Taking a brief interlude from my posts on transportation to share an article I read this morning on BBC.

It’s about Ensemble2Generations, a French company that helps elderly home owners open up their homes at below-market rates to students who can’t afford rent otherwise.

It’s a wonderful example of how the sharing economy helps to solve several social and economic problems:

• Unaffordable rents inhibit the younger generation from moving to cities, or stacks on debts for those who do. This has knock-on effects on the innovation and vibrancy of the economy
• Many elderly today are “asset-rich” and “cash-poor”. They own properties that the young today cannot afford because of rapid property price appreciation over the past 20-30 years. At the same time, longer life expectancies mean that retirement cash savings have to be stretched out. Why don’t they move to smaller properties and liquidate the cash? A perfectly rational argument, but Policymakers are finding that many elderly do not want to move out of a place that holds memories – often of spouses that have passed or good days gone by. Financial incentives can’t change that.
• As nuclear families become increasingly spread out, more and more elderly are living alone and suffering from “social isolation”, with its associated physical and mental health risks.
• Social media and busy modern lifestyles have exacerbated echo chambers – we mix with people who share our life stage, views, interest and start to lose empathy for those who are different. Does this make us less able to find middle-ground, to trade-off our interests for someone else’s, to be truly accepting of diversity in our workplaces and neighbourhoods? I think so. In addition, losing connection with our older generation means losing history, perspective and collective wisdom.

Helping students find affordable rent in older folks’ homes doesn’t just solve an important economic problem. It also hits the heart of what busy, fragmented societies struggle with – empathy gaps and social isolation.

However, this will not be a profitable business in the same way as Airbnb or other home sharing/ rental platforms. Each match is a relatively long term arrangement, which means the company can’t cream off a steady stream of “taxes”. In any case, a high “tax” doesn’t sit well with the objective of affordable housing. Furthermore, I suspect the company has to spend more time and cash on background checks and assessing compatibility issues, given that the objective is building a long-term relationship, not just making a transaction. Finally, the total addressable market may not be large. For these reasons, I personally think a company working in this space would have difficulty attracting VC investment.

Here is a case where there is clear public good, but where it is unlikely for the concept to hit the scale, efficiency and funding required to reap maximum benefit.

• Do you agree with this assessment? Are ideas such as these only feasible in a non-profit/ government-subsidised setting?
• What is the potential of technology and business models in helping this idea take off in a bigger way?
• What are the limitations of technology and business models in helping this idea take off in a bigger way?

Would love to hear from you!