Sherpa Ventures released a comprehensive presentation on the “on-demand" economy the other day. It’s worth flipping through it if you have some time.
Slide 8 contrasts the “village economy” with the economy we have today and it got me thinking...
We’ve gone from:
- The general store where everyone in town knows and trusts the owner to...
- Large, main streets with lots of stores with less intimacy and less trust to...
- Larger, big box retailers with much less intimacy and much less trust.
As stores have become less intimate and less personal, retailers realized that, in order to compete, they had to try to maintain the level of trust that the owner of the general store had with his or her customers. That led to massive investments in brands – Wal-Mart, Best Buy, Macy's etc. They have built brands so that you know they’re low cost, high quality, reliable, etc.
Every customer couldn't know and trust the owner but every customer could know and trust the brand, the thinking went.
But in the new economy, constant connectivity, new payment platforms and reputation management programs (ratings and reviews) have recreated this high level of intimacy and trust, without the customer knowing the owner or knowing the brand.
"I don’t know that restaurant but it has a great rating on OpenTable."
"I don’t know this artist, but people on Etsy like her."
"I don’t know the guy that owns this apartment in Paris, but people on Airbnb trust him."
The point of this post is that, regardless of the mechanics that drive our economy, it’s always been about trust. Whether your’e relying on your personal relationship with the owner of the general store on the corner, or you’re relying on Best Buy’s brand when buying an expensive flat-screen TV, or you're relying on a five-star review rating when accepting a ride from a stranger on Uber -- it’s always been about trust.