Lessons from Seoul’s Two Sharing Economies
(Tech Crunch contributor; Emily Hong) As a Fulbright grantee, I spent part of the last year researching the sharing economy in Seoul. One of my main findings? Korea actually has two.
The first is small-scale, hyper local and socialist in flavor. This first “sharing Seoul” is largely supported by the Seoul Metropolitan government, and consists of a handful of social entrepreneurs largely working through ShareHub, an outgrowth of the Korean chapter of Creative Commons.
The second is the polar opposite of the first, and encompasses Airbnb and Uber, the enormous, multinational corporations that remain those best associated with the term “sharing economy” worldwide.
However, in Korea, and also around the world, it is increasingly evident that to include this latter category of companies under the sharing label is a mistake.
Four years after TIME magazine named “Sharing” as one of its “10 Ideas That Will Change the World,” and as companies like Uber become increasingly politicized around the world, it’s time to re-examine the “sharing economy.” Indeed, we may be able to glean some universal insights from the interesting juxtaposition unfolding in Korea.
What Is The Sharing Economy?
As we use it today, the term “sharing economy” encompasses a broad range of activities, from renting to bartering to gifting. At its most basic definition, the term refers to when human and physical resources are shared between individuals, generally with the help of an online platform or marketplace.
Korea’s two “sharing economies” are moving in opposite directions.
As a political ideal, the sharing economy is a social model in which goods and services are distributed directly between consumers through peer-to-peer interactions. Environmentalists have even looked into the sharing economy as a way to reduce carbon footprints while permitting economic growth.
Shareable, another online community, describes a “sharing transformation” that includes “maker movement, collaborative consumption, the solidarity economy, open source software, transition towns, open government, and social enterprise.”
When sharing replaces new consumption, there has always been the potential to curb costs and reduce waste. In the classic example, instead of buying a new toolbox when I need to use a hammer, I borrow one from my neighbor. I’ll reciprocate this goodwill at some time in the future; perhaps she’ll need my garden hose next week.
With the advent of the Internet and near-instant interconnection, it becomes much easier to match these haves and needs as they occur in real time, creating the potential for digitally powered sharing services. “Anyone have a hammer?” I post to my neighborhood Facebook page. “Be right over,” responds my neighbor.
Korean collaborative consumption efforts actually predate the current startup boom.
The concept of sharing took off in the late 2000s, perhaps as a social and political reaction against the hyper-capitalism of the DOT COM era — a digital rebranding of old socialist and progressive ideals, if you will. Companies like Zipcar were founded; Amazon started distributing small tasks to an Internet workforce through Mechanical Turk.
However, the term “sharing economy” has always been a little problematic: As Giana M. Eckhardt and Fleura Bardhi note in the Harvard Business Review, true sharing is a social interaction that involves no transactions or profits, like books at a public library.
For this reason, many of the true believers in the sharing movement have entirely abandoned the term, largely in favor of the term “collaborative consumption.” For the rest of this article, this is the term I try will use to describe this movement based on peer-to-peer sharing.
According to the organization OuiShare, borrowing heavily from the work of sharing evangelist Rachel Botsman (who runs the eponymous web portal “Collaborative Consumption”), “the collaborative economy is defined as initiatives based on horizontal networks and participation of a community” and is built on “distributed power and trust within communities as opposed to centralized institutions.” In collaborative consumption, “the lines between producer and consumer” are blurred.
Truly, the proliferation and interest in these behaviors and services has been remarkable. A recent study by PwC speculates that this new sector may grow to $335 billion in global revenues by 2025.
Individuals like Ms. Botsman, the author of What’s Mine Is Yours, a sharing manifesto, April Rinne, a Harvard-trained lawyer and Arun Sundararajan, a NYU professor, have made entire careers consulting for companies and governments — including Seoul’s — with regard to the collaborative economy.
Seoul’s Sharing Economy
Seoul is actually an early adopter when it comes to the sharing/collaborative economy. Although much of the press insinuates the sharing economy initiatives have been borne out of startups, Korean collaborative consumption efforts actually predate the current startup boom.
Seeded in 2012 by former human rights lawyer and Seoul City Mayor Park Won-soon, the “Sharing Seoul initiative” sought to doctor the various ills of modern society by promoting this kinder, gentler form of capitalism.
South Korea is the only country to transition from USAID recipient to donor.
South Korea’s transformation from a tiny, destitute, war-ravaged country to a glittering economic and cultural workhorse is nothing short of extraordinary. In the 65 years following the Korean War, South Korea has bootstrapped itself to become a rich global technology leader with an enviable soft power grip, carried by the undulating moves of K-Pop idols to the far corners of Asia and beyond. In the U.S., Korean food has even become big among discriminating Brooklyn hipsters.
South Korea is the only country to transition from USAID (U.S. Agency for International Development) recipient to donor, replacing unpaved roads and open-air latrines with high-tech infrastructure that often seems torn from a fantastical architectural rendering.
Of course, this ruthless drive to self-ameliorate has come at a cost. South Korea is currently experiencing rising inequality, and a decline in the social welfare system that has disproportionately impacted the elderly. Birth rates are also declining, as educational and living costs skyrocket.
Thousands of burned out teens slog through the meat grinder that is the South Korean educational system, and 80+ hour, six-day work weeks are the norm for South Korean workers. Korea also has some of the highest rates of alcohol consumption and suicide in the OECD (Organisation for Economic ).
In Seoul, you see people working for $3 an hour, right next to someone sitting in a Maserati. And it’s not like Seoul is a city you can really drive in.
The competition for space is real, too. Nearly 50 percent of the entire population is centered in the Seoul metropolitan area, and at 16,700 people per square kilometer, or eight times the density of New York, Seoul has one of the highest urban population densities in the world. But this incredible density doesn’t just stop at humans; it applies to their stuff as well.
Korea is home to “some of the most crazily conspicuous consumption,” says Albert Hahn, co-founder of the craigslist-like startup HelloMarket. “In Seoul, you see people working for $3 an hour, right next to someone sitting in a Maserati. And it’s not like Seoul is a city you can really drive in,” he added.
Pierre Joo, a Parisian who runs the Korean office of the French consulting firm Attali & Associés, agrees, adding that he has started to see a “realization by Korean consumers that their economic model, rampant capitalism, is not sustainable.”
New arrivals to the city quickly adjust to the high rates of business turnover. In certain neighborhoods, entire buildings are razed and new ones erected seemingly overnight.
Even leisure is a competitive sport. Photos of must-have items spread virally over Instagram, sending the masses on buying sprees, before falling off the trend wagon just as instantly. Disturbingly chipper floor-to-ceiling advertisements in the metro stations of chic Gangnam neighborhoods remind riders that if you have the money, you could even buy a new face, if you wanted to.
From a historical and cultural perspective, the introduction of collaborative consumption in Korea also makes sense.
It’s not hard to see the appeal of the sharing economy in Korea, as a movement that challenges the notion “that nonstop economic growth leads to widespread prosperity; and that more stuff leads to more happiness.”
This is particularly true for Korea’s despondent millennials: Despite being born at a time when they can reap the full benefits of South Korea’s economic development, these cynical youth have some of the bleakest views toward the future in the world.
They’ve even come up with a jul-im-mal (줄임말) or slang abbreviation, for themselves: oh-poh sae-dae (오포 세대), a generation that has “given up on dating, marriage, having children, personal relationships, and home ownership due to the difficulties of life.”
From a historical and cultural perspective, the introduction of collaborative consumption in Korea also makes sense. Many of the values it represents are evocative of the collectivist traditions of Korea’s not-to-distant past.
As recently as the early 1980s, parts of the Gangnam district were covered in rice paddies, and Korea’s agrarian traditions include the proto-sharing economies of gye(계), community lending circles, poomasi (품아시), non-monetary labor exchanges anddu-rae, (두레) group labor collectives.
Beginning in early 2013, Seoul passed a number of ordinances and local laws to facilitate the spread of sharing practices, spending 286 million KRW (about $260,000 USD) to support community building around “the sharing economy” and invest in 42 sharing business or organizations. At the core of Seoul’s collaborative economy is an organization called CC Korea.
As children we are taught, “sharing is caring,” a notion that seems somehow diluted with the introduction of money.
The local chapter of the international Creative Commons organization, under the mandate of Mayor Park, CC Korea operates ShareHub, which serves as a knowledge bank and clearinghouse for all things collaborative in Seoul. (Naturally, Jennifer Kang, who currently heads up CC Korea, is also a host on Airbnb.)
ShareHub has held workshops for youth and community leaders in Bulgwang, an unfashionable district in northwestern Seoul, and has helped two other Korean cities, Busan and Daejon, start their own sharing initiatives.
Seoul’s leadership in this space was praised internationally as “a model for the world,“ and resulted in a local boom in small-scale social enterprises and startups. However, two and a half years into the Sharing Seoul program, very few domestic services have managed to go mainstream.
Most of these services can’t really scale by design: Among Seoul’s designated sharing companies are Dreaming Acorn, a platform for sharing baby and maternity clothing, and Run Piano, a project that installs used pianos in public spaces.
None of these companies seem to turn large profits; one exception might be SOCAR, a car-sharing service with a business model akin to that of Zipcar in the United States. SOCAR recently received $18 million dollars in funding from Bain Capital.
In fact, a minimal- or zero-profit model might even be a base criterion for a true collaborative consumption firm. After all, it does seem to better aligned with the fundamental spirit of sharing.
As children we are taught, “sharing is caring,” a notion that seems somehow diluted with the introduction of money. I feel like a pre-school teacher (unless she is Ayn Rand) would be horrified by an “Uber for playgrounds” scenario, in which I demand rent from my playmates for the right to ride in my Little Tyke Cozy Coupe, even if I’m not using it myself.
Airbnb (And Uber?) In Seoul
On Airbnb’s main landing page for travelers interested in visiting Seoul, white text is superimposed over an aerial shot of the N-Seoul tower. “Palatial relics and fervent pop culture collide in Seoul, a dizzyingly evolving city that dares you to keep up,” it reads.
In Korea, as in the more than 190 other countries the company operates, Airbnb has styled itself as the ultimate cottage industry.
Locals love “Korean barbecue and soju” and “relaxing at Jjimjilbangs,” while they complain about “traffic,” “rising property prices,” and “everything changing too quickly.”
Elsewhere on its site, Airbnb entices the would-be traveler: “Belong here, belong anywhere.” In Korea, as in the more than 190 other countries the company operates, Airbnb has styled itself as the ultimate cottage industry, a business carried out in someone’s home.
Airbnb is the flagship of the so-called sharing economy, and is the only big firm of its category to really work in Korea. The online marketplace for accommodation combines Orbitz with online dating, matching travelers with hosts and short-term rentals, in addition to moderating payment and communication between the two parties.
Founded in 2008 by two Americans who started subletting their living room in order to make rent on their San Francisco loft, it was originally marketed under the cumbersome URL “airbedandbreakfast.com.”
The company has experienced meteoric growth in the past few years. With 550,000 listings worldwide, and more than 600 employees, Airbnb is currently valued at $10 billion USD. According to estimates, last year Airbnb facilitated bookings for 37 million nights.
Through meticulous branding and local marketing, Airbnb has become a sleeper hit in Korea.
The warm and fuzzy feel of Airbnb’s marketing is just one example of the remarkable job they have done selling belonging to Koreans hungry for comfort and connection, a society on the cusp of burnout after decades of untrammeled development.
In Korea, Airbnb has flourished under Seoul’s sharing-city policy initiatives. It has also been a hit among urbane, well-traveled Seoulites. In fact, Airbnb’s unexpected success in South Korea led Seoul to be profiled along with London and San Francisco in the inaugural issue of Airbnb’s in-house travel magazine, Pineapple.
Airbnb has not released any official statistics on their business in Korea, but through meticulous branding and local marketing, Airbnb has become a sleeper hit. There are thousands of Airbnb listings in Seoul, and the service now accommodates equal volumes of inbound and outbound travelers in Korea.
For inbound travelers to Seoul, Airbnb can still generally offer a cost savings over traditional hospitality options, as well as enable longer trips and group travel. Airbnb listings also represent more diverse neighborhoods than traditional hostel or hotel districts, proffering a more “authentic” travel experience to foreigners.
In an informal poll I conducted of 39 Americans, of the 32 that had used Airbnb in Korea, 17 (53 percent) responded they chose the service over other options because it was cheaper, more convenient or more interesting.
This comes despite Korea’s reputation for being a notoriously finicky market for foreign companies to enter. Elsewhere in the technology sector, even Uber has floundered in a legal morass (that is a another story beyond my pay grade in this essay, but please feel free to email me about it later), and after failing to set up services under its own brand, eBay ultimately entered the Korean market by acquiring a local subsidiary (and eBay copycat), Gmarket.
Airbnb’s Korean success also defies cultural barriers seen in other East Asian countries: In Korea, the home is seen as an extremely private space. The same issue gave Airbnb trouble when recruiting hosts in Japan, a process they refer to internally as “supply acquisition.”
Airbnb has built a robust user community in South Korea by doing what startup folks call localization, tweaking a product for new market entry, accommodating local culture and needs in order to gain a foothold in the market.
Part of Airbnb’s strategy here has been to give its Korean team a remarkable degree of autonomy and ownership. Even Airbnb’s executive team has gone local: At the beginning of his tenure and in previous roles at Google Korea, the head of Airbnb Korea went by his English name, Patrick Lee. But recently, he has been introducing himself with his Korean name, Jun Kyu.
Airbnb maintains a lightweight, all-Korean sales and marketing team in Seoul that operates out of an office in swanky Yongsan-gu, just around the corner from the Itaewon Park Hyatt. On top of their advertising blitzes, the Seoul office also holds regular “host education” events and Airbnb community meet-ups, and is responsible for any Korean-language business around the world.
In Seoul, Airbnb has gone after the hip millennial demographic with pitch-perfect local marketing campaigns. Its promotions partnered with local power bloggers, key tastemakers in all-digital South Korea, and engaged with potential new users in the stylish neighborhoods of Garosugil, Gyeongridan and Yeonnam-dong. For example, Airbnb recently sponsored an art magazine called Don’t Panic, freely distributed around hip hotspots in Seoul.
Airbnb has done much to ingratiate itself with small business and creative communities, as well; it was a marquee sponsor for Seoul’s 2014 Design Week, putting together a thick red booklet of 170 small businesses and featured Korean “design spots,” ranging from Gentlemonster, a premium Korean sunglasses brand favored by Korean celebrities and the likes of Jessica Alba and Miranda Kerr, to Soohyang, my own favorite local candle maker.
Airbnb Korea also gets points for their efforts to keep a good relationship with Seoul’s City Hall and with the Korean national government. The legal and policy teams for Airbnb’s Asia-Pacific division are actually based in Singapore, but members of their team have told me that they seek to “stay in constant communication” with the local governments.
They are always asking about “what they can alter or change.” Given the immensity and diversity of the Asian market, which is the third largest in booking size after the U.S. and the E.U. for Airbnb, that team has much on its hands.
Arguably, booking a stay on Airbnb is not true collaborative consumption.
Airbnb isn’t just popular in Seoul. Areum* is a bright-eyed university student who hosted me in windy, seaside Aewol-eup on Jeju Island. One night’s stay in her spare bedroom cost me and a friend about $15 each, and in the morning, Areum took a selfie and chatted with us while feeding us peanut butter toast.
In five months, Areum had already had around 30 guests, and her motivation to start hosting on Airbnb was to make the most of an underused space after moving into her university dorm.
In this meeting of new needs with existing resources, the manifesto of the collaborative consumption movement still resonates. This natural desire to “make the most of things” was echoed by another young Korean host I met and spoke with, by chance, on the subway in Seoul. She runs the listing for two bedrooms in her parents’ home in Busan, which were recently vacated when she and her brother left for university and military service, respectively.
But arguably, booking a stay on Airbnb is not true collaborative consumption. In Korea, as in many other places, Airbnb offers a mix of true home sharing and a small business platform of sorts. Many of Airbnb’s listings are for actual hostels or bed and breakfasts, or an apartment solely used for short-term rentals.
Minsoo* is the co-founder of a startup based in Seoul, and for the past year and a half, he and a few friends have pooled some money in order to jointly rent out a four-bedroom property in Gangnam that they in turn operate as an Airbnb, splitting the profits.
When he tells me this, I can’t help but think that this is truly collaborative capitalism. Minsoo is the prototypical entrepreneur, always seeing new business opportunities. “I saw a need in Seoul for large group accommodation,” he stated. “People on family vacations or traveling for weddings often need six-to-eight-person occupancy rooms, and oftentimes the only options for these parties are expensive residency hotels.”
For Minsoo, hosting on Airbnb has become an “affordable side job.”
While a number of individuals are still out there on the site renting out their couches and living rooms, the rise of professional Airbnb hosts means that it is no longer accurate to characterize the company as a pure peer-to-peer company. The primary relationship at stake is not between the host and guest, but between the user, be it the host or the guest, and the corporation, Airbnb.
Especially compared with the analogous service Couchsurfing, where accommodation is arranged for free, critics say Airbnb has become just another big company squeezing profits out of its users, exacerbating gentrification and competition for space in certain cities.
There has not been the same controversy over Airbnb in Seoul as there has been in New York or San Francisco, where many claim Airbnb is raising home prices and hurting locals who depend on affordable housing supply. However, this may be only because the number of Koreans on Airbnb has not yet reached critical mass.
More and more, Airbnb is becoming about the bottom line. I first met Jinju Jeon, the manager of the Korean startup media platform BeSuccess, through her Airbnb listing. Jinju likes how Airbnb hosting gives her the opportunity to network and meet people involved in startups outside of Korea.
Jinju has friends who met their eventual bosses on Airbnb, and she also referred me to three of her friends in Korea who also work in startups in addition to hosting on Airbnb. However, as an active host, Jinju says that some of the marketing campaigns have rubbed her the wrong way. “The company is growing so quickly that it had to sacrifice some of its original identity,” she says.
Everything becomes a commodity with a price, easily accessible to those with the means with a simple swipe of an app.
She was quick to correct the “social enterprise” image Airbnb sometimes tries to project, with narratives about how Airbnb revenues can keep low-income individuals in their homes or boast smaller environmental impacts than traditional hotels. At least in Korea, “hosts are usually quite well off…“ she said.
The poor in Korea survive in “unlivable conditions,” and thus are not in a position to accommodate international travelers. Seen this way, Airbnb can be seen as a way that the well off can keep enriching themselves. Rather than a cure to cutthroat capitalism, Airbnb, like Uber, may be capitalism run amok.
Spare hammers, a few minutes of downtime, a spare bedroom: everything becomes a commodity with a price, easily accessible to those with the means with a simple swipe of an app.
Discussing these issues with a friend in Seoul, she remarked on the tension within Airbnb’s values of belonging. While building community is deeply embedded in the collaborative consumption movement, Airbnb is about tourism, essentially the opposite of staying in a place — and by extension, the opposite of contributing to the economy sustainably and making the place livable long-term.
A Shared Way Forward?
Thus, Korea’s two “sharing economies” are moving in opposite directions. One operates at the microscale, comprised of dedicated individuals applying sharing principles to build communities in Seoul. Their operations are on the fringe, generating just enough revenue to keep the services alive. The other is increasingly capitalistic, driven by global flows of money and people.
Yet, despite their divergent paths, these two movements continue to be lumped under the same term: sharing economy. For its part, Airbnb, chafing under the confusion and baggage increasingly accompanying the term, has also become wary of the label “sharing economy.”
However, the term is being formalized elsewhere. A “sharing economy” caucus has sprung up within the U.S. House of Representatives, and as a “Sharing Economy” trade body was recently set up in the U.K. Korea, for its part, is also sticking with the term “sharing,” or gongyu (공유), to refer to both Airbnb- and ShareHub-type sharing.
All this begs the question: What, if anything, do these two forms of “sharing” have in common?
What Airbnb has done is revolutionary.
One thing might be a shared DNA of innovation and entrepreneurship. Whatever criticisms or qualms you may have with Airbnb’s global strategy or branding, this whole category of authentic home-sharing experiences was not possible in the way that it is now before the advent of Airbnb. What Airbnb has done is revolutionary.
It took a fringe, hippy idea and transformed it into an entire economic sector. Similarly, the activities of ShareHub and its allies are a departure from the status quo of contemporary Korea, and its advocates might even describe their aims as to “disrupt” certain societal conventions.
Back on Jeju that April morning, leaving Areum’s apartment and later walking around a nearby residential neighborhood festooned with yellow canola and pink cherry blossoms, Airbnb still felt like some small part of the antidote to over-commercialization.
Koreans are becoming concerned over how certain parts of Korea have lost their character because of commercialization.
At least in Korea, the capital city of Seoul is the center of gravity for the economy. Its pull on businesses and young people is immense. With all of this energy sucked toward Seoul, smaller towns are increasingly reliant on tourism for revenue.
Increasingly, Koreans are becoming concerned over how certain parts of Korea — Jeju foremost among them — have lost their character because of commercialization.
Airbnb, while flawed, feels like one of the few opportunities I do have to try to keep at least a few tourism dollars within local communities. Rather than paying money to an international hotel developer who might route money out of Jeju, I paid my local host, Areum… plus a percentage commission to Airbnb.
People dissatisfied with the state of things, and eager to create a future model for a better life, are driving forward both forms of the sharing economy in Korea.
To me, following the twin narratives of the sharing economies of Korea has highlighted how the “sharing economy” movement has reached a point of transition. At this point, the sharing economy is mature as a buzzword. But when it comes to actual impact, it may still have a long way to go.
Going forward, can the collaborative consumption stay true to core values of social impact and sustainability, or will runaway capitalism exacerbate inequality? Can sharing enthusiasts navigate this identity crisis without coming too jaded?
Either way, people dissatisfied with the state of things, and eager to create a future model for a better life, are driving forward both forms of the sharing economy in Korea. More likely than not, neither shared pianos nor rentable bachelor pads will be a surefire ticket to future happiness and prosperity — but innovation around finding new ways to make the most of what you have just might be. As such, perhaps both kinds will play parts in our shared future.