How COVID is Charting a New Economic Course

As we pass the halfway mark of 2020, we are slowly coming to terms with the reality of life amidst a global pandemic. For those of us in Australia, the fact this once-in-a-generation event was immediately preceded by a devastating national bushfire season, from which communities across the country are still in recovery, means there has never been a stronger catalyst to evaluate what truly matters. History tells us that societal and economic upheavals of this scale provide the space to meaningfully question the assumptions we live by, offering an opportunity to chart a more resilient course through to the other side. 

In the aftermath of the Global Financial Crisis, the disillusionment towards and loss of trust in large institutions led to rise of the sharing economy movement. Characterised by tech-enabled business models enabling people to share and exchange all kinds of things, from homes to cars to household goods, the sharing economy heralded a major socio-economic shift in how we consume. From 2010 to 2015, I worked with author Rachel Botsman, researching the growth of this trend globally, tracking startups like Airbnb and Uber as they became household names, and consulting to Fortune 500 businesses like GM as they explored new business areas in response.

At its core, the sharing economy was built on principles of access over ownership and better utilisation of the things we own, as we attempted to veer away from the pervading culture of hyper-consumption. At the same time, it was about making sense of the powerful new technologies we had at our disposal, from smartphones to social networks, and leveraging them to build trust between strangers online to make these kinds of exchanges and interactions possible. But how do these principles hold up in the COVID-19 era? And what are the new forces at play that will inform the future of a post-COVID society? Here are four principles I think will shape the opportunities to emerge from this crisis:

A return to real-time connection

While the sharing economy initially promised authentic connection with strangers through peer-to-peer exchange of goods and services, as the market matured, the true human connection became sanitised from the process. These days, it’s rare to meet your Airbnb host upon check-in, and the experience of taking an Uber compared to a taxi has lost the sense of a friend giving you a lift in their car. Yet, now more than ever, we are craving true human connection as we stare down continued periods of forced isolation, and the necessity of social distancing. Online video conferencing platform Zoom had an exponential surge in popularity as it broke out from its business target market, becoming the video chat tool of choice for everyone from schools, to health and fitness groups to families wanting to stay connected. 

Similarly, local neighbourhood interactions have became the backbone of social connection in times of lockdown as neighbours check in on each other from a distance, and turn to each other for support when in need. Online neighbourhood networks had mixed success in the first wave of the sharing economy due to the absence of a burning imperative to drive them toward mainstream adoption. Communication tools and infrastructure that facilitate both online and offline interaction at a hyper-local level will be key to building resilient communities in a COVID era. 

Efficiency over convenience

As it reached mainstream adoption, the ‘gig’ economy emerged as an alternative moniker for the sharing economy. This was used to describe the contingent work being performed by thousands of freelance contractors to drive cars, deliver goods and services and run a wide range of errands through various platforms and marketplaces. What it came to represent more broadly was the sharing economy’s evolution toward convenience over collaboration, and in the era of COVID, many of these already vulnerable workers have had their work opportunities either severely limited or become increasingly risky for their own health and safety.

At the same time, within days of lockdown, important services like online grocery shopping all but broke under the pressure of substantially increased demand, exposing the inefficiencies in many of our systems and infrastructure. More effectively tackling challenges of semi-private transportation, logistics and delivery will be critical in both stabilising job opportunities for the contingent workforce, optimising for efficiency at a systemic level over individual convenience.

From reliance to resourcefulness

Another symptom of the success of the on-demand economy is that many of us have neglected to maintain or even learn basic skills like growing or cooking our own food, cleaning, making and repairing. While errand marketplaces and food delivery services provide much needed basic or supplementary income to many people, many of us will no longer be able to justify allocating our discretionary income toward paying a premium for these services. What will become more critical is our access to acquiring these new skills, or developing relationships where we can share or barter skills in exchange for other things.

Skill sharing platforms, ‘time banking’ or local alternative currencies like the Brixton Pound had some limited success in the early days of the sharing economy, but not at scale. More mainstream adoption of these ideas make sense given the current constraints on our lifestyles, as we aim to increase our own sense of resourcefulness across many aspects of our lives. 

Collectively abundant, not individually rich

The concept of leveraging idling capacity, while initially fundamental to most sharing economy startups, became somewhat exploited over time. Instead of increasing usage of existing assets, companies (and opportunistic individuals) began to acquire things for the explicit purpose of renting them out for a profit. You only have to look at the real estate rental market to see new stock popping up in popular suburbs — fully furnished and only available on short term leases — as Airbnb bookings have been cancelled en masse. WeWork’s corporatised approach to co-working is also a good example, and the vulnerability of this particular model has never been more evident in a work-from-home era. 

Returning to the roots of idling capacity is about searching for the latent value already within the system, rather than artificially boosting supply for commercial gain. In a world where centralised office space is no longer desirable, what does it look like to create hyper-local, flexible work hubs on the fringes? This could enliven outer suburbs, take advantage of under-utilised suburban retail precincts and remove the congestion, pollution and depression that results from unnecessarily long commutes. And instead of contributing to housing availability and affordability issues, how does peer-to-peer accommodation create more richness within the community, rather than forcing the community out? 

As we consider how to make the most of our idle space, talents, time and other resources, a recognition of the abundance we are surrounded by will surely help us be resilient in the face of what might actually be much-needed change.

Lauren Capelin is a community strategist and disruptive innovation specialist currently working across the startup and venture capital industry.