It wasn't too long ago that the American Dream meant having a spouse, kids, job, and — maybe most importantly — a home to call your own. But what happens when younger, more itinerant Americans reject the idea of being tied down, preferring to go where work and life take them? What happens when they take that "rent, don't buy" philosophy and apply it to all aspects of their lives? Here you have the abiding theory of the rental or "sharing economy."
Millenials are choosing to postpone or forego the trappings of classic American ownership. Technology has sped up the process, too, offering goods and services to be used and returned as needed, all set in motion with just a few taps on a smartphone. Now, everything from rooms to cars to power tools and designer dresses are available, for a fee, on a time-limited basis.
It's not just young people, either. People of all ages are using more services like Rent the Runway, Zipcar and Airbnb to create value in dormant property, and to have use of valuable property at a fraction of its retail value.
"The most emblematic of the trend (...) [is] renting tools," Koehn said. "The average power tool in America is used for less than a half-an-hour in its lifetime. So, [renting] a power tool (...) makes a lot of sense. There are lots and lots of places now, including dedicated online companies, that will allow you to rent power tools."
The web has sped up the share economy in previously unimaginable ways. Now, services like Airbnb let users rent unused rooms in their houses to people in need of a temporary living space. Zipcar parks cars at central places in urban areas and lets drivers take the cars for a spin, if and when they need to. Business owners have taken notice.
"On the supply side there's both technology, entrepreneurial activity, and viable business models (...) that make it effective, make it interesting, make it attractive for businesses to get in to the renting and sharing game," said Koehn.
The seeds for the sharing economy were planted a long time ago, Koehn noted. "There have always been libraries. There have even been music-lending libraries. So, I think the concept of renting something, or borrowing it for a while for a fee is not new. What is new is this idea that (...) people are interested in owning briefly or holding briefly all kinds of experiences in (...) goods. (...) It's part of a continuum of technology and consumer behavior morphing and changing in a way that has lots of roots in the past."
>> To hear the entire conversation about the new sharing economy, click the audio link above. For more on this, read Claire Cain Miller's piece in The New York Times, "Is Owning Overrated? The Rental Economy Rises."