The sharing economy is quickly becoming Canada’s new normal.
After taking in $15 billion in revenue in 2015, the industry — defined as peer-to-peer sharing of goods and services — is on pace to see that number balloon to $335 billion by 2025. Why? Because technology has reduced transaction costs, making sharing assets cheaper and easier than ever, and therefore possible on a much larger scale. It’s no longer necessary to own a lawnmower, a car, or a holiday home; you can now access them for the time needed and with minimal financial commitment.
“The big change is that you can access the world in real time and share resources you no longer have to own,” said Chris Schafer, public policy manager at Uber Canada, during a recent DMZ panel discussion on the sharing economy. “Access trumps ownership,” said Brian Kobus, director of OMERS Ventures, during the discussion.
Led by companies like Airbnb (founded in 2008) and Uber (founded in 2009), the first wave of peer-to-peer rental firms were founded during and in the aftermath of the global financial crisis. Savvy entrepreneurs turned misfortune into an opportunity, developing new business models for existing services. Consumers quickly embraced this new way of doing business, enjoying new levels access at low price points.
But at the regulatory level, sharing services meet constant barriers around insurance, liability and legality. Many fall afoul of industry-specific regulations. Landlords clamp down on tenants who sublet in violation of their terms of lease. Tax collectors ask whether all income from sharing transactions are being declared. Taxi companies declare that regulations and fees aren’t applied equally.
“Politicians and government have to be much more comfortable with people sharing,” said Tim Hudak, MPP for Niagara West-Glanbrook and former leader of the Ontario PC party, at the DMZ panel. Hudak is in strong support of the collaborative consumption model — so much so that he introduced a private members bill called Opportunity in the Sharing Economy. The bill argues that “greater competition, innovation, entrepreneurship, and consumer choice will be of significant net benefit to Ontario residents and businesses.”
The Canadian government is doing its own research into positive and negative implications of services like ride sharing and apartments-as-vacation-rentals. According to the Toronto Star, deputy ministers commissioned a study of the sharing economy, looking into its potential long-term effects and how regulation will need to react. The February 2015 report, according to the Toronto Star, “cautioned against attempting to overregulate the industry — both because it could stifle the rapid innovation in the field, and because overburdensome regulations could push the sharing economy ‘fully outside the government’s control.'”
It’s too early to tell whether laws will bend or change to allow sharing services like Uber, Airbnb and new players like the DMZ’s own Rover Parking and MealSurfers to operate without issue. For now, entrepreneurs need to satisfy the concerns of governments and skeptical members of the public who don’t immediately see how technology can transform business models for the better. Startups may have to become more comfortable with regulation and work with, not against, governments and regulatory bodies if they want to remain in business.
As the sharing economy grows, those regulatory bodies may already be getting more comfortable. “We launched and the reaction from the government was very much to back away. It was like a knee-jerk reaction where they said ‘No, you can’t do that without understanding the details of what we want to accomplish,’” said Grant Brigden, founder of Rover, during the panel. “I’ll say now that it’s changed. It’s very much a lean-in type of scenario.”
The DMZ is a leading business incubator for tech startups in Canada. They help startups build great businesses by connecting them with customers, capital, experts and a community of entrepreneurs and influencers.
The DMZ is a partner in StartUp Here Toronto.