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Israeli Startups and the Sharing Economy

Getting people to work together on-line for their mutual benefit may be as big as the industrial revolution -- and Israel has a major role to play
Stay overnight in a beer barrel? An Airbnb option (Courtesy Airbnb)
Stay overnight in a beer barrel? An Airbnb option (Courtesy Airbnb)


It’s already a while now, that Sharing Economy is considered as a huge thing. Some even say that it is as dramatic as the Industrial Revolution. Many companies have high hopes regarding the growth of the Sharing Economy and lately many new promising Israeli start-up companies also decided to head this way.

Since I consider myself as someone that takes an active part in this “Sharing Economy World” I decided to pause for a minute and try to understand:
1. What do these two words mean while combined together?
2. What are the major forces that are driving this phenomena?
3. Who are the promising Israeli start-ups in this field?

After doing some research regarding the Sharing Economy, it turns out that there are several definitions and uses of this term. While there are some differences in these definitions, they are all referring to the fact that in the Sharing Economy the power is shifting from main centralized institutions to individuals and small communities.

Among those definitions, the two definitions that were the best in my view are by Rachel Botsman (the author of the influential book “What’s Mine is Yours: How Collaborative Consumption Is Changing The Way We Live”) and by the Macmillan Dictionary.

Botsman’s definition is:
“An economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary benefits”.
Rachel Botsman also referred to a common confusion and misuse of this term with the following “family related” terms:  “Peer Economy,” “Collaborative Economy” and “Collaborative Consumption”.

In the Macmillan dictionary it is defined as:
“An economic system based on the idea that different people or organizations share the creation and use of resources”

So now, after agreeing on the definition of “Sharing Economy” we can move ahead  to analyzing what are the powers that are driving it and if it is indeed such a big life changing revolution.

I decided to do this by analyzing examples of promising Israeli websites in this area, comparing them to leading worldwide sites, and deriving the conclusions along the way.

I believe one can say without much doubt that amongst numerous sites in this field, the most known site, the one that really raised the Sharing Economy issue to the headlines, is Airbnb. This houses & flats rental site that started as a small initiative by 2 students from San Francisco to rent their flat and generate a small extra income, was the first to reach high volumes and to excite the imagination of thousands of entrepreneurs around the world: how can they become “the Airbnb for…”

So what did Airbnb have that no other site before had?
The simple answer might be: nothing: people were offering apartments for short time rent periods since ever and there were quite a few sites in this field before Airbnb showed up.
This is of course a wrong answer, a more suitable answer would be: everything!

They recognized the need; they had the concept, the technology, and the vision how to leverage this opportunity. And these are the basic powers that are driving this economic model. Let us get into the details of every component.


The Need:
The foundation for every initiative, especially when there are 2 sides: the client and the seller.

And the need was there for Airbnb: on one side travelers looking for a decent cheaper accommodation place and on the other side home/flat owners struggling to pay their mortgage and looking for additional income source.
And the need was also identified and leveraged by Israeli Start-up:
OneHourTranslation – A Marketplace for professional translations.
Since the “World is Flat” (as coined by Thomas Friedman) more and more people are doing business with strangers that live in a remote place and many times even speak a different language. OneHourTranslation founders recognized this increasing need for translation services and offered a new solution to it by enabling many language experts to make an extra salary channels and sometimes even a full salary through their marketplace.

The Concept:
This one is a key factor!

The idea that strangers will not only trust each other enough to use and keep the other side assets but that these stranger will actually want to enjoy each other company and will look for this act of socializing.
This is true for LocalYoo which is a marketplace that enables travelers to connect with local experts and for EatWith that let you meet new people while dining at their homes. Both companies realized that lately many seek to experience a place from a local perspective and create real connections with local people around the world.

The Technology:
Oh, the technology.

People are trading with others pretty much from day one. The internet and mobile devices spread and the technologies that generated this spread are the ones that enabled the leap forward for Sharing Economy, turning local initiatives into worldwide businesses.
The technology enabled people from one side of the world exposure to offering by people from the other side of it. Technology reduced transaction costs, made sharing assets cheaper, safer and easier than ever and therefore possible on a much larger scale for more and more people.
A great example for this is among the israeli companies is:
GetTaxi that offer a reliable, user-friendly way to travel around based on a relatively new, yet simple technology that wasn’t available a few years ago. This technology together with a smart concept generated a first tier impressive application.

The Vision:
The fuel of the process.

There are many uncertainties in this emerging world, So many, that only a clear practical vision can walk you through them: A vision of generating a new way of commerce that will change not only the way people consume things but also the way they behave and think. A vision about a future world in which the power is shifting from the big enterprises to us, the real people.  A world where each individual can utilize his skills and gain control of his career and destiny.
A great example of a company that managed to implement such vision is fiverr which is the world’s largest marketplace for services, starting at $5.
Their vision that was previously considered imaginary recently became a reality: Tens of thousands of people all over the world are selling niche skills and products through their website and are making nice income from that.
And it’s a must to mention GetTaxi and their ambitious vision to compete the with multibillion mighty Uber.

The Opportunity:
Now is the right time.

Is it just me or you also share the feeling that making a decent living gets harder every year?
Did you know that some researchers think that by 2020 30-50% of Americans will work as freelancers?
I encountered many such questions lately and it seems to me that all the factors have just matured and aligned together to declare the following years as the Sharing Economy years. Many individuals and business already recognized that now is the time to utilize your skills and assets and go forward with your vision and the Israeli companies I mentioned are just a handpicked choice I made and there are many others that are on the way to becoming leaders in this world.

To summarize,  I think I can proudly say that Israel is indeed becoming an important force in this worldwide process and we can expect more and more Israeli start-ups to enter this world. A nice perspective how to think about Sharing Economy may be the beginning of online shopping: 10-15 years ago people were afraid to purchase things online. It wasn’t obvious as today that buying online from sites like Amazon or eBay would become common practice. But with time, people made more and more successful transactions and gained confidence. The same applies for Sharing Economy: after one good experience with companies like, fiverr, EatWith, LocalYoo and many others, you realize that this model is feasible and can be used and duplicated to many other aspects of life.

About the Author
Giora is an experienced entrepreneur in the Israeli Hi-Tech industry. Currently serving as the CEO of Localyoo, which is a new online marketplace connecting tourists with local experts, enabling travelers to book tips, itineraries and experiences from a variety of qualified locals. Giora is also a Tel-Avivian by heart and soul ;-)
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