Apr 29, 2020 - Technology

Pandemic flattens the sharing economy

Illustration: Sarah Grillo/Axios

The "sharing economy" — as embodied by companies like Uber, Airbnb, and WeWork — is in critical condition, thanks to the coronavirus pandemic.

Why it matters: Basic assumptions about the evolution of human behavior in the digital age are melting under the pressure of COVID-19, requiring us to recalibrate how we envision the tech-enabled future.

Driving the news:

The pandemic has brutally shut down these companies' fundamental bets.

  • Right now Americans simply aren't leaving home much, and when they do, they will drive in their own cars if that's an option. (They may still prefer ride-hailing to mass transit, or be left with no other option in places where transit routes have been drastically cut back.)
  • Minimal travel means little demand for short-term rentals. And thanks to work-from-home orders, there's little demand for co-working space.

The big picture: The sharing economy — an idealistic vision birthed and branded in the late 2000s, during the last economic crisis — held that Americans were moving beyond an ethos of acquiring and protecting stuff.

  • Instead, we would willingly share use and enjoyment of space, vehicles, and tools, saving money to buy memorable experiences and fulfilling leisure activities.
  • Software could make this possible by widely distributing access to information about the availability of those spaces, vehicles and tools, and by building reputation ratings and "trust proxies" to put us at ease with relying on strangers.
  • In the early days of the Web, Americans got comfortable using their credit cards online and selling used appliances on eBay. Sharing-economy entrepreneurs aimed to extend that approach everywhere.
  • As a 2014 Wired cover story put it, "We are entrusting complete strangers with our most valuable possessions, our personal experiences — and our very lives. In the process, we are entering a new era of Internet-enabled intimacy."

Yes, but: The companies that emerged to deploy this vision in American cities, driven by a startup ideology of "scaling fast" and enriching investors, turned it into something faster and nastier — a grinding gig economy with a flashy app front-end.

  • The billion-dollar sharing giants were all about squeezing new efficiencies out of existing human and material assets, and then trying to squeeze a profit from fees on the margins.
  • That was always a tough business proposition: Uber and Lyft, which are both now publicly traded, have never turned a profit.
  • Now, even if these firms bounce back in the post-lockdown world, they've lost all room to maneuver.

What's next: In some ways, the pandemic opens a door to the revival of the sharing economy's original, grassroots ideals of community cooperation and peer-to-peer trust.

  • There's a lot of flour, sugar and yeast passing from neighbor to neighbor these days, even if we're just leaving it on one another's doorsteps.
  • We may not rush back into shared spaces — but we've experienced a profound demonstration of interdependence.

Editor's note: This story has been corrected to report that Uber has 27,000 employees — not 2,700, as we originally said.

Go deeper

1.9 million Americans filed for unemployment last week

Photo: Mario Tama/Getty Images

Another roughly 1.9 million people filed for unemployment last week, the Department of Labor said on Thursday.

The big picture: The coronavirus pandemic is still putting a historic strain on the labor market, though the pace of unemployment applications continues to slow.

The risk asset rally continues as stock market rebounds

Illustration: Sarah Grillo/Axios

Risk assets have jumped over the past week and continued their rally on Wednesday, with the S&P 500 gaining for a fourth straight day and posting its highest close since March 4, while the Nasdaq ended the day just 1.4% below its all-time high.

What it means: If it hadn't been evident before, Wednesday's market action made clear that the bulls are back in charge.

Trump's troubles grow, spread

Photo: Tasos Katopodis/Getty Images

President Trump is confronting the most dire political environment of his presidency, with his support dropping fast from Texas to Wisconsin, even among his base of religious and older voters. 

Why it matters: Top Republicans tell Axios that Trump's handling of the nation's civil unrest, including his hasty photo op at St. John's Church after the violent clearing of Lafayette Park, make them much more worried about his chance of re-election than they were one week ago.