Implications of the sharing economy for investing

The Future of Investing-

Implications of the Sharing Economy?

Dr. Robin Teigland Stockholm School of Economics

robin.teigland@hhs.sewww.slideshare.net/eteigland

@RobinTeigland

December 2015

Halloween in Nashville, 1974

If the rate of change on the outside (of an organization) exceeds the rate of change

on the inside, the end is near....

-Jack Welch

Thx to R. Wieselfors, Ericsson for photos

Thx to R. Wieselfors, Ericsson for photos

2015

Valuecreation

People• “Net generation”• 24x7 “mobile”

workforce• Knowledge via MOOCs• Sharing not owning• Sustainability

Technology • Broadband access• Mobile phones• The cloud• Internet of Things • Big Data• 3D printing• Robotics/AI• VR/AR• Holography• Blockchain

Open Source IP

• Software • Hardware• Physibles

Convergence of…..

Finance•

Microlending/microfinance

• Crowdfunding/equity/P2P

• Non-fiat cryptocurrencies

• Mobile money/payments

• M2M payments

A system that activates the untapped value of all kinds of assets through

models and marketplaces that enable greater efficiency and access.

- Botsman

The Sharing Economy

Harvard Business Review, 2014

The Sharing Economy: Embracing Change with Cautionhttp://www.slideshare.net/eteigland/sharing-economy-webb

LEARNING

p2p learning

open courses & moocs

PRODUCTION

co-design / co-innovation

digital peer production

distributed fabrication (makers)

FINANCE

p2p funding

p2p payments

p2p insurance

compl. currencies

GOVERNANCESWARM

participatory organizations

participatory government

blockchain / DAO

CONSUMPTION

redistribution

local food systems

product-service

on-demand services

COLLABORATIVE ECONOMY FRAMEWORK V0.1

The Sharing Economy is enabled through peer-to-peer (P2P) transactions on

multi-sided platforms (MSPs)

http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/

“Sharing” is big business…

http://www.web-strategist.com/blog/2015/06/04/the-collaborative-sharing-economy-has-created-17-billion-dollar-companies-and-10-unicorns/

• ReveUSD 26 bln today -> USD 335 in 2025 (PWC)

• 17 companies valued at over USD 1 bln, but 10 are privately owned

Uber• Launched June 2010

• 300 cities in 58 countries • Limited physical assets• USD 51 bln valuation (Ericsson – USD 32 bln)

Exponential growth by “doing more with less”

Decreased need for capital?

Major efforts to regulate the sharing economy

If Uber were to pay drivers as employees in USA.

Gigs vs Jobs: A race to the bottom?

Spawning a new form of capitalism -Modern day sweatshops?

“Monopoly” platform “Monopoly” platform

“Perfectcompetition”

“Perfectcompetition”

LEARNING

p2p learning

open courses & moocs

PRODUCTION

co-design / co-innovation

digital peer production

distributed fabrication (makers)

FINANCE

p2p funding

p2p payments

p2p insurance

compl. currencies

GOVERNANCESWARM

participatory organizations

participatory government

blockchain / DAO

CONSUMPTION

redistribution

local food systems

product-service

on-demand services

COLLABORATIVE ECONOMY FRAMEWORK V0.1

Banking is essential,

but banks are not.

Bill Gates

In just the past few years in Stockholm…

Company Founded BusinessKlarna 2005 E-commerce payment servicesMyLoan 2006 Loan brokerTrustly 2008 Online paymentsiZettle 2010 Mobile paymentsFundedByMe 2011 Crowdfunding, crowd equityKivra 2011 Digital mailboxTink 2012 Personal financeSafello 2013 Cryptocurrency exchangeKnCMiner 2013 Cryptocurrency mining equipmentToborrow 2013 P2P lending for companiesCryex 2014 Cryptocurrency clearing house

Stockholm #2 FinTech city in EU

2010-2014 investment

● $532 Mln

2014 investment● $266 Mln

Top 2014 Investments in

Stockholm FinTech Companies (USD Mln)

Klarna $125

iZettle $55

Trustly 29

Bima Mobile $22

KNC Miner $14

”Innovative Lending & Investing” emerging

2013 Stockholm FinTech revenue

Cryptocurrency0%

Transfers2% Innovative Lending

5%Wealth Man-age-ment9%

Other FinTech12%

Payments33%

Trading & Banking Tech39%

& Investing

Our report: http://www.slideshare.net/eteigland/stockholm-49722748

P2B lending in Sweden

Enabling local community?

Crowdfunding rapidly growing in Europe

Crowdfunding growth 2012-2015

USD 34 bln E

Competing for investment?

New forms of ownership…crowd equity

Democratizing innovation and investment?

Women in USA <30% of business

owners <15% of angel

investors <10% of venture

capitalists

Marom, Robb and Sade 2014

Women on Kickstarter

35% of project leaders

44% of investors Women invested in

women project leaders (>40% of projects)

VS

Using the crowd to identify investment opportunities

Nesta

No one knows everything, everyone knows something,

all knowledge resides in humanity.

networks.

Adapted from Lévy 1997Image: Krebs

Emerging forms of collaborative investing

Crowd-sourced hedge fund

Activist hedge fund

+

Developing investment skills online

https://www.quantopian.com/home

Enabling financial inclusion

The Sharing Economy is enabled through peer-to-peer (P2P) transactions on

multi-sided platforms (MSPs)

http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/

The challenge of ensuring trust

1. Trust in the platform2. Trust in the other users

3. Trust in the products and services4. Trust in the financial transactions

Leap of faith when meeting strangers -> Increased trust

in society?

Innovation is forward looking

while regulations are backward

looking.

http://www.weforum.org/sessions/summary/rise-demand-economy

Within 6 years: Challenging

the fiat money system?

Bitcoin – An emergent phenomenon• Open source project on SourceForge in Jan 2009 • Original source code by “Satoshi Nakamoto” –

pseudonym?• Developed by self-organizing community of

thousands of strangers across globe• Approx USD 5.6 bln market cap and approx 145,000

daily transactions of USD 75 mln• 1 BTC = USD 377 (Nov 30, 2015)

Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707

What is a cryptocurrency?

DigitalDecentralized, peer-to-peer (P2P), i.e., no

central, third party

Uses cryptography to validate/secure transactions

Also uses cryptography to generate currency itself

Non-technical explanation of Bitcoin−https://www.youtube.com/watch?v=t5JGQXCTe3c

How does Bitcoin work?

Screenclip from: How Bitcoin Works under the hood, by “Curious Inventor”

Blockchain • Shared public

ledger • All transactions

ever made logged• Chronology and

integrity enforced by cryptography

Betting on the Blockchain - Together

Goldman Sachs, JPMorgan, Credit Suisse, Barclays, Commonwealth Bank of

Australia, State Street, RBS, BBVA,

UBS, Nordea, SEB, + ……

+

IoT and smart contracts

Ownership attached to asset/property (e.g., real estate, shares) and can be verified

Run on Bitcoin ledger, execute legal rules between two entities: people, organizations, machines

Trustless because no center, no one in middle – the network is the middleman

Example: I run a private weather station using neighbors’ sensors. Smart contracts enable payment to neighbors for data sent from their sensors to my weather station.

But time will tell… uses we cannot imagine today.

https://www.youtube.com/watch?v=JsC4ptn2Aik

From “trusted”, centralized human authorities

to trustless, decentralized networks

IBM Institute for Business Value (PDF)

La’Zooz – Decentralized transportsharing

http://lazooz.org/

Enablers of a “true” Collaborative Economy?

Blockchains

Collaborative Economy

IoT/sensors

P2P/M2M micropayments

Big data

Thomas Jefferson (1816)“Laws and institutions must go hand in hand with the progress of the human

mind.”

The problem is that the human mind itself can’t keep pace with the advances

that computers are enabling. 

http://wadhwa.com/2014/04/15/mit-technology-review-laws-and-ethics-cant-keep-pace-with-technology/

Challenges in the Sharing EconomyEnsuring trust

−In the platform, other users, products and services, financial transactions?

Regulatory−What is “employment”?

Security, taxation−What are new “rules” around “consumption”?

Taxation, safety, big data and privacy, IP and ownershipEconomic implications

−New pricing mechanisms -> deflation?−Lower demand for capital in “Zero Marginal Cost

Society”?−Net effect on labor productivity?

Some questions…

• What basic assumptions will no longer hold, e.g.,centralized, third party verification?

• How will trust be enabled?

• How will new forms of value creation and investment be regulated?

The future is already here, it’s just not very

evenly distributed.

- William Gibson

Robin Teiglandrobin.teigland@hhs.se

www.slideshare.net/eteigland@robin.teigland

If you love knowledge, set it free…

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