One minute, hard and fast, is not much time in which to explain an idea, especially if that idea is a proposal for an innovative new sharing economy model that is going to bridge the wealth gap. But if that’s how much time you’ve got, then you make it work.

That is the very essence of hackathons: make it work. Take the best of those 60-second ideas, put them in an environment filled with experts and mentors, give them another hard, short deadline, and tell them to make it work.

This past weekend, Rani Croager, co-founder of the cooperative social-enterprise incubator Uptima, hosted the Sharing Economy Challenge hackathon at Impact HUB Berkeley, which, as you may have already guessed, was focused on developing sharing economy models that tackle income inequality. “The sharing economy itself has an enormous potential to bridge that wealth gap,” she said, “if we start to think about how we design solutions that benefit our community.”

The sharing economy’s great promise is that these systems which allow for the more efficient use of resources, especially idle and wasted resources, will have complementary benefits for other important issues, issues such as community, sustainability, stability and income inequality.

But Rani’s “if” is a big one. Today it is increasingly important to recognize that there are different types of sharing economies, and that these differences have important implications for how beneficial, or extractive, these peer-to-peer systems are for their larger communities.

The reason for the big “if” is that when it comes to sharing economy platforms, what goes in is what comes out. When diverse considerations go into the project, diverse needs are met by it. When sustainability is a focus for the designers, the users end up supporting that cause. But when venture capital is invested into a sharing economy model, venture capital returns are what is extracted from it.

The point being that the influence that venture capital has on the ideas it invests in can fundamentally subvert the priorities of that enterprise, turning it from a “real” sharing economy into a third-party wealth creator for the already wealthy.

When “sharing” has the word “economy” affixed to it, there is almost certainly a third party involved. This is only natural; even peer-to-peer (p2p) models, meant to connect one person’s resources with another person’s needs, have third parties: the company that created the platform.

P2p systems act as facilitators of a transaction, and the value created in these transactions is split between the users and the third party, with the ratio dependent on the costs and priorities of the founders.

Such a system is only as valuable as the transactions it enables among the peers it connects, which are products of 1) platform design and 2) target audience awareness.  Big investments from VC firms can do a lot for concerns 1 and 2 (á la Lyft and Airbnb), but the result, according to Rani, is that “they are creating value for the money that’s been put into these businesses, as opposed to creating value for the community.”

Trouble is, even platforms that want to focus on creating value for the community need funding.

That is why organizations like Uptima, and events like the Sharing Economy Challenge hackathon, are so essential to the formation of community-oriented platforms. Bringing the ideas of many passionate people to one place provides an opportunity for immense and efficient knowledge transfer.

These events go way beyond cataloging the pitfalls of VC capital, but funding is always a central concern.  According to Kendra Shanley, one of the hackathon mentors and co-founder of the community-currency project Bay Bucks, “what’s powerful about it is that the way you are funding can actually reinforce your social mission.”

The mentors and experts who are there to assist in the prototyping and incubation of the new ideas are already experienced with the challenges these unconventional projects face. They help expose the teams to the benefits of structure, ownership, governance and funding alternatives, and offer insight into how these decisions will affect the viability of the enterprise.

They know how just important their work is to the future of these alternative models. Yvette Holts, another mentor and founder of Cowrie Village, was recently a participant in the Startup Weekend Black Male Achievement Hackathon.  She says the hackathon was instrumental in developing her team’s mixed goods-and-services bartering platform, Saltmine.

For her, the value was in “the impetus that comes from having people really pay attention to your ideas,” in addition to the progress that is made in that environment: “from there, we came out with a logo and a beta-version of the app and then this fantastic team of people who are still working together on it now.”

The winner of this weekend’s hackathon was, an app designed to connect people with projects they would be interested in working on or mentoring. The prize for winning was, among other things, a full scholarship to the Uptima incubator, memberships to co-working spaces, and free registration for a even bigger hackathon and conference  event, the New Economy Convergence. There were also awards for the runner-up, the best cooperatively-owned model and the audience choice.

By funneling the winning ideas into alternative business incubators, networks of co-working spaces, and upcoming knowledge-transfer events, this hackathon model is providing a viable opportunity to grow community-oriented sharing economies without the Faustian bargains of venture capital.

The benefits of the hackathon are not limited to the winners. As a matter of fact, Yvette’s project, Saltmine, didn’t win at the Startup Weekend event. “We didn’t win the hackathon,” Yvette said, “but we won with the team we created and the people we connected with.” At the end of these events, everyone who participated walks away with new ideas, new skills, new contacts, new projects, and renewed inspiration.

In this way, the hackathon fulfills that great promise of the sharing economy: to promote community, sustainability, stability and income equality through the more efficient sharing of the resources we already have.

About The Author

Eric is a freelance writer who covers Oakland's thriving New Economy movement, as well as local culture, community projects, and letters. As graduate of UC Santa Cruz he is essentially a socialist, but what does that even mean anymore, really? As a proud Oakland transplant from the PNW, Eric sees his work at Oakland Local as a small part of Oakland's battle to keep its identity, support all its peoples, and be prospering without plundering.

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