What Drives America’s Go-To Expert on the Sharing Economy?

NYU professor Arun Sundararajan has emerged as the go-to expert in the field of the modern-day “sharing economy.”

Arun Sundararajan, left, has emerged as a go-to expert on the sharing economy. (Credit: NYU Stern)

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Professor Arun Sundararajan looks out at the sweeping view from the 19th floor of the downtown Brooklyn building that houses NYU’s Center for Urban Science and Progress. “The logic,” he says of the new institute’s location, “is that you can see the city you’re studying.” New York City is, at the moment, the site of perhaps the fiercest battle in Sundararajan’s area of study, “the sharing economy.” New York’s attorney general and his allies are cracking down on the room-rental service Airbnb for allegedly violating laws on short-term tenancy.

But Sundararajan has become the favorite public intellectual of sharing-economy advocates (Have you talked to Arun yet? goes many an email to even the mildest critics) because he offers a gaze that sees beyond the gritty in-the-streets battles convulsing the field in New York City, where rules around sharing have piled up over generations, to the more unsettled turf of India, or San Antonio, or Chicago. It’s in those places that sharing offers, as he sees it, intriguing possibilities.

As we talk, he fires up his MacBook Pro to show me a video from Carpooling.com. It’s a rhythmic map showing daily peer-to-peer car trips across Germany. “It illustrates,” he says, “how a platform plus existing assets can create something that would have otherwise required infrastructure.” This makes Sundararajan uncharacteristically giddy.

“How digital technology changes things has been my interest since I was a graduate student,” says the professor, brushing a thick thatch of hair from his eyes with a few fingers. “It’s just that what digital technology changes has changed.”

Lessons From a Silicon Valley Failure

Sundararajan seems to have started accumulating experiences from a very early age that would all eventually add up to making him a good fit to be the first go-to expert in an emerging niche field like the sharing economy. He spent a childhood of the ‘70s and ‘80s in Wales, England and India. The son of an “adventurous” surgeon father who got a Commodore 64 at the age of 13 and entered programming contests in his teens, he was living in Chennai India, when the time came to attend the local branch of the famed Indian Institutes of Technology. While he adored computers, he had no burning desire to study electrical engineering. But doing that at IIT, he says, “seemed the thing to do at the time.”

Degree in hand and a full financial aid package under his arm, he headed to the University of Rochester in the U.S. to study business administration. “It was a complete shift,” he says, “but it seemed to me that there was greater potential for impact to think about the business of technology rather than going down the path of being a computer engineer.”

He arrived at New York University as a visiting professor in 1997, and finishing up his PhD, became an associate professor the next year. But his mind was always, in part, elsewhere.

From nearly the start at NYU, he worked on a Silicon Valley startup called Aftermind, jetting off to California between classes to write business plans and raise money for a software platform that used the Internet to allow businesses to manage their customers. Aftermind ran out of cash in 2001, but for Sundararajan the experience was priceless — and riskless, as he had a university job. “It was an eye opener to both the culture of the tech industry and to the different problems when technology disrupts an industry by entering into the customer experience.”

As the 21st century began, Sundararajan began focusing on just that: changes in economics sparked by digital technologies.

As Aftermind crashed, the peer-to-peer file-sharing service Napster was coming onto the scene. Sundararajan became particularly intrigued by what happens when you separate a product from its traditional physical container — “new ways of providing familiar things,” he calls it. He examined everything from pricing to piracy to how a network shapes the value of a product as more people use it. As the 2000s wore on, says the professor, “there were maybe, like, 50 or 100 people around the world who had the same focus.”

The Rise of the Social-Technical platform

In 2009, Sundararajan was asked to be part of a team working on a massive roll-out of a biometric ID program in India. He was tapped for his expertise in how things spread. The ID platform was meant to be an equalizing force among the country’s poor. “It was pivotal for me,” he says. “It got me thinking how these platforms that are mixtures of social norms, technology, processes, and practices — I haven’t really come up with a good label, social-technical platforms — seemed to be expanding in scope. They made the problems I was looking at seem small.” He looks out the window. “This seemed to me the future.”

Still, back in the U.S., his work on “traditional” digital economics continued. Then, while running experiments on Facebook to test how, say, having a wall photo in common affected how likely people were to share other experiences, he stumbled upon Getaround, the San Francisco-based car-sharing service piggybacking on Facebook’s social connections. Here was a digital network providing for the same kind of trusted exchange that banks do in many places or that old-school social networks can still provide in many the Indian village. And it was intensely personal. “It’s one thing to trust someone enough to let them send you a box through eBay,” Sundararajan says. “It’s another thing to get into someone’s car and say, ‘Drive me to another city.’”

He was hooked on the sharing economy and began attracting notice. In 2012, he wrote a piece for Wired, headlined “Why the Government Doesn’t Need to Regulate the Sharing Economy.” If that was the first splash, many have followed. This January, he testified before Congress in a session that he calls “a gentle introduction” to the sharing economy for all involved.

Making Headlines, Shepherding Social Change

How does it feel to become the first public intellectual of the Age of the Sharing Economy?

“It feels good,” Sundararajan says with a laugh. It’s gratifying that his ideas are having an impact, but he sees in it a responsibility: More academics should think about shepherding “good thinking” into public policy and social change. “It’s something I’ve prioritized to some extent.”

Lost sometimes, though, is that Sundararajan’s arguments are — editor-picked headlines aside — nuanced. He often poses hypotheticals, takes long pauses and asks questions with his hands. “I actually believe,” he says, “that at the root of any regulation is good intent.” It’s just that decades of progress can often create a “misfit” between regulation and modern methods.

Sundararajan’s stance can be distilled to the notion that the sharing economy needs a chance to work out its kinks, so that we can intelligently figure out the right rules where necessary.

Take the attempts in many places to distinguish between amateurs and professionals. Sundararajan thinks hard lines are actually bad for, say, the cabbie who drives 60 hours a week but who might benefit from getting onto the Uber platform. In Chicago, cab drivers are suing the city for devaluing taxi medallions by embracing ride-share. And they might, says Sundararajan, deserve some compensation. “It’s important that we have sensible transition plans for these people,” he says. Regulation, too, might be needed to, say, provide the right number of wheelchair-accessible cabs in a city fleet. “Government,” he says, “always has a role to step in and take care of things the market can’t provide on its own.”

The Future’s So Bright, He’s Bound to Have Critics

Being the go-to sharing economy professor means Sundararajan doesn’t have many allies, but it also means he doesn’t have many critics. The latter will surely change, he predicts. “As I start to put out data-based research papers, I’m sure there will be plenty of debate.” He grins. “And I welcome it.”

Tom Slee, a software industry veteran and writer, has issued harsh critiques of claims made in sharing economy circles and the economic trend’s potential. Slee says he finds the professor’s work thoughtful, but “the underlying business models don’t seem to me to be as novel as he paints them.”

I put the notion to Sundararajan. He’s confident that something shifts when individuals accustomed to renting out spare rooms on an one-off basis are tied together on a platform that can scale to millions of users at once. And if there’s a bit of feeling around in the dark on what that change looks like, exactly, Sundararajan is confident that it exists.

And he expects his colleagues in academia will come to see it, too. “I may have noticed it a little earlier than other people, but I have a feeling that the Airbnb valuation” — there’s talk of $10 billion in the air around the company in recent weeks — “has attracted the attention of a lot of them.”

As someone drawn to the study of today’s transformative social-technical platforms by the possibility that they also might level out inequalities, Sundararajan says he still isn’t too worried that venture-capital-backed behemoths like Airbnb and Uber are attracting the sort of support that Aftermind never did. A non-trivial slice of that speculative cash, he says, is going to settle the market by working out the rules that will apply to the sharing economy in cities all over the world. If even he might like to see the rise of, say, worker-owned networked transportation cooperatives, that’s not likely to happen while the rules around the sharing economy remain so unsettled.

That’s why of Uber and its colleagues, Sundararajan says, “I see them providing, to some extent, a public service.”

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Nancy Scola is a Washington, DC-based journalist whose work tends to focus on the intersections of technology, politics, and public policy. Shortly after returning from Havana she started as a tech reporter at POLITICO.

Tags: uberairbnbsharing economy

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