Young Pros: Is the Sharing Economy Messing With Your Wealth?

Sharing economy collaborative peer-to-peer mesh consumptionIn his piece last summer for Time magazine entitled “How the Sharing Economy Is Hurting Millennials,” Reid Cramer concludes with a rather grim statement:

“It is our collective responsibility to make sure the emerging ‘share economy’ doesn’t leave Millennials completely devoid of wealth.”

Cramer isn’t anti-sharing; in fact, he’s impressed by Millennials’ ability to reap the collective benefits from expensive, individually owned assets such as cars (Uber) and homes (Airbnb).

What concerns Cramer is that, in this new world, fewer young people own such assets.

He points to the fact that “Millennials are lagging behind previous cohorts in their rate of homeownership” as an indicator of “growing generational inequality.” According to Cramer, this lack of assets is shunting Generation Y into a spiral of downward mobility.

As a Millennial, I appreciate Cramer’s concern for my financial security, but I find it a bit misguided, especially in an economic environment that is still feeling the effects of the Great Recession. In the current context, Gen Y isn’t lagging in terms of homeownership; we’re buying more homes than any other generational demographic, and this is a growing trend. The difference is that we buy, sell, and repeat rather than hold onto property for decades. This short-term investment philosophy is a sign of the post-Great Recession Millennial worldview — the desire to be “asset light.”

Just as we don’t want to be shackled to the same job until retirement, we don’t want to be weighed down by the things we own. Whereas older generations equate success with stability and security, many members of Gen Y are often more interested in pursuing meaningful work with flexible hours and social connectivity. This pursuit requires a high degree of mobility, and the asset-light lifestyle provides the freedom to pick up and move — to a new job, home, or city — whenever opportunity knocks.

For many Millennials, an asset isn’t an asset if it impedes mobility.

Hence the explosive growth of the sharing economy: Why own what you can rent? And why own something that can’t be rented out?

This doesn’t mean Millennials aren’t planning for their futures. On the contrary, new tech-enabled saving and investing tools like Wealthfront, for example, are being actively utilized. Cramer’s critique is built around a conception of asset ownership that is quickly becoming obsolete. To generate wealth in the sharing economy, Millennials have realized that we need not (and often cannot) adhere to rigid schedules of asset accumulation. Success is no longer achieved by owning as much expensive stuff as possible. To build wealth, you need to be nimble, mobile, and proactive.

So what does it take to thrive in the sharing economy? Here are a few guidelines:

Minimize and Monetize Your Assets

The proliferation of niche sharing platforms means two things: Access to expensive items is no longer contingent upon ownership, and nearly everything you own can be monetized.

Only invest in big-ticket items when you’re sure you can defray the costs of ownership. This might mean renting your car out on Uber on the days you’re not using it or selling your dusty surfboard and renting instead.

Identify your Strengths and Preferences

A while back, I had an Uber driver nearly burst into tears. She told me she hated driving and wanted to quit, but her work as a freelance interior designer wasn’t bringing in enough money. I told her about a portfolio company that connects designers with consumers through a simple online marketplace. The driver was ecstatic and said she’d sign up the next day.

The sharing economy churns out countless opportunities every day, often in the form of functional tasks — like driving — and short-term contracts for specialized skills. Don’t let desperation push you into a gig you hate. Figure out what you love doing, and find a platform that will pay you to do it.

Understand the Changing Benefits Landscape

In previous generations, workers could count on their employers to provide comprehensive healthcare, unemployment, and retirement packages. Millennials rarely have that luxury.

Thankfully, as employer-provided benefits vanish, a new wave of providers is rushing in to fill the void. For example, those without a traditional benefits package can now seek medical coverage and investments from businesses all across the web that are designed for that purpose.

But don’t slack — the responsibility is on you. If you’re not proactive, you won’t be covered.

Invest in Yourself

Your functional skills are easy to monetize in the sharing economy, but they’re not necessarily the most fulfilling. Fortunately, there are platforms that will also pay you to do the creative things you love. You just have to be good enough to get hired.

It takes both passion and talent to land your next creative gig, so it’s vital to invest in yourself. Nurture the skills you wish to monetize, practice them, take relevant classes, and get certified if it makes sense to do so — set yourself apart by mastering your craft.

Cramer’s concerns about the sharing economy aren’t unfounded; indeed, this is a time of great uncertainty and unpredictability. But the upshot of such uncertainty is a kind of freedom, which Millennials are leveraging into a new approach toward work and life — with the right balance of planning, saving, and creative utilization of our assets and skills, of course.

 

1fd07d0About the Author: TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

 

 

 

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