The massive global network of highly connected individuals created by Web 2.0 companies laid the foundation for the emergence of a diverse and self-sustaining ecosystem that enables people to transact beyond the depths of the corporate ocean: the new Abundance Economy. These companies are accessing not only “blue oceans” of market demand, but discovering new “long tails”, with no capital or time constraints, leading to an abundance of both demand and supply.
The Abundance Economy is comprised of companies with two-sided markets that enable people and businesses to monetize under-utilized/latent assets, goods, and services by providing them with structural and customer capital. We categorize companies based on the source of their value origination into the following five classes: Assets, Goods, Delivery Services, Commodity Services, and Specialized Services.
Introducing copianomics: the science of choice under abundance. Under the laws of copianomics, the Abundance Economy companies have the potential to achieve accelerated value creation through accessing multiple supply and demand side growth levers to achieve superior unit growth and comparable sales growth.
In six years, Airbnb has created a long tail of over 800,000 listings, surpassing the 690,000 hotel rooms of nearly century-old hospitality company, Hilton Worldwide. But given the exponential size in the US alone of the long tail relative to the head (e.g. 4.9 million guestrooms represent less than 4% of the 133 million personal homes) and the fact that Airbnb only has 148,000 listings, or 0.1% penetration of this tail, its potential to disrupt the $163 billion lodging industry is massive. And Uber, which was founded only five years ago, has expanded to 205 cities in 45 countries and is adding drivers at a current rate of 50,000 per month. And unlike Airbnb, Uber is not just creating a long tail – it is aggressively attacking the existing global taxi infrastructure on both sides.
Our qualitative analytical framework assesses the ten economic characteristics of the top fifty U.S.-based Abundance Economy companies. The most attractive classes are Assets and Specialized Services, with top-rated companies being Airbnb, RelayRides, PivotDesk, Storefront, Uber, Lyft, Vayable, Good Eggs, and Sherpaa. And Getaround, etsy, Gumroad, Skillshare, and Quirky also rank favorably in terms of having generative economic moats. The most challenged companies, which we expect to face an increasing competitive environment, are the “Closet Sharing Economy” Goods, goods Delivery Services, and household/caregiver Commodity Services companies.
The smart money is starting to flow to the Abundance Economy. The top fifty companies have raised $4.6 billion from over 130 venture capital firms, with Airbnb and Uber accounting for half and 20% of the firms investing in three or more companies. With the upcoming IPO of Lending Club and the potential IPO of Airbnb and Uber, we expect to see a lot more investor interest, especially from growth-oriented institutional investors. And this is a nascent space that offers attractive opportunities for entrepreneurs looking to build the next “Airbnb of” or “Uber of”, especially in the Assets and Specialized Services classes.