Australia Lags Behind in Share Economy Revolution

26/09/2015 12:33 PM AEST | Updated 15/07/2016 12:51 PM AEST
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International 'Thought Leader' Rachel Botsman warns Australia is being left behind in the grab for the Share Economy. Far from being a world leader, Australia is inhaling the gold dust left behind by even tiny countries like Estonia (1.3 million population).

Entrepreneurs from this small land at the edge of the Baltic Sea have produced internet phone service Skype, virtual fitting room software Fits.me, peer-to-peer currency exchange TransferWise and online gambling software PlayTech, to name just a few.

Botsman is the global authority on the power of collaboration and sharing to change the way we live, work, bank and consume. Her TedX talks on the subject have been viewed more than 2 million times.

Botman told HuffPost Australia that we always fall back on a tired old excuse for the lack of leading innovation here: that our population (23.9 million) is too small.

“That’s a lame excuse. Estonia shows that size is irrelevant when it comes to large scale technological innovation. There’s something about the mindset of entrepreneurs in Estonia. Their small scale is their asset. They test ideas at home before trying overseas,” Botsman said.

To put it in perspective, Estonia, despite its small population, is one of the most digitally advanced countries in the world.

Government cabinet meetings went paperless in 2000. By 2005, free high-speed Wi-Fi was available in most populated areas. They were the first nation to allow online voting for government elections.

Unlike Australia, Estonia has used its small popular to its advantage and its sharing economy is thriving.

So what is the Sharing Economy? Put simply, it refers to digital platforms to unlock the value of unused assets; a car, skill, or a resource, through a shared access.

“It all comes down to one behaviour -- sharing. It’s taking under-used assets and unlocking new value from them. So all this talk that Airbnb kills hotels or that Uber kills the taxi industry is not right. What it does is create new forms of wealth. What it does for people is it lowers the barrier to entry," Botsman said.

“You no longer need a taxi license to give someone a lift, and a passenger no longer needs to interact with a traditional taxi driver to get from A to B. You have to get beyond the technology and really see what’s under-pinning these companies to see how it looks like to other sectors.”

“The biggest linkage to Airbnb and Uber is they’re asset-light companies; they don’t own any inventory. They’re facilitating access to inventory that already exists and they’re addressing inefficient systems to ultimately create new systems.”

The theory of the ‘sharing economy and ‘collaborative consumption’ was defined in Botsman’s book What’s Mine is Yours: How Collaborative Consumption is Changing the Way We Live.

Botsman said we need to get over the idea that Australia isn’t big enough to crack the market, or that there’s a lack of funding.

“There is not a lack of ‘A-funding,’ which is start-up capital. If you have an idea and want to test it, there is a really fertile environment for doing it here. But there’s a lack of serious ‘B-funding,’ for when you need to get to the next level. So it’s at that next level that it gets tricky when you’ve been in it for a few years and need to move forward. That's the stage when people either give up, run out of cash or move to the US or Europe.

“Australia is a very important market for companies like Airbnb and Uber. We’re seeing international companies launch here and that’s a good thing, but it makes it tricky for the local start-ups to compete with that international heavy weights. In terms of home grown start-ups, we do have a healthy mix, it’s just we are not perceived as creating anything new.”

Botsman said the Australian government is very behind the rest of the world because its sole focus is, ‘How are we going to regulate Uber and Airbnb?’

“Instead, they can play a role by not only seeing what things they can put in place to protect people but raise the standard of innovation around the industry and get clear on tax implications. What we’re seeing in the sharing economy is people inventing highly disruptive business models with fantastic customer experiences, where people say, ‘This is a better way to travel or a better way to take out a personal loan.’”

“Australia needs to grasp more innovation. It’s not that people are saying, 'Let’s kill the taxi industry or the hotel industry, it’s about letting go of a traditional way of doing things that have been around for a long time. That’s why it’s so disruptive and this is really only the beginning."

Botsman’s advice to budding entrepreneurs is that they must first understand the problem they are trying to solve.

“You should understand the problem better than anyone in the world. A lot of entrepreneurs say they want to create something and they’re not clear on the problem they’re solving. You must have clarity around that because it’s easy to put something up and create an online business and build an app. That’s where people go first,” Botsman said.

“But I’m more impressed when an entrepreneur tells me, ‘We haven’t built anything yet but we have 100 people using our service and now we’re going to build it because we know what they want.”

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