Can Israel Lead The Way On Sharing Economy?

By Einat Paz-Frankel, NoCamels June 01, 2016 Comments

The Israeli phenomenon of the Kibbutz – a collective community traditionally based on agriculture – taught Israelis how to share everything from food and clothes to sleeping quarters. Now, the Startup Nation is poised to become a major player in the sharing economy, which is based on sharing information and resources with one another for the benefit of everyone.

SEE ALSO: From Agriculture To High-Tech: Meet Five Kibbutzim That Became Global Powerhouses

Many companies offering shared-resources have popped up in recent years, and some are now worth billions of dollars. WeWork, for example, co-founded by Israeli Adam Neumann, provides shared working spaces around the world, and recently started offering shared living spaces in the US, through its subsidiary WeLive. Another giant in this sector is Airbnb, which allows people to share their houses with tourists for a fee. Ride-sharing services offered by Israeli firms Gett, Via, Juno and Get Around, as well as by their global rivals Uber and Lyft, have gained tremendous popularity in recent years thanks to their ease of use and relatively low fees.

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The sharing economy is expected to be worth $20 billion a year by 2020, according to a recent report by Juniper Research, more than three times its worth in 2015 ($6.4 billion). According to Juniper, the following sectors are expected to drive the sharing economy in the next four years: Transportation, goods, services, music and video, space, and finance. These will in turn become the basis for the learning, municipal, health, logistics, and food sectors to grow.

Ride-sharing alone will account for $6.5 billion of the sharing economy by 2020, according to the research firm, and “space-sharing” firms such as Airbnb and WeWork could surpass that amount.

In a conference dedicated to Israel’s role in the global sharing economy trend, held in Tel Aviv yesterday by financial newspaper TheMarker, industry leaders said that despite regulatory and infrastructure challenges, Israeli startups are at the forefront of the sharing economy.

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Via co-founder Oren Shoval said the hefty prices of cars in Israel made it a good country to test their platform, which books multiple passengers headed in the same direction and drops them off within a block or two of their requested destination.

Just recently, Via raised $100 million in a single financial round, “a huge achievement for the Israeli high tech,” he said.

SEE ALSO: Ride-Sharing Startup Via Raises $100M; Revs Up Competition Against Uber, Lyft

Founded in 2012 by Shoval and Daniel Ramot, Via enables tens of thousands of passengers each day to share their ride with others headed the same way. Via has so far provided more than four million rides, and is growing rapidly.

The eBay of hotel rooms 

In the fields of hospitality and dining, Israel is also on the forefront of the sharing economy: Israeli startup EatWith connects tourists to families who provide an authentic home cooked meal, replacing expensive, touristy restaurants; and Roomer, which connects tourists looking for hotel deals with other tourists who had to cancel their hotel reservation and cannot get a refund.

“We’re like the eBay of hotel rooms,” Ben Froumine, founder of Roomer, said at the conference. According to EatWith general manager Noam Klinger, “we provide gourmet meals at chefs’ houses starting at $15 a person; it’s a great way to personally meet chefs and local hosts.”

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“Israel serves as the proving ground”

Conference speakers said that the success of Israeli-developed ride-sharing platforms such as Gett, Get Around, Via and Juno, was in many cases built on the pilot tests they ran in Israel, which is a small, densely populated country that suffers from traffic jams around major metropolitan areas.

Chen Herzog, ‎Chief Economist and Partner at Israel’s BDO Consulting Group, said at the event that “Israel’s density helps its startups become world leaders in the sharing economy. Israel serves as the proving ground for startups in this sector to move forward.”

He added that Israel’s Mobileye, which is developing driverless car technologies, is poised to become a major force behind any shared-vehicle platform. Also, Internet of Things (IoT) and FinTech technologies – which are also developed locally by many startups – will become key components of the sharing economy.

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Photos: WeWork, EatWith, Via, GotCredit

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