Economics

Pimp Your Ride

Why own what you can rent? And why not rent out what you own?

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If you get in line early enough at 99 Cents Only on a day when it's celebrating a new store opening or some other special occasion, you can get a new Philips flat-screen TV for a buck and change. During the holiday season last year, Volkswagen sold three factory-fresh Jettas for just $5,995 each on Gilt.com, the Web's leading site for deeply discounted designer goods. In the age of Groupon, everything's always at least 50 percent off. It's never been easier to own stuff, and yet for millions of consumers, ownership is becoming as obsolete as newspapers. The costs are too high, the benefits too negligible.

Zipcar, the urban car-share pioneer, tripled membership numbers in 2009. But as fast as car-sharing is growing, it's failing to keep pace with bike-sharing, which is reportedly the fastest growing form of transportation in the world. New Yorkers renting out spare space in their homes are making upwards of $1,600 a month. These factoids come from the 2010 book What's Mine Is Yours, in which business consultant Rachel Botsman and serial entrepreneur Roo Rogers rebrand "renting" and "sharing" as "collaborative consumption" and position it as the cure for "outdated modes of hyper-consumption" that have left America with seven times more personal storage facilities than Starbucks outlets.

Just a few years ago, President George W. Bush was still touting "the ownership society" as the surest path to prosperity and personal autonomy. But that was before we could easily search our cellphones for the nearest power drills, sedans, and spacious Manhattan closets for rent. What we really want, sharing evangelists suggest, is access, not ownership. And when we can use the mobile Web to pinpoint sharable goods, the burdens of ownership—which include maintenance, storage, and eventual disposal—begin to outweigh the benefits in many cases.

Sensing a sea change in which people abandon their cars and turn their garages into DIY Holiday Inns, several venture capital firms, among them Google Ventures and Sequoia Capital, are pouring money into start-ups that specialize in what a May Fast Company article described as "underused asset utilization." Similarly, Web-based peer-to-peer rental platforms are inspiring a new wave of micro-entrepreneurship among people with underused assets of their own. At Relay Rides, a car-sharing service that helps individual car owners rent their vehicles to others, some owners are making upwards of $600 a month. At Airbnb.com, which allows homeowners to rent space to travelers, a guy who lives across the street from a busy park in San Francisco is renting access to his bathroom for $10 a day.

In What's Mine is Yours and The Mesh, a 2010 book by the online commerce pioneer Lisa Gansky, Web-facilitated renting is presented in utopian terms. It will use resources more effectively and thus produce less waste. It will lead to more durable products and more responsive companies that specialize in long-term customer relationships rather than one-time flings that end at the cash register. It will lead to greater social connectivity—as we develop deeper relationships with our neighbors' Jet­skis, we'll also develop deeper relationships with our neighbors. It will end our mindless, unsatisfying overconsumption.

In both books, the material life is generally presented in negative terms. We fill our lives with "stuff" rather than "the things we really care about." We suffer from "insatiable consumerism" and "mall-fueled conformity." 

But luckily for those of us who find great pleasure and meaning in what What's Mine is Yours dubs the "frenetic quest for personality identity through brands, products, and services," collaborative consumption may turn out to be a somewhat greater agent for hyperconsumption than its evangelists imagine. Think about San Francisco's bathroom entrepreneur. Before he started renting out his toilet, park visitors could either wait in line at the park's public toilets or perhaps pee on someone's garage door. Neither of these options has an explicit fee attached to it. The entrepreneur is creating new opportunities to consume services.

Meanwhile, as Ben Franklin might have said, a penny saved on car payments is a penny spent at Etsy. This is the real opportunity collaborative consumption presents: It gives consumers the opportunity to more efficiently allocate their resources and thus free up money to make additional purchases.

Much of the prosperity we enjoyed throughout the 20th century occurred because the cost of food dropped enormously. In 1874 the average family spent more than half its budget on food. Today food takes up only around 10 percent of the average family bill. When butter and eggs got cheaper, people could suddenly spend their bread elsewhere, and their increased buying power led to new products, new industries, and cheaper prices for everything as demand for all these new goods increased.

Yet as the price we pay for food was dropping, the price we pay for our cars and our houses was on the rise. "From 1950 to the mid-1980s, the amount allotted for housing and cars doubled from 22 percent to 44 percent of [the average American family's] budget," the urban studies maven Richard Florida writes in his 2010 book The Great Reset.

To a certain extent, the drop in food prices was catalyzed by people divesting themselves of ownership: They sold their farms and moved to the cities. Now collaborative consumption platforms such as Zipcar and Airbnb can reduce the cost of our cars and shelter by allowing us to rent when we might otherwise purchase or make the assets we do own less costly by renting them out to others.

While cars and shelter may qualify as utilitarian necessities, many of the categories suited to collaborative consumption are best described as luxuries. There isn't much reason to rent anything you use often or that costs less than a couple hundred dollars. But designer shoes that go for $1,000, high-end sporting equipment, a condo in the Dominican Republic?

Not many people can shell out $80,000 for a vintage Hermes crocodile handbag on eBay. But at Avelle.com, you can secure one for a month for $1,950. While this figure hardly conjures visions of responsible consumerism or even conspicuous thrift, it does represent a step forward in the democratization of luxury. Similarly, platforms like Airbnb are an excellent inducement to live beyond one's means. If you're in the market for a new apartment and you really love the one with an extra big living room and a view of the ocean even though it's about $500 a month out of your price range, well, those features will also make it more attractive to potential lodgers.

The emergence of new rental markets is also likely to exert a downward pressure on existing products and services. If the Web has taught us anything, it's that consumers are quite generous in what they will tolerate if the price is right. The thousands of amateur hoteliers now offering couches and air mattresses in New York City and Paris for as low as $20 a night have the potential to undermine the prices that hotels charge in the same way that people who create content for free have changed the business model of Hollywood and the news industry. A space on the floor in someone's living room flop house may not have all the amenities of Motel 6, but if it's clean enough and safe enough and reliable enough to attract consumers on an ongoing basis, it will create competition for legacy hoteliers that will in turn create new waves of innovation and price reduction.

How is the Four Seasons going to compete with the ever-enterprising Kardashian clan when they start offering package deals—a night in their pool cabana, plus access to their jewelry and SUV collections—in an effort to generate revenue after Hollywood collapses entirely? Conscientious, environmentally correct consumption never sounded so frivolous, or so fun. 

Contributing Editor Greg Beato writes from San Francisco.

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  1. You have to own shit to rent the shit to other people.

    1. D’oh!

    2. Owning shit is just a conservative meme.

      1. Seriously, do those conservative and libertarian and libertine assholes REALLY want granny to starve? No? Then collective property is the only solution!

        1. Because the intentions in your heart are all that matter.

        2. “Then collective property is the only solution!”

          Only solution? Really? Have you considered that families, friends, private retirement plans and charities just might be better suited to take care of “granny” just a bit better than a radical restructuring of property ownership?

          But philosophy aside, how about we compare a real-world example of collective ownership, specifically, of food production. Let us look at the industrious Pilgrims who founded Plymouth plantation in 1620.

          I’ll let the video explain.
          http://www.youtube.com/watch?v=66QdQErc8JQ

          Ok, that’s one example…technology was pretty low, its a small sample size. Surely by the 20th century, we humans knew a lot more about farming.

          Enter the collectivization of Stalin’s farms in the Soviet Union. The result? The starvation deaths of millions (no one knows the exact number) in 1932-33.

          1. Hey Kev, Chill a little bit. My guess is that RPA might be a little sarcastic.

          2. Don’t forget the massive starvation during Mao’s Cultural Revolution a generation later.

    3. You have to own shit to rent the shit to other people.

      Meanwhile the government continues to put up road blocks to renting property and continues to restrict the use of property rented or owned.

      1. Dude! I like to “share” other people’s property with my buds, but the government continues to put up road blocks!

  2. Alt-text contest:

    “I see your schwartz is as big as mine!”

    1. Lord Vader laments the loss of lil’ Annie on Mustafar.

    2. “So you have appeared in comic form more than I have!”

    3. How not to make fanfic tentacle rape porn.

    4. “So, you girls like bacon?”

    5. Have you seen the movie, “Catholic HS Girls … In Trouble!”

  3. the burdens of ownership?which include maintenance, storage, and eventual disposal?begin to outweigh the benefits in many cases.

    Somebody’s still got to maintain, store, and dispose of that shit, right? So you’re paying a premium for items you use infrequently in order to offload the hassles of ownership.

    How is this different from, I dunno, every other rental deal in history?

    1. Exactly. This is the same bullshit article Reason have a month or two ago…still bullshit.

      1. should read ….had a month…

      2. Pretty sure Beato’s got his tongue firmly implanted in his cheek.

        1. it’s not, ask me how I know

    2. Exactly, anyone that thinks you aren’t paying for storage and maintenance with your rental fee is a moron.

      1. The point, moron, is that that cost is distributed between the many users of the product and is therefore a smaller cost to you than owning the product where you are the sole individual covering that cost.

        1. that is until some idiot renter blows up your lawn mower or refuses to return it or sues you because he didn’t know how to operate it and cut off his toes. the paper work would have to be very complete and your insurance up to date.

    3. What about specialization? This way a smaller number of people who have a comparative advantage can keep track of shit. Why should every yuppie have to keep track of a car, riding mower, vacation home, etc.?

    4. next up, a time-share sofa…

  4. “How is the Four Seasons going to compete”

    I believe the word you’re looking for is rent-seeking and no it isn’t the same thing you’re talking about in your article.

    1. I’ve never stayed at a Four Seasons. I’ve stayed at the W, and their downmarket brand Aloft, and I can tell you how they’ll compete: luxury and service. You want to sleep on an air mattress in somebody’s living room, that’s fine. I’m too old and busted for that shit.

    1. In Russia SHIT rents YOU!

  5. “a guy who lives across the street from a busy park in San Francisco is renting access to his bathroom for $10 a day.”

    I’ll bet this guy’s in a rent-controlled apartment.
    One look at those crowds tells you it would take a $100 sanitation charge to let ’em in.

  6. Another Web 2.0 hype.

    Its no different from renting has always been. The only difference is that the intertubes may make a marginal difference in the volume of rental deals.

    1. I don’t see an IPO

  7. I like the concept in theory. In practice, I find that most people do not care for their stuff in a way I find acceptable. For example, most people:
    1. Wax their cars maybe once a year, if they wax them at all
    2. Fill their cars up with garbage
    3. Slam the everloving shit out of car doors
    4. Get fingerprints on as many of the glass parts in a car as they can
    etc

    1. Whatcha drive?

      1. 2001 A6 4.2 with a manual tranny swap. It’s very clean for it’s age though, like all my cars have been. It’s more the principle of the matter – people should take care of their things. The way most people treat their stuff to me feels like they are actively trying to destroy it.

        1. Some of us are just lazy. I feel proud changing my truck’s oil at ~4500 miles.

          1. And that’s totally fine. I don’t judge people for how they take care of their own vehicles, as they own them. I do judge them for getting mine dirty when I am obviously super anal about it. Also, I would not want to share a car with you. Just sayin.

            1. “obviously super anal about it”

              Naah. Not at all. You seem like a perfectly normal uptight obsessive.

            2. No offense taken. But I agree with Francisco downthread.

        2. My truck looks like a piece of shit due to neglect, and it’s only three years old.

          My motorcycle looks cherry and has enough wax on it to start a fucking candle factory.

          I love my bike.

          1. You should start a candle factory. I’m just saying.

          2. I love my truck and it’s ALWAYS dirty, I have NEVER waxed it, not only fingerprints on the glass, but dog nose-prints. The exterior is scratched from continuously driving down tree-lined two-tracks while hunting. I change the oil every 6k miles and when it dies, I’ll buy a new truck that I love.

            Made to be used, not looked at.

          3. What does a fucking candle look like, and where do they make them? I’ve only seen regular candles.

            1. I believe it’s the Amish equivalent of a fleshlight.

              1. ahhhh, so that’s what those ear candles are all about, just kinkier…

    2. You should see how they treat rentals.

  8. It was Meister Eckhart who said something to the effect, “the more you have the less you own.”

    1. “the more you have the less you own.”
      As Einstein might have said: “What!?”

      1. …and Vader.

        1. … and those schoolgirls. Mmm schoolgirls.

  9. Access ain’t free, you rent it.

    So instead of an ownership society, we get a rent-seeking society.

    No thank you.

    Let’s be honest here, just because Bush said “ownership society”, what he really meant was “mortgageship society”. Which is borrowing til kingdom come. Which is access to credit. Which is rent-seeking.

    1. no, renters are two steps above vagabonds…
      if you own something and don’t have enough sense to take care of it soon you won’t own it…

  10. I’ve come full circle on this. I’m now selective about what I decide to accumulate (a man CAN have too much shit), I “own” as much of it as I can rather than rent, always pick the highest quality I can afford, and make sure I can afford to take care of it ongoing (time, money, capability as applicable).

    And, no, you can’t borrow my really, really, nice fucking tools. Now, for a fee or barter….

    1. There are but two set in stone rules of life: never loan out your chainsaw or your wife for surely neither will be returned in the same shape it was before it went out the door.

      1. wow that’s true. I used to have a nice chainsaw…

        1. so what was your experience with wife loaning…

  11. It is funny how hippies get excited about “sharing” when the present models are really just plain old renting.

    As is the case with almost all things, renting is fine as long as it isn’t compulsory.

    Renting is great for some things, other things it doesn’t work at all. For example, it makes sense to rent a tuxedo to be worn once a year, but no sense at all to rent shoes that one wears day-to-day.

    Restaurants, including chain restaurants which collectivists abhor, are perhaps the prime example of rental. Effectively, a patron rents the use of an oven, a stove, pots and pans as well as the time a cook takes to prepare the meal.

    I personally hate cooking for myself, so I am happy to “rent” the use of a restaurant, similarly, I don’t mind paying more for the privacy of a hotel room as opposed to renting or even sharing a house or apartment with another (unless the owner is exceptionally sexy…and a nudist). But that’s my choice, just as it should be the choice of the owner to rent their stuff or space.

    1. It is just plain old renting…but technology has made it more efficient. Certain items make a lot of sense. I used Zipcar for years here in Seattle. But their model only works in areas where the user density is high enough to keep the car locations close by.

      1. which is why i cant get on board here in the wv panhandle.

        1. I take it bike sharing isn’t poised to take off anytime soon either?

          1. bike sharing? keep the baby-wipes handy, for like bowling shoes, do you really know where that seat has been?

  12. Most of what you call property tax, I call rent. We all talk about property rights but in the end you’ll have a hard time convincing the government to let you keep your shit if you don’t pay the rent.

    1. but at least when I sell my home I get something but when I leave a rental I get nothing.

  13. Restaurants, including chain restaurants which collectivists abhor, are perhaps the prime example of rental. Effectively, a patron rents the use of an oven, a stove, pots and pans as well as the time a cook takes to prepare the meal.
    http://www.aimengcrystal.com

  14. Looks like a pretty cool ride to me dude. Wow.

    http://www.anon-web-toolz.at.tc

    1. I see anonymity bot didn’t RTFA.

  15. How is the Four Seasons going to compete with the ever-enterprising Kardashian clan when they start offering package deals?a night in their pool cabana, plus access to their jewelry and SUV collections?in an effort to generate revenue after Hollywood collapses entirely?

    My guess is they’ll get legislatures to outlaw the competition.

  16. So, which one of the girls is for rent, and how much?

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  18. They should start putting zipcar spaces in land use codes. That is put requirements that after a certain size of development a zipcar space is required, or just declare maximums allowed in parking lots and let the landowners sell some spots. Maybe this could be done with state laws to mandate the towns to do as such.

    Of course such laws wouldn’t be specific to zipcar but for any car sharing company in general

  19. They should start putting zipcar spaces in land use codes. That is put requirements that after a certain size of development a zipcar space is required, or just declare maximums allowed in parking lots and let the landowners sell some spots. Maybe this could be done with state laws to mandate the towns to do as such.

  20. To a certain extent, the drop in food prices was catalyzed by people divesting themselves of ownership

  21. Pretty interesting business model, but I would prefer to pimp my own car, rather than rent it

  22. sharing is growing, it’s failing to keep pace with bike-sharing

  23. George W. Bush was still touting “the ownership society” as the surest path to

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