Michel Bauwens advises peer-to-peer sharing platforms to give more power to their community.
– Peer-to-peer sharing is inevitable, says Michel Bauwens.
As the co-founder and director of P2P Foundation, Bauwens studies the impact of peer-to-peer technology and ideas on society.
– Peer-to-peer is becoming the infrastructure of the modern world. It is not something marginal. Slowly but surely, all infrastructure is moving in that direction.
Understand your goals
Bauwens encourages entrepreneurs to think about what DNA you want to put into your peer-to-peer system.
– I differentiate between peer-to-peer marketplaces that enable individuals to connect with each other and share resources, and ones where you actually create commons: free knowledge, free software, free design. For me, the latter is what I call peer-to-peer.
He defines four models for the collaborative economy: centralized and distributed control, and for-profit and for-benefit organizations. Put together, they form four quadrants representing four different futures.
– The first model is centralized control with a for-profit organization. That is where I put Facebook and Google. In the old system, companies would actually make something and sell it. In the new system, they are enabling us to do things together.
According to Bauwens, the problem with this model is that it does not create a real commons—a resource that is collectively created, shared, and managed, one that is not privatized.
– It is individuals exchanging their videos and documents. It is a fundamentally problematic business model because it captures the market value, but does not reinvest it in the people who use the system. Airbnb is not investing in hotels, Uber is not investing in taxis.
Build value on top of the commons
Bauwens argues that the people who create value should also own the companies. He encourages the use of cooperatives.
– We should be co-constructing the new economy, not parasitizing on the old one. The people should all have a say in how companies are managed and run.
We need young people to bridge these two worlds.
According to Bauwens, recent studies show that the survival rate for cooperatives is substantially higher than for startups.
– In the traditional startup world, the winner takes it all. As a venture capitalist, you invest in ten companies, knowing that only one will make a profit. After one year, you close down the nine others. It is not a good model for entrepreneurs; it is like buying a lottery ticket. Unfortunately, people from the old corporate world do not really understand the new cooperative economy. I think we need young people to bridge these two worlds.
By bringing people together, entrepreneurs can also educate people about the need for sharing.
– Create conferences and other events where you invite people from both worlds. Open a dialogue. Today, you get red-carpet treatment if you want to become a startup, but there is no such thing for entrepreneurs starting a cooperative. We need to help people find their way.
Bauwens believes public services play a role in facilitating collaborative consumption.
– There should be a new type of incubator where you can learn about financing and how to create open company formats—business models that are not predicated on enclosing the commons, but on co-creating commons.
Through open source businesses, entrepreneurs can create value by adding services on top of the commons.
– If you have a community, the community has needs. You can start creating added value on top of the commons, like services, learning, maintenance, and insurance. Everything that is immaterial can easily be shared.
Look beyond traditional models
To find a way to create value, Bauwens encourages entrepreneurs to make three circles: the inner circle of your passion, the middle circle of your skills, and the outer circle of social need.
– You have to find a sweet spot where those three things combine. This model is risky because you have to build your commons and community without necessarily knowing what your business model is. Look at Facebook and Google—they had no clue what their business model was. Twitter still does not know. When you create a community, the business will come eventually.
Venture capitalists believe so too.
– You can create the community by building a useful commons—like a software design that people use and need—and the community will create itself around that. Most people in the software world have a dual version model where one version is open and free, and you pay for the premium version. A freemium model.
We need to educate the alternative finance world about the opportunities in the new peer-to-peer economy.
If bringing good to the world is the main goal of your marketplace, Bauwens believes you should look at three things.
– Sustainability—how well you are in balance with nature; fairness—how well the people who produce the value also get a stake in the benefits from it; and third, sharing the knowledge that is produced.
Bauwens encourages entrepreneurs to look beyond traditional startup models—beyond venture capital.
– There are some interesting business models. Fair shares, for instance, is an interesting model where you have four kinds of shares: the founders, the funders, the workers and the users.
The best place to look for funding is within the ethical finance world.
– Although there are various movements like slow money, we need to educate the alternative finance world about the opportunities in the new peer-to-peer economy. The emerging entrepreneurial world needs funding.