Sharing Economy Dying? Debunking Hype

Good riddance, gig economy: Uber, Ayn Rand and the awesome collapse of Silicon Valley’s dream of destroying your job

The problem with Salon articles (and to a lesser extent, Slate) is that there is often a substantial mismatch between the headline, which is often sensationalist, and the rest of the article, and or the argument is weak and easily refuted by anyone with rudimentary knowledge or just common sense.Other problems include: an obvious liberal bias and ads that clutter and slow the site.

The sensationalism is a bait and switch technique to get clicks, as the content of the article almost never commensurate with the hype in the headlines. The headline and byline make bold proclamations which are gradually dialed-down as the article continues, until eventually diluted completely.

The sensationalist headline of the article is based on Farhad Manjoo’s opinion, but this only occupies the first paragraph of the article:

The New York Times’ Farhad Manjoo recently wrote an oddly lamenting piece about how “the Uber model, it turns out, doesn’t translate.” Manjoo describes how so many of the “Uber-of-X” companies that have sprung up as part of the so-called sharing economy have become just another way to deliver more expensively priced conveniences to those with enough money to pay.

And here is the ‘dialing-down’ part:

Yet that strikes me as too black-and-white, as overly gloomy as Manjoo once was excessively optimistic. The sharing economy apps have proven to be extremely fluid at connecting someone who needs work with someone willing to pay for that work. Some workers have praised the flexibility of the platforms, which allow labor market outsiders – young people, immigrants, minorities and seniors especially — who have difficulty finding work to access additional options. It’s better than sitting at home as a couch potato with no income. And by narrowing the scope of their services, these companies stand a better chance of contracting with quality people, and developing real relationships with them.

Historical experience shows that three out of four startups fail, and more than nine out of 10 never earn a return. My favorite example is SnapGoods, which is still cited today by many journalists who are pumping up the sharing economy (and haven’t done their homework) as a fitting example of a cool,…

Also, as alluded by the second quote, it’s not that Silicon Valley techno-libertarian is dying, but rather in any new industry not all companies will succeed. Alta Vista and eToys dying in the 2000′s was not a harbinger for the end of search engines and online commerce; instead, Google and Amazon did it better and took over, becoming much more successful than ever imagined. Same for Facebook, which took off where Friendster and Myspace left off, with much much more success.

Uber is still very successful, and pivoting is not a sign of decline, but rather of evolution. In any new industry, there will always be more winners than losers, but as in the case of Uber, Google, and Facebook, the winners tend to be very big. Bitcoin’s meteoric ascent spawned probably over a hundred imitation digital currencies, all of which failed to gain traction, but Bitcoin is doing better than ever.

I suspect that, properly pivoted in the right direction, these app-based services will continue to play a role in the economy. Eventually many traditional economy companies may adapt an app-based labor market in ways that we can’t yet anticipate.


But he also writes

Indeed, the reality that the sharing economy visionaries can’t seem to grasp is that not everyone is cut out to be a gig-preneur, or to “build out their own businesses,” as Leah Busque likes to say. Being an entrepreneur takes a uniquely wired brand of individual with a distinctive skill set, including being “psychotically optimistic,” as one business consultant put it. Simply being jobless is not a sufficient qualification. In addition, apparently nobody in Silicon Valley ever shared with Kan or Busque the old business secret that “you get what you pay for.” That’s a lesson that Uber’s Travis Kalanick seems determined to learn the hard way as well.

Thee nice thing about the gig economy, for consumers, is that low-quality workers who are not ‘cut out’ for it tend to be weeded out quickly – or not even visible. In a typical salaried job, these low-quality workers stay until they get fired or quit, hurting profits and productivity, and possibly leading to higher prices for consumers. In post-2008 ‘results-orientated’ economy, people are getting paid for the economic value they produce, not what they think they deserve.

So instead of: Good riddance, gig economy: Uber, Ayn Rand and the awesome collapse of Silicon Valley’s dream of destroying your job The Uber model just doesn’t work for other industries. The price points always fail — and that’s a good thing

It’s more like: Gig apps provide some benefit to the economy and workers, and will likely continue, but some apps will fail. It’s not a collapse or ‘good riddance’, but a reshuffling as the industry evolves. Sometimes the price point does not work as well as hoped, and other times like Uber it is hugely successful.

The second version won’t get as many clicks or shares though

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