ZDNet spoke with Arun Sundararajan, a professor at NYU, at the Digital Business World Congress this week in Madrid about why crowd-based capitalism is rapidly outpacing industrial capitalism.
You can watch the interview above or read the transcript below.
Arun: For the last few years, I've been fascinated by platforms like Lyft, Uber and Airbnb that go under the umbrella of the sharing economy. But what they really are is early examples of success in a new way of organizing economic activity that I call crowd-based capitalism.
You can think of the 20th century company as being the epitome of industrial capitalism. Large companies employ people full-time, pay them salaries in exchange for their labor and talent, and provide goods and services to consumers.
Crowd-based capitalism changes the model. Instead, you have a platform that is aggregating demand. It provides some search and discovery and some trust. But the actual provision of goods and services whether it's the transportation through Lyft, the short-term accommodation through Airbnb, the venture capital through AngelList, the loan through Funding Circle, the rental car to get around from Turo, [it all] comes from a distributed and heterogeneous crowd.
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This used to be on the fringes five years ago, but today Didi Chuxing, which is the large crowd-based transportation platform in China, is valued at $70 billion and will soon be bigger than the world's largest auto companies. Airbnb is already accommodating more people every night than Marriott, Starwood, and Hilton put together.
We've seen crowd-based capitalism emerge from the fringes and start to be part of the mainstream and I expect that this will happen in the next 10 years in professional services, law, accounting, consulting, public relations and healthcare... not open heart surgery, but [things like] home care (I cut my finger cooking and I need a registered nurse to stitch it up) and potentially in some developing countries for solar energy.