Welcome to world of sharing economies

The sharing economy. Peer-to-peer consumer networks, collaborative economies, the collaborative consumption movement, the mesh economy... Whatever you call it, the idea of direct contact between individuals with a need and individuals who can fill it is catching on like wildfire. Is this evidence of a more collectively connected global society, or just another way to undercut the competition?

Legislatures are beginning to wonder, in part spurred by reported examples of the risk in trusting unvetted strangers: a woman assaulted by an Uber driver, a private residential arrangement gone bad. In Tuesday's Press, Jeff Selle reported that Gov. Otter is struggling with the idea, so he won't sign legislation regulating ride-sharing (e.g., Uber and Lyft) services. It's set to become law anyway. A few other states have or are considering similar regulation, but none is sure just how to treat this new kind of consumerism.

Beginning as a sort of social recycling and waste-prevention movement in Europe, the sharing economy began as the words describe it: I'm a Regular Joe with surplus (space, items, time, skills, transportation) to fill your need, so let's skip the middleman and get in touch directly, usually on the Internet. Maybe we barter or trade individually or as part of a sharing co-op; maybe money exchanges hands.

Its humble beginnings were community or town-specific, but websites developed, grew at light speed, and now some have become for-profit sites like Uber, but without the regulatory requirements of corporations or, in cases such as ride-sharing and skilled services, the intended protections of licensing, thus making price competition problematic for regular businesses with those costs.

The sharing economy has many faces, but also many eyes. Many still work simply like Regular Joe's example, or part of a co-op where people list what they can offer and get "credit" to take from someone else down the road. As reported in the March 30 issue of The Monitor Weekly, others have grown into sizable companies, both public and private, such as:

DogVacay (private) - Pet sitters; $47 million in funding

Instacart (private) - Grocery delivery; valued at $2 billion

Lending Club (public) - First to offer peer-to-peer personal and business loans; value $3.1 billion

Poshmark (private) - Buy/sell what's in the closet via Webcam; 2014 revenue $100 million

TaskRabbit (private) - Odd jobs/handymen/office help; $38 million in funding

Companies like these still differ from old-style business, because while they involve a managed website and perhaps some staff, the underlying providers/sellers are generally private individuals who've never met a company representative or fellow provider, posited across the nation or globe at their home computers. Because the movement has grown so fast, some of the biggies, led by Ranan Lachman, the founder of LegoPlay (rents toys), are trying to organize themselves and set industry standards, beginning with an agreed name: Sharing economies. It sounds nicer.

It also looks better in the eyes of socially conscious Millennials, who are much more inclined to outsource their needs via Internet than are earlier generations. But they also watch closely. When a company does something they disapprove of, they post and repost and before you know it, the shame is viral. It also effects change; companies such as Facebook have responded by changing marketing or other practices.

In the not-so-old days, co-ops and private transactions faced little to no regulation, even when money changed hands, as long as they stayed small because conceptually, they were not really "in business." As sharing economies have evolved from their simple origins to, in some cases, large, for-profit companies, that concept is shifting. Perhaps as Mr. Lachman's group develops they can help governments and consumers define parameters; regulation or no, we need a new border differentiating what is simply "a sharing economy," and what is a business.

Sholeh Patrick, J. D. is a columnist for the Hagadone News Network who formerly practiced business law. Contact her at [email protected].