The business of sharing

From food to rooms to cars, people are increasingly renting out what they don't need. Will the 'peer economy' be able to hold its own in the face of mainstream opposition and legal busybodies?

by Kate Bassett
Last Updated: 05 Apr 2016

'Would you like to see my bedroom?' asks Daniel Kaplansky. We're sitting in the kitchen of a modest Shoreditch flat opposite a tattoo parlour, which he shares with his Eatro co-founders, Bar Segal and Zifeng Wei. MT follows him down the corridor.

'This is where you sleep?' I ask, baffled. It looks like a small student dorm room, with a dodgy-looking single bed crammed in next to a double.

'The three of us share this room,' explains 23-year-old Kaplansky. 'We rent out the other two rooms on Airbnb, which covers our living costs. Our furniture is from Freecycle. Our intern sleeps on the couch.'

It's a novel twist to their start-up story: they're funding their sharing-economy business using the sharing economy.

The three Eatro lads are close (you'd have to be with these living arrangements). They met as children in Budapest - their families relocated there from Israel and China after the collapse of communism - and moved to the UK together in 2008 to study. They based themselves among the trendy techies of Silicon Roundabout, and started Eatro last year with £25,000 from family and friends, and a government-backed loan.

The business is essentially about sharing your leftovers. Making meatballs for lunch? Eatro is an online marketplace that allows you to list your extra portions and sell them to hungry folk in the neighbourhood fed up with M&S sandwiches. The trio describe it as the 'eBay for homemade food'.

'We were all sick of mass-produced, bland-tasting food,' says Segal. 'We wanted to democratise the takeaway industry by connecting home chefs with people looking for healthy, homemade, affordable meals.'

Eatro founders [L-R] Zifeng Wei, Daniel Kaplansky and Bar Segal.


The trio has kept costs low by designing the website themselves and using a cheap developer in Budapest to build it. Eatro went live in January and takes a 12% commission on each sale. Kaplansky reckons they'll sell 100,000 dishes by the end of the year (he notes that on shareyourmeal.net - a simple site made by a couple in the Netherlands - 70,000 meals were shared in a year).

With an average meal price of £6, that's roughly £70,000 in revenues. Given their lean, three-in-a-room lifestyle, nearly all of that will be profit. Not bad for year one.

The business of sharing - also dubbed collaborative consumption, the peer economy and pay-as-you-live - has spread rapidly. Among some, the 2008 global crisis caused a rethink of materialism and overconsumption.

For sharers, ownership is out and pay as you go is in. It makes the optimum use of resources and the web provides a very efficient aggregator of supply and demand. Why fork out for something new when you can rent or share it more cheaply online? It may sound very 21st-century San Francisco but this isn't just a hippy ideal; it's a way for people to cut costs - even make a bit extra on the side - thanks to the power of the web.

According to a report last year by car-sharing service Zipcar, 47% of the population now rent or share goods and services, generating an average saving of £531.10 a person.

'We're talking about a new generation of smart consumers,' says Mark Walker, who heads Zipcar in the UK. Zipcar's mainly city-based members pay by the hour to use cars parked locally that are booked online. The concept is spreading, he reckons. 'Whether it's a car by the hour, a dress by the day or a pram for a month, the hiring and sharing of goods and services makes much more sense than outright ownership.'

As they become more numerous and popular, sharing services have started to run into trouble. Regulators, courts and city halls are struggling to define exactly what these companies are (is Eatro a food business or a technology platform, for example? Should 'home chefs' be required to adhere to the same strict training and public health rules as restaurant chefs?). Sharing organisations tend to operate in the grey area between personal and commercial, public and private. In other words, they're a legal minefield.

Take Uber, the lift-sharing service launched by Travis Kalanick in 2009 to blow up the traditional taxi industry. The San Francisco-based company, whose app connects passengers with nearby professional drivers who have extra times between scheduled runs, now operates in more than 50 cities and is valued at $3.5bn (£2.1bn) - but it has faced legal hurdles at nearly every turn.

In some cities, such as Miami and Vancouver, local regulations have kept Uber out, typically by requiring minimum fares or minimum 'wait periods'. In those cities where Uber does operate, it has faced a barrage of federal lawsuits, cease-and-desist orders and stiff penalties.

Existing taxi and limo firms want to kick this quicker, smarter virtual competitor off the streets and they're using the courts to do it, citing unfair competition and an uneven playing field. As they see it: they're tightly regulated, which costs them plenty; so Uber drivers should be too. In January, unionised taxi drivers in Paris went on strike protesting against increased competition from app-based car services. Things turned nasty, with demonstrators hurling themselves at Uber vehicles and smashing their windows.

Worse still, Uber (which was last year's largest single VC investment of $361.2m) faces its first wrongful death lawsuit after one of its drivers knocked over a six-year-old girl on New Year's Eve. There's been no mea culpa from Uber: it says it's not liable for any damages as its drivers are freelance operators, not employees, and the driver wasn't carrying a passenger at the time of the crash.

'The fact that the sharing economy is under a lot of heat is a sign that it's reaching a tipping point of maturity,' says Rachel Botsman, co-author of What's Mine is Yours: The power of collaborative consumption (Harper Business, 2010). 'In 2008, when I first started talking about this idea, most of the entrepreneurs could fly under the radar in terms of regulation, taxes and other policy hurdles. Big brands were not paying much attention because many thought it was a short-term trend or reactionary blip to the recession. The situation today is very different.'

Even Airbnb, the poster child of the sharing economy, is feeling the heat. The company, which allows people to rent out spare rooms or their empty homes when they're on holiday, has not only had to deal with instances of guests trashing properties, stealing valuables and, in one case, using an apartment as a temporary brothel, it's currently locked in a legal battle with its most lucrative market, the state of New York.

Airbnb, like many sharing businesses, has had to face down legal challenges and hostility from mainstream rivals.


At issue is a 2010 state law forbidding people from renting out their homes for fewer than 30 days unless the owner is there. The state's top law enforcer, attorney general Eric Schneiderman, has subpoenaed data on all Airbnb's 15,000 New York hosts to check they're playing by the rules and not evading the 14.75% state occupancy tax. Airbnb is objecting, with co-founder Brian Chesky saying: 'This doesn't feel like an investigation, it feels like a fishing expedition.'

Alex Stephany, boss of ParkatmyHouse.com, has also had to deal with regulations aimed at slapping down the new kids on the block. 'Legislation doesn't recognise that sharing - be it an apartment, a loft or a driveway - has become a mainstream activity,' he says. 'It needs to grow up.'

The company, an online matchmaking service for drivers and driveway owners, has met with resistance from local councils claiming that renting out your driveway constitutes 'change of use', turning your home into a commercial car park. Some residents have been told they'll need to pay planning application fees of about £385 before hiring out their drives, or face a fine of up to £20,000.

'It's nonsense,' says Stephany. 'A driveway no more becomes a car park when you hire out a space than a home becomes a hotel when you rent out your spare room. If you're a law-abiding, middle-aged couple using our site for a bit of extra cash, these kinds of threats can be scary.'

Luckily, ParkatmyHouse.com, which has 500,000 registered users, has an unlikely champion - in the shape of communities secretary Eric Pickles. He crashed into the debate last August, telling off the councils for being 'town hall parking bullies' and accusing them of using parking charges and fines as a cash cow: 'This government is standing up against overzealous parking enforcement,' he cried and he issued new guidance saying that homeowners could rent a single parking space without planning permission.

Stephany reckons the government could go further. He wants clearer rules and has called for the rent-a-room relief scheme, which provides tax-free income for those who are letting out a furnished room, to be extended to people who are renting out their driveways.

ParkatmyHouse CEO Alex Stephany [right] has overcome opposition from local councils to attract 500,000 users. Founder Anthony Eskinazi [left].


Have the tales of legal woes in the sharing economy got the Eatro founders worried? Surely they've had nightmares about food-poisoning lawsuits?

The lads, who are now in the kitchen chopping up garlic and chives (they're preparing gnocchi for lunch - they'll be selling an extra batch on their site) aren't fazed. They worked with a food law specialist at Taylor Wessing to thrash out the legal implications of running a business that sells food from home kitchens.

'Serving food to your neighbours on an occasional basis is completely legal,' says Kaplansky. 'Eatro is about connecting private buyers and private sellers - the keyword being private. It's like serving dinner to a guest in your home. If I were to start selling my gnocchi to the public on the streets, then I'd be in trouble.'

All food premises, whether they're registered or not, are covered by food safety legislation but it's basic, common-sense stuff: keep your kitchen clean, make sure your food isn't mouldy.

All three of the lads have been on a level 2 food hygiene course and they've condensed the details into a 'chef guide' on their site. Buyers pay for their meal using the site's payment system, which automatically collects Eatro's fee. The co-founders don't take any money directly from the chefs, so they avoid liability for the grub. In theory, at least. Whether the first punter to come down with food poisoning will agree remains to be seen.

Eatro's biggest challenge? Critical mass. The site lists only a few dozen chefs, all in east London. The lads personally vet all new cooks to check their kitchens and make sure they're not serving up sloppy seconds. But that's labour-intensive; if this business scales up (and out of the capital), they'll need a different process.

The whole point of the sharing economy is convenience and choice: there needs to be a critical mass on both the supply and demand sides of the equation, otherwise the model doesn't work.

Greg Marsh, co-founder of onefinestay - a kind of posh Airbnb that caters to the luxury traveller - says you have to 'fake it until you make it'. He started the London-based business, which he calls an 'unhotel', in 2010 and admits that the initial handful of properties on the site belonged to his pals, who had no real intention of renting them out.

'We just cobbled it together,' he says. 'There was a line at the bottom of the site saying: "We have lots more properties. Get in touch for details." That was a lie. We had to hustle in the early days.'

Now with more than 2,000 properties, onefinestay has expanded into New York, LA and Paris. Marsh won't share the company's financials (ironic that) but says the company is growing by more than 100% a year.

The sharing economy isn't for everyone. Some find it too happy-clappy; they prefer shiny new things that are devoid of anyone else's grubby fingerprints. And there are obvious limitations (you wouldn't want to share your underwear, or your child).

But the fact that this new model has got regulators and established players so rattled suggests that it's way more than a 'short-term trend' or a 'reactionary blip to the recession'.

If the start-ups in this space can survive the growing pains, they'll be sharing in the spoils.

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