• Redefining “sharing economy.” A “distributed marketplace company” (DMC) develops and manages an automated platform that enables self-organized, usually ad hoc transactions between two independent parties, a user/consumer and a provider, in order to use otherwise slack resources. Between Uber’s $50 billion valuation, Etsy’s IPO and the large venture capital infusions into Airbnb, DMCs have clearly attracted investor interest, as well as scrutiny.
  • A matter of trust. A core component of a DMC’s value lies in its ability to gain the support of stakeholders—not only customers and providers, but also incumbents, suppliers, communities, regulators and investors—and facilitate relationships among them. As DMCs grow, one of their primary challenges is maintaining the trust of these disparate stakeholders.
  • Where is trust at risk? We have identified the salient characteristics of DMCs; all of these companies sit somewhere on the continuum for each characteristic. Assessing where a company lands on the continuum can highlight the opportunities and risks presented by its business model.
  • A closer look at Uber. Uber continues to grow quickly and many in the media speculate that the firm will go public. Meanwhile, the company faces regulatory risk because it has riled its traditional taxi-service competitors as well as local governments. We look at the economic implications for Uber should regulatory or social pressure require it to change its pay model. As it stands currently, we calculate that there is no significant pay advantage for Uber drivers relative to taxi/limousine drivers, which would pose a risk to Uber if it had to adhere to stricter regulations.

For more information about this report please contact Alice.Petrofsky@cornerstonecapinc.com.

Please see the attached document to read the Executive Summary and important disclosures.

John K.S. Wilson is the Head of Corporate Governance, Engagement & Research at Cornerstone Capital Group. Prior to Cornerstone, he was the Director of Corporate Governance at TIAA-CREF and the Director of Socially Responsible Investing at the Christian Brothers Investment Services. He is also an Adjunct Assistant Professor at the Columbia University Graduate School of Business.

Margarita Pirovska, PhD, is the Policy & Sustainability Analyst at Cornerstone Capital Group.

Michael Shavel, CFA, is a Global Thematic Analyst at Cornerstone Capital Group and a former Research Analyst at AllianceBernstein’s Global Growth and Thematic team.