Growth is the name of the game in the startup world. Any innovations which enable scaling are like gold-dust to entrepreneurs. The last ten years have seen the meteoric rise of a number of startups which fall under the banner of the ‘sharing-economy’. Many of their growth stories contain lessons which should be noted by any business. By taking these as examples, I’m going to show to how to scale your sharing economy startup.
The sharing economy has come into existence by the increased trust and prevalence of apps and smartphones and is focused primarily on peer-to-peer transactions. The idea is that ordinary people who own assets are now able to monetize them with very little interference from external forces.
You’ll no doubt have heard of at least one sharing economy business. Some of its more significant flag-bearers include Airbnb and Uber: the former allows owners of spare beds and sofas to rent them out to holiday-goers for a few nights, while the latter allows car owners to function as taxi-cabs. Almost all sharing economy startups use technology to manage transactions, allowing them to keep track of, and handle the payments for, each transaction at huge scale.
No matter what business idea you’re working with, the ways in which sharing economy platforms have innovated solutions to the problems they face are worth noting down for your future growth strategies.
The Problems Faced by Startups in the Sharing Economy.
There are a few problems that are unique to the sharing economy. Naturally, facilitating a transaction between two strangers means that rigid security checks and verification procedures need to be implemented to make sure all users are safe on these platforms. From a branding point of view, a startup company needs to cultivate a sense of trust from strong, clear messaging and transparent terms of service.
Additionally, making sure that users are insured is another key element of growing trust in the business that needs to be worked out to ensure success. The industry is fundamentally revolved around ordinary people letting out their own possessions for money and so they need to be guaranteed the safety of their possessions.
Insurance is an especially big problem to solve with peer-to-peer item rentals, as facilitated by companies like Fat Lama. A relatively new player on the sharing economy block, Fat Lama has developed full item insurance for the lenders on their platform and this fact has managed to grow the platform as much as it has. Insurance is a must for fostering trust on your platform.
A third problem is balancing marketplace supply and demand. Many dead sharing economy startups failed to balance the number of service providers they had with the number of those in need of it. Any sharing economy startups that are looking to establish themselves must treat both sides of the equation with equal consideration and grow them both together in order to create optimum user experiences on both sides of the coin.
Growth Hackers has worked with sharing economy startups and seen that success hinges on trust, insurance, and balanced supply and demand: get these right, and growth becomes predictable. When sharing economy startups are scaling, they always face the offer/demand or chicken and egg problem. Finding the right balance is crucial.
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Scaling the Fundamentals
Besides sizing up and tackling the unique problems that collaborative consumption poses, in order to build the next Taskrabbit or Turo, you need to focus on building a product which can scale fast. When you’re at hyper growth, you’re going to want robust procedures in place across operations and engineering.
The first thing to do for your startup is to understand your market: this requires acknowledging all the problems listed above, but most importantly the fact that you need to ensure that you can satisfy both owners and consumers with your business, and that you can do this at scale. You need to be responsive to either side, and understand which side needs more catering for as well. If you need to get in more consumers in, then you will be wanting to throw out a few promo-codes to get them using the platform.
If you want a few more suppliers, you will want to be doing things like prioritizing newer users on the front page of your site. Retention is also key, and the same strategies as above apply to keeping users happy on your platform.Second, you have to make sure that you are employing a team of people that can handle many different operations well and effectively. This includes performing detailed security checks, managing customer support and handling damage, abuse and theft disputes.
Growth Hackers treats scaling a startup like building a skyscraper: without a strong foundation in operations, automation, and responsive teams, the structure will collapse under growth pressure. As the company grows the team will need to grow, but you must have a responsive skeleton crew to be able to handle periods of high-load in an effective manner. If they can’t then your business will struggle to go far.
When you scale up your startup, you have to ensure that to help your team you are using all technology available to them to maximum effect. A great idea will be to either purchase, or develop your own content management software.
There are many ways to scale up a business but it will be impossible to scale your sharing economy startup or a business without the automation of many of the tasks you need to perform, including handling payment, security and simply processing the sheer volume of information you will be dealing with a potential user-base of millions of people.
Growth Hacking
In order to grow, sharing economy businesses use more or less the same tactics as other businesses to make sure that they are reaching the right people at the right time. Digital and Social Media Marketing, Online ads and, of course, SEO are essential to any online business looking to generate traffic to their site.
There are, however, companies like Uber and Airbnb which are some of the quintessential pioneers of growth marketing, a fundamental element of sharing economy start-up success. Growth Hackers has helped startups achieve rapid adoption by leveraging the same growth hacking strategies used by Airbnb and Uber… targeting the right people at the right time with digital precision.
Airbnb’s story is worth noting here.
Joe Gebbia and Brian Chesky, the founders of Airbnb, utilized Craigslist to launch their own user base. The well established online bulletin board was a hub for users listing their apartments and spare beds for temporary accommodation, mainly to vacationers. Naturally this was what Airbnb wished to leverage, with their own business ensuring greater safety and more secure payments for their users than the relatively unregulated Craigslist could offer.
They messaged the users listing their places on Craigslist and advertised Airbnb to them. At one point they even suggested that they could still list on Craigslist, but the link they put on the site would redirect to Airbnb. Before long this growth hacking strategy payed off and Airbnb had successfully hacked into existing behaviors to let them establish a solid roster of listings for their own site.
The tip here is use all existing behaviors you want to capitalize on to maximum effect.
And don’t forget that once the ball is rolling, the assets which you are allowing people to monetize can be used for different markets as well. Recently Uber has launched the highly successful UberEats, a competitor to another sharing economy platform, Deliveroo. This has utilized the fact that they have a veritable fleet of car signed up with them which, in addition to getting people from A to B, can also move stuff from place to place as well.
Fat Lama have also leveraged the functionality of their website, as well as their insurance program, to disrupt the campervan market, allowing owners of camper-vans to list their campers on the site and rent them out peer-to-peer. These are examples of possibilities for any businesses that own or manage assets.
Take note of the success that sharing economy platforms have had in being innovative with their growth strategies and truly exploring every avenue available to them. Being creative, thinking out-of-the-box, hustling and being user-centric are essentials to grow and scale your sharing economy startup.
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Secure the Right Funding
In tech, the prevailing pattern is that in order to truly grow at scale you need to secure the right funding at the right time. There are hundreds of articles about this, but the key points are this: make sure you know who you are pitching to, what your metrics and figures are, and be the preeminent expert about both your own business, and the market you are establishing in.
Considering the relative youth of the industry, it has been important for C-class Executives to continually educate their investors on the huge industry waiting to be tapped into. When Growth Hackers prepared a sharing economy startup for investor meetings, we honed their metrics, market knowledge, and pitch strategy. The result: a successful funding round that accelerated scaling immediately.
The sharing economy is hitting a stride at the moment so your job should be easier than it was for Airbnb or Uber, but the principles are the same: pitch your figures well, and sell your company, as well as the sharing economy, to whomever you are securing investment from.
If you can demonstrate to your investors that the market opportunity is significant, and your model isn’t about to cap out, you should be well positioned to secure funding.
So, how to scale your sharing economy startup?
If you are a small business owner, then it can seem daunting to grow your company in established markets. It’s important to have faith in your idea and really believe that it will be impacting people’s lives in a meaningful way. This is ever the case in the sharing economy, where you are fundamentally allowing people a way to make money that they simply did not have the option for just ten years ago.
And if you are looking to establish in the sharing economy, just remember – nail down your security checks, insurance programs and operations teams, and make sure you can handle times of high stress with processes that scale. Make sure you are being constantly creative with your growth, never stopping to look out for ways to hack into existing behavior or new markets to disrupt.
You also need to know how to hire when scaling up. And finally, sell your idea well to investors! You probably have a unique take on a marketplace that is itching to develop a way for ordinary people to get involved, so get your idea out there and funded, and see where it takes you.
Growth Hackers is one of the top small business branding companies, we help startups gain traction, grow and scale. Indeed, we help SaaS, tech, education, blockchain, energy, finance and sharing economy startups build their brand online and offline, drive qualified traffic to their websites and/or apps, automate their lead generation, improve their conversions, increase their sales and get a positive ROI.
