Episode 1 The Bottom Line

no prior knowledge of the incident. And now The Bottom Line with Evan

Davis. Consumers in developed economies have got used to owning

things. Cars, homes, clothes. You name it, they bite. If they do not

buy at a rent it from a large company. Today we will look at and

alternative model, it is sometimes called collaborative consumption. It

is about renting possessions out to each other. It is beginning to take

off and three enthusiasts will tell us what it has to offer and discuss

why some people do not like it. Let's start by spending a few

minutes meeting each of my three guests. All of them represent

companies in the area of facilitating sharing. The oldest of

the companies is Liftshare. Ali Clabburn you found that company back

in 19 87 before we had an Internet. What you do? Any member of the

public could say they were travelling from London to Bristol

and you could find a match. The challenge was we could not run a

business that way. I could not you run a business that way? We were

matching people together but there was no financial transaction for us.

It were paying each other. We could not get our hands on the cash. Then

we had a stroke of fortune when Glastonbury contacted us saying they

were having trouble getting Sony people down to the festival without

annoying the council because they had such a congestion. We set them

up with a branded version of the Liftshare site we had and it was a

great success. So it was a Glastonbury Liftshare scheme and we

were doing the back office. We ran the lift sharing scheme before them

and they promoted 200,000 people going to the festival. For us was a

great way to promote the service. We started getting phone calls from

people who had gone to Glastonbury asking if we could do something

similar for the company. We had approaches companies in London,

wrestle and Norfolk. Saying could you run car sharing scheme for our

company. We run a thousand schemes. The biggest culprits, and all for

very small companies who may have trouble getting places to -- people

to their places of work. How many write a year are shared by

Liftshare. It is about 12 million a year. But it is now probably 15

million year -- next in chronological terms is the Airbnb.

Most people would associate this was sharing economy. The country manager

for the UK is Even Heggernes. The first Evan on this programme other

than me. This was founded ten years after Liftshare, 2008. Give us a

story of the origins? The founding story is interesting, two of three

founders faced a problem. They did not have enough money to pay their

rent. There would try to figure out what to do. They were both recently

designed graduates, there was a big design conference taking place where

they live. They had some air beds so they wanted to create a website

called air bed and breakfast. Now we are in more than 75 countries around

the world, we have 75,000 properties on our books. If I had a spare room

or a spare house I can put it onto your site, if I look for one I put

it on your site. You will charge a fee for me using Airbnb as the

finder 's fee? The business model as we charge a fee from the guest and

the host. From the guest we charge between six and 12%, from the host,

3%. We get on average 10% a booking. What is the scale of the Airbnb? We

reached -- we recently reached 10 million guests and 6 million was

2013. The third business, this is much younger. This is the founder of

Rentez-Vous. This is Fiona Disegni. The company. Tell us what we have a

fashion rental market place. Women can rent clothes to one another and

rent designer creations. They came up with the idea with the fact that

I always find I have too many clothes in my wardrobe and nothing

to wear. I realised that was the case of every woman. From the study,

we do not wear 70% of our clothes. I have to admit, Liftshare I get, that

existed before the Internet. The Internet makes it easier. Bedroom

sharing, house sharing, that I can understand. Clothing sharing, there

is something more personal about clothes. It is more awkward, they

may not fit. Someone goes to the party in the clothes. The clothes

may not come back in the state they left. Allsorts are problems I can

imagine? That is correct. We are going into more emotional kind of

things. You will rent a place or a car because you cannot afford it.

With clothes, it is all about the fact fashion is changing every time.

You do not want to wear the same things every day. We do not need to

overconsume. We do not need to buy. The customer experience is I get the

thing clean and I handed that drycleaned. We have partnership with

dry cleaners. Local partnerships in London and Paris. We also have

deposit, that's accuse the rental. -- that's accuse the rental. There

is a big problem or the clothes are not given that we give the money to

the owner. We have the measure of all your businesses. Do you see

yourselves as commercial businesses or something a little different,

around the lifestyle or ethos of sharing? For Liftshare, when I set

it up, set it up for my social problem. I could not afford to get

back from university. I set it up for personal reasons. In is trying

to find out how to spread it around. It was a social thing to go round

other university -- University is encouraging it. Then you get the

understanding of how wonderful sharing is. Then you understand it

is not only wonderful from a sharing point of view but it is an

environmental thing and a financial thing. Whatever way you look at it

it is a win-win. There are many benefit is, you can not be in the

sharing economy and look at yourself as a normal corporate financially

based business. The benefits are far greater than any financial benefit.

I had to second you. A lot of people sign up on errant B because they

want to make extra money, then they stay on because of the experience.

It is more about access than ownership. If you go a couple of

decades back, we'll want to buy a car, but now it is more about access

of things. The technology of today we made it more possible. Ten years

time, all you need to own as a mobile phone. That will give you

access to everything you need. People love to own their own home.

More than just a financial thing. They feel it is their own. There are

certain things and certain different people, the young people, the way

they view things is different. It is not limited to the young. You go

back that years ago, sharing was commonplace. In the old days,

sharing was a substitute because he could not afford to do something

different. Now people can afford it. It has become more a choice. You

feel more part of this kind of values. You realise you can get more

than just the product itself. We had to make a change on how we consume.

There is a limited amount of resources on the planet. If we keep

on spending or wasting the resources as we do today, there will not be

too many generations after us that can experience the planet the way it

is today. We need to make a change. We do not have a choice. The three

options are reduced the population, use less or share more. Let us be

clear, you are all giving noble views of what your businesses about,

you would all like to make money out of this? If you can float the

businesses and make millions that would be great? We have come through

15 years and we have come with ups and downs. Airbnb has gone down the

investment route. We have always tried to be self investing. We do

not want to be pulled by venture capitalists. Airbnb is very

profitable? What we have in the middle of the business is the

experiences. Airbnb and the family in Copenhagen, you had to spend an

hour with my kids. No stinking maybe somebody wanted a free babysitter.

They ask me all these questions, what food I like eating. What do I

do for work. Then the woman told me I had to spend money with my kids.

This is bigger than a roof over your kids, these children are more

open-minded. They more knowledge. A lot of the bad things happen in the

world because we are afraid. It is a commercial organisation, not a

charity? We have a massive organisation behind making this

possible. Our communities in the centre and that is what we care

about. The issues around making enough money to cover cost and do

better than that, you have problems in the early days, you found they

were paying each other the people that were sharing? You could not get

a bit of it. The first there we went to we were charging people ?10 to

join. It was a freshers fair. Join up with Liftshare, we will help you

travel country. We made it ?5. Then when it was free, 50 people joined.

We decided it had to be free. We went round other freshers fares and

the same thing. 100 people joined but we had no financial model I had

to go to work at pubs or wherever I could get the money to get a website

developed. It took three years before we got first contract. You

did very well because you adapted to find a mum tree model. How about you

on the revenue side? We already charge the user a fee when they

rent. We also integrate some emerging designers for them to rent

creations. They pay us to get access to the community. What would I be

paying for a rental? A designer dress? It is about 20% of the

purchasing price. For the rental. We take 20% off of the fee. And for the

designers, 30%. You take 4% of the purchase price? One of the biggest

financial challenge is to this market is taking the middleman

transaction. Looking at Liftshare, if I give someone a lift from

Bristol to London that is ?10, Lafai as the organisation who makes that

match takes a cut, we say what is reasonable, 10%? Once you've gone

through the thing of that money going through the merchant service

or a bank, they take their percentage. When you pay the money

out to that person they take a percentage. You can end up spending,

or every pound we taken it can be 60p going to the bank. We have

bigger transactions, ?100 a room it is worth spending to a half percent

on that. For our business, acting as a middleman would not work. One

thing in your favour, each of you is running a -- natural monopoly.

Airbnb seems to be the one people go to. There were others. That makes

sense, if you have 30 of these things, you cannot crack the

market? As we grow, there are more competitors trying to do what we do.

It is a huge market. We always keep focus on developing the service. To

always be innovative. If I go to -- if I go to a place and I want to

work rent a room, I want one that lots of rooms. The big one is more

likely to have that rather than a smaller full -- smaller one. We have

private people running their microbusinesses on our side. They

say, "Go on Airbnb. That's where we get our man." That's why they keep

coming back to us. You've got competition, haven't you, Ali?

There's Liftshare competition? There is. We have 8% of the UK market. As

a critical mass, we've got it. The interesting thing now, in the market

place, is they're coming with big backing. They're spending a huge

amount of advertising. So Liftshare, you'll see three brands ahead of

ours. There is a French one, Car Pooling from jeemple. And within

London there are National Cars, a Go Car Share locally. My prediction,

they won't all stay in the market, because they'll consolidate. It

doesn't make sense to have the market split. There will definitely

be consolidation. OK, well, we have been having a good

conversation about the sharing economy. I have learned a lot about

the positive attributes and your enthusiasm shines through. Let me

ask this rather important question - is some of the value of what you're

doing undercutting regulation and rules that would apply and impose

standards on professional, corporate providers of the services you're

competing with? So, let's take, for example, Airbnb. Hotels have to meet

all sorts of environmental safety standards, fire safety standards,

catering cleanseliness standards, there are all sorts of things they

have to meet, right? To what extent is Airbnb just able to get where it

is because it doesn't have to face all those standards? I think that a

lot of tech companies popping up today, brand-new business models,

the technology we have today we didn't have X amount years ago. And

a lot of the laws that we're facing today was created. So we're spending

a lot of our time working with stakeholders and regulators all over

the world, educating them about our business model, what we're doing.

And trying to find a way where we can work together. Yeah. Cos a lot

of people don't like Airbnb. I mean, I know a lot of policymakers don't

like it, do they? Of course we have some that is seeing is Airbnb as a

threat. And I think that what we offer compared to some of our

competitors is completely different. Staying in someone's private home is

completely different from actually staying in a hotel. More than 80% of

our hosts are private people renting out their primary residence. That's

the majority of our... What proportion of the people renting

out, of those 80%, of ordinary people renting out their home, what

proportion of them do you think are paying tax on the income they

dearrive? We require every single host on our site to follow the rules

and regulations in the area they're living, including paying taxes. We

are encouraging them, by sending out tax forms. So if the British tax

authorities said to you, "Can you give us a list of everybody who's

rented out a room so we can collect a tax?" We're not sharing the data.

No. There must be a suspicion... I mean, in your one, Ali, do you think

they pay tax on the income they derive? They don't make a profit.

The difference of Liftshare to most of the challenging ones now are that

very early on, we looked into the insurance issues. And there were a

few insurance companies who said, "We won't let people share cars." We

got them basically to change their policies to clarify they will let

people share cars, as long as they don't make a profit. As long as you

don't make a profit from giving someone a lift, you're not seeing as

higher for reward. We've got people saving up to ?6,000 a year. One guy

has set up a website that shows exact southerly how much money he's

saving so he can show the tax man he's not making a profit. Do any of

you think the sector has grown as fast, as quickly as it has because

it does allow some circumvention of things. It has stopped a lot

paraphernalia sharing going on. And businesses have been set up within

that regulationulation, whether it's sharing taxi, hotels, they have run

normal businesses. Now the world is changing fast and the regulators are

struggling to catch up with it. The challenge is whether it is worth

breaking those rules. And in many circumstances, the rules have

stopped people from living sharing lives, using goods really

efficiently. That's gotta be changed. If the regulation is

stopping sharing, it's the regulation that's wrong, rather than

the sharing that's wrong. Yes. In France they have been quite negative

about it? Yeah. Really. With taxidrivers in France, in Paris, and

in Lion, basically, the traditional taxidrivers don't accept the fact

that online and mobile taxidrivers' company could get customer easier.

So, taxidrivers vandalise the other taxidrivers. Physically vandalise?

Physical lip vandalise. Yeah, so it shows that there is a kind of an

upheaval, in a way, in France based on the fact that new model are

disrupting traditional. It's a lot of ill feeling, then, really, to the

disruptors. Yeah. And I think that people are kind of freaking out.

Which is the jurisdiction which has been most negative about Airbnb?

Because there have been problems here and there. So, now I'm based in

the UK, but I'm sure you have seen that we have been - facing some

issues in New York. There was a case with a guy renting out and he was

found breaking some regulations. Zoning regulations. So he's running

something that looks like a hotel in an area with no licences. He rented

out a private room in his residence. We appealed and are working closely

with regulators in New York to work together. You won the appeal? We won

the appeal. It must be annoying for you. You're in 170 countries, and

each of them has their own view about what's allowed, what isn't

allowed? That's the beauty of the world, things are different

everywhere. Where does this sharing economy go? What are the limits? Is

there entrepreneurial activity in this area? We've got you, Fiona,

you're obviously the upstart in the room here. Are there lots of others

in London? Tech city, London, they call it. Are you the only one there

in this space? Yeah, there are in France as well. There is this global

movement that has been borne in France that is actually like the

kind of organisation that represents sharing economy. So, it's really

important in France but also here. Office sharing, so that is new

companies trying to, yeah, go into this field. And a lot of our

sustainable fashion. But I think what is really interesting is that

we bring values to traditional companies. And that's something that

is not really seen yet. But basically I think that we change a

model and we actually create value for these companies as well. So, I'm

just not quite sure I understand why you would be better at that. You

were agreeing, Ali, but... I agree because of the conversations. Say

we're working with the corporates, some of the biggest corporates in

the country, the schemes. One of the reasons, they set it up normally to

reduce parking. Buff the feedback we get, saying there's a senior

director sharing with someone on the shop floor, talking every day, going

to work. The silos they're break down, getting sharing into the heart

of some of these bigger companies inspect disrupting them in ways that

was never possible before. Big companies, how do they respond to

this movement? That you're obviously all very passionate about and feel

very committed to? Do they co-opt it? Do they fight it? Do they join

it? I mean, what do you see their response as being and what would be

your advice to the established players? Of the bright ones are

embracing it. Marx and Spencers. You have I have aies, who bought Zip Car

for a lot of money. They're diversifying their portfolio by

bringing that under their umbrella. They have - I think they have to

embrace it, but embrace it with care, but understanding that it will

disrupt what they're doing. If they don't do it, others will. I think

the challenge for everybody - we are lacking in resources. And I think

all the traditional company also have is the same challenge and they

will have to adapt new models for that as well. Tell us what you would

do if you were running a big hotel chain now? When I talk about

disruption, I also like to think of that as progress. And in the world

I'm from, there is space for everyone. We're offering completely

different things and in the end that will be better for the consumer.

Look, thank you all very much for sharing your thoughts with us. Ali

Clabburn of Liftshare, Even Heggernes of Airbnb, and Fiona

Disegni of Rentez-Vous. I'm gonna be back with more guests

next week. Don't forget the downloads of The

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