular articles.
And in March of 2018, Facebook quietly announced that they’ll let creators charge $4.99 a month for select access to fan content, essentially competing with YouTube’s Partner program.
You see, there’s this weaving of digital assets, media creation, typical advertising, capital formation, cryptocurrency, technology that’s shaking out — value sharing is on topic, at the front of conversations now. It’s crossed the chasm from being a anarchist social ideal to creeping into the very model of business structure and social expectation to be paid for the value you create, as you create it — sharing in ownership along the way. This blurs the vision of the value extractive economy, bleeding into a value shared one.
This has been happening for a decade plus — the signs have been there all along. So there you have it. The future is already here, but it isn’t evenly distributed.