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:
- Ride-hailing giants Uber and Lyft saw their business crater with the pandemic’s arrival, according to analysts. Yesterday, the Information reported Uber was weighing layoffs of up to 20% of its 27,000 employees.
- Airbnb has added new cleaning protocols and 24-hour between-stay buffers. The privately held company hasn’t disclosed how its business is faring, but it took on two separate $1 billion loans earlier in April.
- WeWork, which packs large numbers of workers from multiple companies into its teeming co-working spaces, was already in trouble before the coronavirus hit, and now it’s trying to figure out how to make its “members” feel comfortable enough to return to their pods.
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.