Two venture capitalists walk into a bar …
It sounds like the beginning of a joke, but it’s actually the beginning of something much larger. Not long ago, we found ourselves in a pub in a tiny village on the southernmost tip of Ireland. The village had paved roads and 3G coverage, but the place itself felt as if it hadn’t changed in hundreds of years. Sheep wandered up the street as laundry pinned to clotheslines flapped in the breeze. And in the local pub we saw evidence of a local economy tailored to a seemingly bygone way of doing business.
One wall of the pub was completely covered in advertisements — an ad for a tailor, one for a handyman, another for a chauffeur, a hairstylist, a bed-and-breakfast, and so on. The ads listed no websites, no Twitter handles, no Facebook pages, not even physical addresses. Instead, they displayed phone numbers, the business owners’ names, and the promise of goods and services delivered directly to your home. The very nature of village life drives the creation of this nearly ideal customer experience: Personalized service and near-instant accessibility.
Modern commerce has moved far away from this model. As urban areas have grown, commercial transactions have become less personal in nature. Throughout the 20th century and into the early 21st century, the march of progress has taken us from the village general store to Main Streets with specialized businesses to today’s strip malls, supermarkets and big-box stores, where consumers can get nearly anything they want in a single location. As price and selection have increased in modern commerce, however, trust, personal relationships and service have fallen by the wayside.
Today, we are seeing companies like Uber, Airbnb, Rent the Runway, Munchery and Poshmark replicating the best of the village economy. These companies are at the leading edge of what we call the on-demand economy, or ODE, using technologies of trust to deliver personalized, service-oriented experiences to consumers. As ODE progresses, it will shape the city of the future — a city with fewer cars but a more mobile population. A city where big office buildings are replaced by home offices and collaborative spaces. We’ll see destination retail replaced by showrooms and places where experiences are more important than products.
Shervin Pishevar, co-founder and managing partner of Sherpa Ventures, is a serial entrepreneur, leading venture capitalist and angel investor. He has also served as managing director at Menlo Ventures, where he worked closely with teams at Uber, Tumblr, Poshmark, Cinemagram, Getaround, Machine Zone, Fab, Warby Parker, Shaker and Mr. Number. While at Menlo, he helped launch the Menlo Talent Fund, Menlo’s $20 million seed fund. Earlier in his career, Pishevar founded and operated technology-enabled companies including Webs.com (sold to Vistaprint for $117.5 million), Social Gaming Network (SGN, merged with Mindjolt), and HyperOffice. Reach him @shervin.
Scott Stanford, co-founder and managing partner of Sherpa Ventures, has been focused on the Internet/technology sector for 20 years in the capacity of advisor, operator and investor. Until March 2013, he co-headed Goldman Sachs’s Global Internet Investment Banking business based in San Francisco. In his 12 years at Goldman, he advised clients on $80 billion of equity and debt financings and strategic transactions and was deeply involved in making approximately $1.6 billion of principal investments in technology-enabled companies including Facebook, Uber, DST/Mail.ru and LinkedIn. Reach him @sherpa.
Thanks to Zach Noorani for contributing research to our 2014 ODE Report.