of Collaborative Consumption. When I got the blurb for this book, I was really excited.

Then I saw Rachel's TED Talk and I was even more excited. She was a fantastic speaker

there and I expect her to be a fantastic speaker and then I read the book; loved the book.

In fact, I've been, evangelized everybody on my Facebook page to on my Buzz, on my,

talking to my friends in person. My friend's 14 year old kid was super glad to hear about

share.com cause he's now getting full value for his video games as opposed to half at

GameStop. So, it, I think you're gonna find these ideas super interesting, both personally

and professionally. I think you know about some of these companies and I think you're

gonna find some new companies you haven't heard of that will be useful to you, but I

think the book is more than something that's interesting both personally and professionally.

It's also a different way of thinking about the world. It's a way, I said, I think we

can get by, get past some of the kind of roadblocks that we've got on public discussions. Because,

I mean, think about it. Sharing for fun and profit; what could be more socialist or more

capitalist? So, it's a chance to transcend old problems. Please welcome Rachel and Roo.

[applause]

>>Rachel: So. Good morning, or good afternoon, everyone and thanks for having us today. So,

I'm gonna talk to you about the rise of collaborative consumption. And Roo and myself have been

doing interviews for the last couple of weeks and the most popular question is, "Is this

a reaction to the recession?" So, today I'd like to talk to you about why this isn't a

reactionary blip to the recession, but a fundamental change in the relationship between producers

and consumers and the beginning of what we think is a revolution in identity and ownership

that could become as big as the Industrial Revolution or even the Information Age. So,

today we thought our focus would actually be on technology and how technology enables

trust between strangers, and how this is reinventing sectors from retail to banking to food; creating

massive workspaces of opportunity. So, to get started, I thought I would start with

an example you're all very familiar with, which we call the Godfather of collaborative

consumption, which is eBay. Now there is a popular Silicon Valley legend that eBay started

when Pierre Omidyar wanted to help his girlfriend sell and collect Pez dispensers. This is,

in fact, a myth made up by a PR whiz. The real story, whoops, it is Murphy's Law today.

The real story is that Pierre actually put this broken laser pointer up for auction on

his personal website as an experiment. And he was even astonished within 24 hours when

a bid came in for 14 dollars and 83 cents. So he contacted the winning bidder to make

sure that he knew it was broken and the guy wrote back and said, "I'm a collector of broken

laser pointers." Now, it was in this moment, that Pierre knew he'd hit on something really

big for two reasons. One, he realized, that it was actually a massive opportunity to redistribute

things that were unwanted or worthless to one person. And then secondly, that had an

immediate value to someone else. And what he also realized was that the Internet had

created this massive match-making machine, with the power to match person A's "have's"

with person C's "wants" with whatever they may be. So, no longer was the coincidence

of "wants" a problem. So, in other words, the Internet had created the efficiency and

access for us to trade peer to peer. But it also did something critical for eBay, and

also for collaborative consumption, was that it created the social lubricant, or trust.

In other words, we know had the technology to create trust between strangers. Now, my

grandma, who the book is dedicated to, is very fascinated by this subject of collaborative

consumption and it's funny cause she really gets the heart of the book; she really gets

the community aspect. Although, she gets a little lost when we start talking about real

time technologies and augmented reality. So anyway, I was last back in London and she

asked me to show her the power of this matchmaking. So I went onto eBay and I said to her, "What

do you want?" And she said, "I want a pearl, silver-rimmed picture frame for your wedding

photo." So, online I went and found one within two seconds and so the seller was called moocowmeadows.

So she said, "Well, how can I trust someone called moocowmeadows?" And I said, "Well,

you just do." And then she said, "What, I'm gonna pay for it and I can't actually physically

inspect the item?" And I said, "Yes." And then she said, "And then we're gonna pay for

it before it's actually shipped?" And I said, "Yeah." She said, "Well, how do I trust this

person?" So then I started to explain to her well, 98 percent of trades on eBay receive

a positive rating and the two percent negative rating, it's relatively minor reasons, like

the item arrives one week later than expected. "Ok," she says, "let's order the item." So,

we then got into this conversation about reputation systems, right? Now, eBay has proven something

incredibly powerful, which is that the trust we form face-to-face can now be replicated

online through points, feedback, power sellers and Roo and I noticed that these two principles

that eBay had proven on steroids, trust and efficiency were enabling us to mimic the exchanges

that used to take place in villages, but in ways and on a scale that had never been possible

before. So, in other words, technology was actually taking us back to really old market

behaviors. So, we're swapping and sharing and bartering and trading, but they're being

reinvented into cooler and dynamic forms that are relevant for the Facebook age. We call

this groundswell collaborative consumption and we believe it's a new culture and economy

that reinventing not just what we consume, but how we consume. So, a few years ago we

started to notice the massive surgance in car sharing and bike sharing and peer to peer

rental markets and Etsy labs and food co-ops, and we started to wonder whether all these

things were linked and interconnected. And what we believe is that we are sharing and

collaborating again in ways actually more hip than hippie and keeping up with the Jones's

is being replaced by sharing with the Jones's. I was reading The New York Times, I like to

go back and look at articles that really influenced me and there was a great quote where it said,

"Sharing is to the iPod what the 8-track is to, sorry, sharing is to the iPod, sharing

is to ownership what the iPod is to the 8-track, what the solar panel is to the coal mine."

In other words, sharing is post-modern and cool and ownership is becoming dull and backwards.

Now, when we started writing the book, we had around 500 examples of collaborative consumption

and now we actually have over five thousand from all corners of the world. And as we dug

deeper, we actually realized that they could be organized into three clear systems. So

the first is called redistribution markets. So, to tell you the power of redistribution

markets, about four years ago I bought a bread making machine. Now, hands up here, it's predominantly

men, but maybe some of you know Nigella Lawson. Does anyone know? Oh, sweet, yes, Nigella

Bites. So, Nigella often appears on the TV screen looking like this. It's the middle

of the night, right? And she feels like making cakes and there she appears, fully made up

and she becomes somewhat of this domestic goddess, right? So, at the time, I was doing

a lot of travelling and I happened to be on a plane where Nigella declared that every

woman needed a bread making machine to fill up our homes with these warm and comforting

smells of freshly baked bread. And I thought, "Wow. This is all I needed to be a domestic

goddess?" So, I bought this bread making machine. Now, bread making machines are huge. I don't

know if you've seen them, but they actually occupy probably half of a New York kitchen.

And I used this bread making machine just once, but the weird thing was I actually felt

this strange sense of relief when I finally got rid of the thing. I had fallen in to the

common consumer trap of buying not what I needed, but I thought I needed or what I desired

or what I thought I should be. I was trying to keep up with the Jones's. Now, this problem

is huge. Consumerism has actually become all-consuming and I wanna give you a couple of steps to

support this point. Our houses are stuffed with ice cream makers, electronic gadgets,

foot spas, chocolate fondue fountains and my latest spotting, a strawberry slicer. I

mean, was life complete before the strawberry slicer came along? So, 80% of the stuff we

own, we use less than once a month. Just think about that. Eighty percent of the stuff you

own you lose-, use less than once a month. The second thing is there actually 53 thousand

personal self-storage units in the United States alone. That's seven times the amount

of Starbucks. Now, this is crazy. Like we don't have enough room in our houses for all

this stuff, so we start renting and paying for self-storage units? And when you think

about it, waste and storage are two end games of the same problem; we have too much stuff.

And this is where redistribution markets come in. You've got examples like Freecycle, where

people give stuff away, you've got examples like swap.com that Daniel mentioned, or Thread

Up, a kid's clothing exchange, where people exchanging things for equal value. And then,

of course, you've got reuse market places where people are actually making money. eBay

actually just estimated that the worth, the estimated worth of the secondary goods market

is 500 billion dollars. So, it's a huge, whitespace of opportunity. Redistribution markets also

have massive environmental benefits because reduce, reuse, recycle, repair, redistribute

what they are doing is stretching the lifecycle of a product. In other words, they reduce

the amount of stuff that end up in landfill. The second system is what we call collaborative

lifestyles. So, hands up, how many of you have heard of co-working or social lending

or peer to peer travel? Most of you, right. Ok. These are all examples of collaborative

lifestyles because it's not just stuff that can be shared; its spaces, parking spaces,

gardens, time, skills, assets that are intangible. And the reason why it's so easy to share this

stuff is because we've wired our world to share and we can share within our neighborhoods,

our offices, or our Facebook network. But to give you two examples of collaborative

lifestyles, I personally really like, the first is social lending. Now, the easiest

way to explain social lending is Roo has a hundred dollars to lend and I want to borrow

a hundred dollars and it matches us together, although it doesn't have to be a direct exchange.

And there's some huge marketplaces emerging like Zopur in the UK and Lending Club in the

US. Now, social lending increased by 800% last year. Now, I can't think of a traditional

bank that increased by 800%. Now, Lending Club did around 11 million dollars worth of

loans last year and their expected to become ten% the personal loans market. So, if I was

someone like Bank of America or Commonwealth Bank, I'd start getting worried about social

lending, that they were actually gonna start eating into our margin. But the thing that's

so fascinating about social lending is that for default rate is really low at 0.64%. Now,

credit cards are around 8% and the traditional bank is around 5%. Now, in our research, we

discovered that the reason why it is so low is that people said, "I trust my peer. I feel

more accountable to my peer than I do with any kind of big bank." This is really interesting.

The second is another example of a collaborative lifestyle, is called Landshare in the UK.

Now, Landshare, there's similar ones in the US called Sharing Backyards or sharedearth.com.

It's like a garden dating agency. So, what it does is it takes Mr. Jones with some spare

back garden space and Mr. Smith, a would-be grower, and it matches them and together,

they grow their own food. There's been over 55 thousand matches in the UK so far and it's

one of those ideas that's so simple, yet brilliant, you wonder why it's never been done before.

My dad is actually participating in Landshare and the funny thing is it's actually not about

the food, right? He has all these kids come round to his neighborhood and grow tomatoes

and the first time, in 18 years that he's lived in Hampshire Garden suburb, he actually

knows his neighbors names. So, I think it's really interesting that what's happening is

its part of this OTO, offline, online to offline trend, where people are forming connections

through technology that leads to very powerful community and human relationships in the real

world. The last system is what we call product service systems, ok? So, have any of you been

to London or Washington or Denver or Minneapolis or Paris, recently, you've seen a lot of people

cycling around on bikes. But they're not on their own bikes, they're on magic bikes that

are there when you want them and gone when you don't. Now, bike sharing is actually the

fastest growing form of transportation in the world and it's a great example of a product

service system, whereby you pay the benefit of a product, what it does for you, without

needing to own the product outright. Now, product service systems are absolutely ideal

when products have, what we call, high idling capacity. So, high idling capacity refers

to unused or untapped value, of a good. So a car that sits idle for 23 hours a day, the

evening dress that you wear once and that sits in your wardrobe has high idling capacity.

Now one of my favorite metaphors for this is who owns a power drill? Wow. A lot of men,

so around 80% of the room own a power drill. Actually, half of all households in the US

own a power drill. Now that power drill will be used between 12 to 13 minutes in its entire

lifetime. Now, when you think about it, it's really crazy. You're laughing, but it is crazy

because what you need is the hole, not actually the drill, and that's a great example of the

shift in mindset about a whole generation of people growing up saying, "Hang on a minute.

I want the benefit of that product and I can access that through different ways." Peer

to peer rentals, such as Zilok, is a great example. Now product service systems have

actually been around for years. Just think of libraries or laundress, but we believe

that we're entering a new era of supercharged appeal for two reasons. One, we now have the

technology to make sharing frictionless, convenient and fun. And two, our relationship to satisfy

what we want is far less material than any previous generation. I don't want CDs. I want