Last month I spoke with Rachel Botsman, founder of the Collaborative Fund and author of What’s Mine is Yours: The Rise of Collaborative Consumption. Botsman’s work explains how our traditional relationships of mutual assistance – things like sharing, trading and renting – have been entirely reinvented and scaled with the help of new network technologies.

Last year, as part of a Knight Foundation study on social networks, we talked about how various initiatives are trying to catalyze mutual support in communities. They seek to connect residents with one another, encourage them to discover latent assets in their community and build trusted, reciprocal relationships. Through our Technology for Engagement initiative, Knight has supported a number of projects that help neighbors connect with each other to exchange information, goods and ideas, including CommonPlace. Recently, we supported FavorTree, an online platform that allows community members to share, lend or swap goods, services, and information, and as a result, the community increases its social capital. Favor Tree is led by Micki Krimmel, the founder and CEO of NeighborGoods.net, a site that allows users to save money and resources by sharing stuff with their friends.

Four insights stood out from my conversation with Botsman that are relevant to efforts to build mutual support networks in communities.

1. Rethinking Proximity: Transactions of goods or services in a collaborative consumption setting tend to happen physically, even if the introduction is done remotely. This means that people have to be in the same space. We tend to think about proximity in terms of where people live, but there are a range of different places that end up being useful exchange points that fit into someone’s everyday life, such as where they work, where they drop their kids off at school and where they go to church, etc. For example, FavorTree, an online forum for sharing goods between community members, allows users to create a group for their small business, religious organization, or sports team in addition to their entire neighborhood. 2. Curiosity and Curation: People like exploring the goods that are being offered. It’s like going through someone else’s box of treasures. For example, many users visit Airbnb’s site more than four times before they decide to even book an apartment or house to rent. Why? Because the site is so beautifully designed that it feels like browsing through a well-crafted travel catalogue.  People are curious to find out what’s available around the world even if they don’t need to book in the moment. By hooking users in through curiosity, Airbnb gets a user interacting and talking about their brand before they have even made a purchase. When we design collaborative consumption sites, we need to pay particular attention to how goods are displayed and what the user interface looks like. It needs to feel more like a curated craft shop than the inside of your local DIY store. (It’s worth checking out Itemology – a beautifully designed site for curating and exchanging personal items by @erdogan)     

3.   Pricing it Right: Collaborative consumption startups often experiment with a range of different pricing models for users: membership tiers, long rental fees, short rental fees, free up to a certain threshold, etc. Users get confused easily and are hesitant to register for something with a mystery price tag, so it’s better to keep it simple. The most successful model to date has been a service transaction fee where startups collect a fee for successfully matchmaking buyers and sellers, borrowers and lenders, hosts and guests. (For more detail here’s Botsman’s slideshare presentation on seven collaborative consumption business models).

4. Friendly Trading: Some of the early work in this space has shown that people often feel embarrassed about charging their neighbors for renting something they own. Working out how to value an item and then charging your neighbor for it isn’t something that everyone feels comfortable doing. If sites are looking to sustain themselves by taking a percentage of a transaction, they need to help people overcome this initial inertia. Providing a suggested rental fee for popular borrowed items or maintaining online records of dues and payments are common and effective ways for websites to support their users. To learn more about the collaborative consumption movement, you can visit Botman’s website.

By Mayur Patel, vice president/strategy and assessment at Knight Foundation