Over the past couple of weeks I have been playing around with an application/website called Airbnb. It's a service that gives ordinary home-owners the ability to rent their homes direct to other people. This means that your house in London, Paris, New York or Munich can appear on the Airbnb website, along with pictures, prices, maps and more and be seen across the globe. There are options to rent the whole house or part of it; throughout the year or just for part of it and it all comes with peer reviews and social media plug-in functionality.
When you look at it carefully we could see the beginnings of a major shake-up of an industry here. Instead of paying £250 a night for a hotel room in Paris, you can now pay £100 for an apartment and get a true experience of Paris. In many cases the owners provide you with welcome baskets, information and sometimes work you around the neighbourhood. Now, that can't be bad can it? A company like Airbnb also employs a review system which gives you rich, peer-to-peer feedback and helps you make better renting decisions.
The system is quite interesting in that both the owner and guest pay money to Airbnb - 3% and 6-12% respectively. They will also send a professional photographer out to you free of charge in most cases. I can see that a service like this could start to create some real headaches for hotel chains, booking companies and the like.
Another website that has caught my attention over the last month or so is Kickstarter. The Kickstarter website offers 'creative' people the opportunity to pitch their ideas to the wider public and ask for funds to turn their project ideas into reality. These pledges are not loans or investments (shares) in a company and in return people are offered 'goodies' - more often than not products associated with the company - watches, cd's, art, etc.
Take the example below from Pebble Watch, these guys were looking for funding in for the following reason:
With your support, we can bring Pebble onto wrists worldwide. While we're close to entering production, your contribution will help fund:
- Production tooling
- Large component order
- Global Bluetooth certification
They gave a great pitch and in return generated more than $10 million when they only wanted $100,000. These pledges took the form of the standard pebble watch (before it had gone on sale), coloured watches, developer packs and distributor packs. One further point to note is that unless you reach your pledged total, none of the money will go to your cause. What's really neat about this concept is that budding entrepreneurs can now access funds without having to hand over equity to investors or get stung for high interest rates on loans. It's yet another example of a website which is starting to shake up (all be they ripples at the moment) an industry.
One area which has been around a little while is peer-to-peer lending. The concept is that instead of going to a bank to loan money, you simply go to a site like Zopa and loan it from the general public at artes substantially lower than the high street banks. Individuals are able to invest sums of money, divided into smaller pots of money to reduce risk, to people who require loans. There is obviously a risk involved for lenders (they have lost 0.5% of all monies loaned) but the returns can be quite handsome - 7.5% on a loan of £5000 for example.
The amount of money loaned by market leader Zopa is over £210 million to date and the UK Government is so keen to see business sites, using the same model, lending to UK companies that it is to invest £100 million into these sorts of companies. With poor interest rates for investors, higher rates for borrowers and general distrust of banks increasing, we may see another industry facing a shake-up.
One other area which you can't fail to have seen is the huge rise in sites like Gumtree and Netmums, which allow you to sell unwanted items direct to your peers. Having recently moved house, it has been a revelation to me the amount of enquiries you get for items which otherwise you may have taken to a charity shop or the skip. I am sure that the more that people use these sites to sell all manner of things, the more likely it is that some of them will see opportunities to sell 'new' products which could have further impacts on traditional channels.
To conclude, we are definitely seeing a rise in the general public 'stepping up to the plate' and offering their services, lending money or pledging funds. This will definitely have an impact on traditional offline and online channels and potentially makes for more dynamic marketplaces. And, I suppose, this can't be a bad thing.