Jul 6, 2015 · 13 minutes

 We need to stop talking about “the sharing economy.”

Yes it was a remarkably powerful, captivating idea. The end of ownership and the beginning of atomization of all of the world’s things -- your free time, your house when no one is in it, your car when it’s parked idly in your garage, that ladder you bought and only used once. The hope was very millennial: You could have a minimalist approach to living without sacrificing cars, houses, and ladders, and get a constant turn-on-the-tap ability to make some extra cash should you quit your soulless office job.

For the rest of us who aren’t quite so millennial, it was a pay-as-you-go-way to feel more affluent than we are. One black car ride at a time versus a service and a driver. One weekend in a house on the South of France, versus owning a vacation home.

There have been heady estimates about what all this does to the broader economy as well. A whole new era of jobs and wealth and money being minted from things that already existed, they were just lying idle. Viva the marketplace!

But here’s the thing, when most people talk about “the sharing economy” and “companies like Uber” they really don’t mean that. What they mean is just Uber and Airbnb. And really just Uber.  

Without Uber, the sharing economy would be an economy like Greece is an economy. You only have to look at the numbers to realize just how much the rest of the so-called “sharing economy” is left-- comparatively-- in the dust.

Sure, Airbnb is impressive. It’s a decacorn too, and one of the highest valued private companies in Silicon Valley history. It’s also one of two companies that makes up some 90 percent-plus of the value of Y Combinator’s entire 10 year portfolio. But the fact that Airbnb has accomplished so much and is still so much smaller than Uber makes my point. Uber has raised $5.5 billion in funding, while Airbnb has raised $2.3 billion to date (Airbnb just upped that dramatically with a $1.5 billion round closed June 28, but Uber is said to be in process of doing the same, so expect the gap to widen again). Uber is valued north of $40 billion while the latest rumors of Airbnb are in the $24 billion range. But again, a new funding round should push Uber’s valuation even higher. Some have speculated as high as $50 billion. And while Airbnb customers pay a higher price to use its service, no one rents multiple Airbnb’s a day. In terms of frequency of engagement there’s no contest between the two.

And that’s before we even get to lobbying heft: Uber is spending tens of thousands of dollars buying individual state legislatures and essentially writing its own laws. We detailed how that went down in Nevada, here. Reminder: Uber employed more lobbyists than the state’s entire gaming industry.

Airbnb is one of the strongest companies to emerge from this wave and is life changing for many people. Still, it’s not hard to see a world where the two companies are public and CEO Brian Chesky keeps having to explain that Airbnb is just a very different company than Uber over and over again. (Sound familiar, Dick Costolo?)

And Airbnb is really the only other company anyone ever means when they talk about the heft, the impact, the cash, the IPO potential, the disruption, the jobs created, the convenience delivered, and the laws broken by the sharing economy. Uber might have a “rival” in Lyft, and unlike Chris Sacca I think there’s ample room for another multi $1 billion company in ridesharing. But even there it’s hard to imagine Lyft doing so well were it not for Uber: Travis Kalanick’s horrific tactics have made everyone want a viable alternative. And the billionaires who couldn’t get into Uber want to put their cash somewhere. There would still be a Lyft without Uber, but it wouldn’t be nearly as highly valued or rich with venture capital. And, sadly, it’ll never be close to as big.

When reporters and investors say “companies like Uber” they need to acknowledge: There are no other companies like Uber.

From a human perspective, that has its plusses. Given Uber’s disturbing brass-knuckled destroy-anyone-who-gets-in-our-path mentality the world certainly doesn’t need any more giant sharing economy companies like that. Because it’s so dominant, Uber’s “values” have set the tone for the entire mini-industry. We saw the same thing with social networking. Facebook, for instance, pushed heavily towards a social media world that runs roughshod over privacy and has an emphasis on real names, not anonymity.

It’s a little sad when you think back to that original dream of the sharing economy. The companies that really typify its true sharing ethos are mostly getting left in the mud, likely to combine with one another, another industry giant, or live life as a public company hovering in the $1 billion market cap range... eventually. Airbnb may be the last real forbearer of the original chummy ethos, and even Airbnb’s grass roots efforts are starting to turn corporate and cynical.

Mostly as Uber has sucked the vast majority of the money, attention, and hype out of the room, it’s distorted all those original ideals in the process. Uber CEO Travis Kalanick has even said the drivers are expensive and inefficient, looking forward to a time that all Ubers are self-driving cars. So much for all those jobs and shared time flowing back into the economy. Turned out it was all about the disruption, with none of the happy human-empowered dream around the disruption.

And until the time the robot drivers take over? Well, the lie that being an Uber driver is a great way to make a living has been utterly exposed.

It’s a little sad from a venture perspective too. Uber’s utter dominance across nearly every vector represents somewhat of a failure for the rest of the crew-- at least by comparison. Sure, several of these companies are still raising money and growing. And as a resident of San Francisco I regularly use TaskRabbit, Lyft, and Postmates. I have friends who use Handy to clean their houses...or do they use HomeJoy? (Doesn’t matter. Neither are Uber-sized, and the two are reportedly merging to get more heft.) After I gave birth to my daughter, I Zaarly-ed over some cupcakes to the staff at CPMC, and my prenatal yoga instructor. I love the sound of Shuddle, even though I’ve never used it. I don’t use GetAround (no one wants access to my toddler-mobile) but I see a few GetAround spaces still in San Francisco. Usually they annoy me because they are empty, and I’d like to park there. Several of these may still become sizable companies. But many more may go the way of Handy and Homejoy… or even Zaarly with its pivots and sad slide into “Wait-- what does Zaarly do again?”  

But my guess is if you called a random name in the phone book and asked them which sharing economy company they use, the answer would be Uber and maybe one other.

But let’s do better than guess. CB Insights recently published a study that puts this reality in stark contrast: Uber has raised more funding than all other US on-demand mobile services combined. Without Airbnb it wouldn’t even be that  close. In total Uber has raised $5.5 billion ($5.9 billion according to Crunchbase)— a whopping 28 percent more than all other US on-demand companies combined, as of the writing of the report. Researchers even tried to tip the scales against Uber, including companies like OpenTable that already existed before the sharing economy got a trendy name.

Despite all the hype of the sharing economy changing the way we live and work -- delivering on those early dot com promises to have everything brought to us at any moment for a reasonable price -- fewer than 20 private companies have even raised more than $50 million.

The dramatic power law is shown in this chart:


That graph above is slightly misleading because it doesn’t include Airbnb’s $1.5 billion private equity round closed three days after the survey was completed. That would cause Airbnb to leapfrog over Lyft and narrow the gap slightly. But Uber, too, is in talks to raise another $1 billion. It’s clear, those three are pulling away from the pack-- each with huge revenues and profits in sight, yes, but one much bigger than the other two.

This flies in the face of how a lot of people really want to think about the sharing economy. VentureBeat rah-rah’d that there were a stunning 17 unicorns in the sharing economy space back on June 4. (Oddly enough they actually said there were 17 billion dollar companies including 10 unicorns. For some reason, they define unicorns as only private companies. Most VCs I know would argue the opposite: That a company is only really a unicorn if that valuation ever makes its way off paper.)

But dig a little deeper:

  • Venturebeat’s writer extended the category from just “sharing” to “collaborative” to include odd fits like eBay, Etsy, and WeWork. At some point, you dilute the definition of the category so much that the analysis says nothing. The Internet in and of itself enables collaboration. YouTube could be in there under that definition. While eBay and Etsy are at least peer-to-peer marketplaces, WeWork is a real estate company. That’s like AOL calling itself a leading social network because it owns AIM.

  • Chegg is on the list too-- and while an early sharing economy that’s actually public and has a real, tradable valuation, its future potential is also pretty capped. We know what Chegg is. And by the way: It’s not worth $1 billion. As of now it’s hovering under $700 million. Chegg actually makes my argument more than it makes VentureBeat’s argument.

  • Many of the others listed that do fit the bill --like Instacart-- are new to the unicorn club, and still have a lot to prove. I’m not saying it’s easy to become a unicorn even now. CB Insights puts the odds at some 1%. But it’s certainly easier coming off a year where new unicorns were birthed every 9 days.

  • Many of these are international, and a lot of those international valuations are -- you guessed it-- a direct extrapolation of Uber’s dominance in the Western Hemisphere and aggressive plans to dominate the world. Without Uber, do we really think that Alibaba and Tencent would own car services in China? Uber has not only bought the most US legislators and raised the most venture cash, it’s spawning the most global copycats and its valuation is inflating their valuations.

But even if there were still a dozen companies at low unicorn levels, they all feel like rounding errors when one outlier is valued north of $40 billion. (And the runner up, Airbnb is worth half that lofty sum.) Put another way: Uber has not only raised more cash than the sharing economy combined, it is worth more than the rest of the sharing economy combined.

This matters greatly because the venture world is all about the home runs. Less than 5 percent of the deals make up more than 95 percent of the entire industry’s returns.

Uber is finally at the point that Facebook reached around the time of that $15 billion Microsoft investment. It’s the coming of age of a mini-industry where there was so much hope, investment, and hype. All of that buzz was ultimately warranted, because the sharing economy spawned a truly ginormous company. One of the biggest in Valley history, despite Uber’s constant attempts to shoot itself in the foot. But that single company pretty much became shorthand for the mini-industry in the process.

Consider the comparison: Friendster, Tribe, LinkedIn, Spoke, Plaxo— there was a scrum of early social networking companies. Then came MySpace and Facebook. And then another wave of Twitter and the social networks for X. Dogster. Catster. Eons. TBD. There were better UI spins on the same things, like FriendFeed. Facebook absolutely dominated everything in cash, valuation, media attention, and users.

Sure, Twitter and LinkedIn also became extremely valuable social networks. But they did so by staking out a very orthogonal relationship to Facebook— LinkedIn is all about professional networks and has a freemium business model, while Twitter is about 140 character real time conversations. Even still: Those companies at times suffer by being in the social media orbit and not being Facebook. As I wrote weeks ago, Dick Costolo’s biggest failing as Twitter’s CEO was trying to build that company in an era of Facebook. Most of the banal solutions for “fixing” Twitter entail making it a lot more like Facebook.

And while Facebook isn’t nearly as aggressive as Uber, the company has an iron-grip on its pole position in the industry, and it will do nearly anything to maintain it. It’s spent north of $22 billion on acquisitions of dominant messaging and mobile photo apps, determined that no one will chip away at Facebook’s core competency that built its empire to begin with. Not satisfied with Facebook on mobile, Instagram, and WhatsApp, it invested in building a brand new messenger team from scratch to spin out a new messenger client for mobile. And surprisingly, that product already has hundreds of millions of users. Facebook is using its dominance in social from an earlier era to absolutely choke off the oxygen in the mobile messaging world by having three of the top four most dominant platforms all in one sprawling suburban campus. Snapchat refused to sell, and it’s the lone non-Facebook-owned holdout in the top four.

Facebook is even taking a (virtual) flier on virtual reality should that be the next thing. It played catch up on mobile-- and that cost more than 10% of its market cap.

It becomes a virtuous cycle when a company so dominates its micro-industry. Facebook can do all of this only because it so utterly dominated social. For one thing: It has the financial wherewithal, for another it’s perceived as joining the winning team to sell to or go work at Facebook.

Nearly 15 years after social networking began, Facebook’s market cap is $244 billion. LinkedIn’s is $26 billion, and Twitter’s is $23 billion. And everyone else in social— a category that once had thousands and thousands of entrants— is pretty much done.

And at least in terms of valuations, the polarity in the sharing economy has happened even quicker and more dramatically. The sharing economy is pretty much Uber. And that means it’s very different that the happy ideals with which it began.

There’s one interesting twist in the comparison: While Facebook bolted on dozens of acquihires on the way up and became aggressive with mega-acquisitions around the time of its IPO, Uber has stayed remarkably un-acquisitive. Its done just one deal, for mapping technology. That means the spoils will be comparatively more narrowly spread once this thing does finally go public. Ironically for the dominant company of the “sharing economy,” Uber has also tightly controlled the secondary market around its shares, refusing to allow free-for-all or even coordinated secondary exchanges like Facebook and Twitter did.

When it comes to Uber, you were either in early, you pay an ungodly sum to get in now, you’re in Lyft, or you’re out.