The evolution of fallow assets in the modern marketplace
Fallow, a term which originated in the farming industry circa 1400 AD, historically refers to land which was fertile but left uncultivated for one or more growing seasons(1). In modern contexts, the word ‘fallow’ has evolved to encompass any tangible resource which is left idle and therefore underutilized to its full potential. Such resources present significant economic opportunity which would otherwise be foregone if the asset were to remain idle and depreciate over time.
The gig economy, one of the most successful examples of an emerging market in recent years, relies almost entirely on the supply and demand of fallow assets. By monetizing these dormant materials, companies such as AirBnB and Uber created businesses that generate profit through the market exchange of idle resources. This innovative model allows both consumers and suppliers to benefit through the exchange of goods which resulted in rapid expansion into the broader global market.
However, these companies could be limited by the finite supply and demand of physical resources and may consequently become less economically viable in the long term. In contrast, the widespread success of service industries (software, labor, design, etc.) indicate much greater demand may exist for a new evolutionary branch of fallow assets which are not limited by material constraints.
Fallow assets in the modern age
The definition of fallow assets has shifted as our economy has changed over time. Where fallow once referred to arable land, the definition has expanded to include both public and private property. Across the United States, millions of properties (i.e. hotels, vacation homes, office buildings, etc.) are left vacant and underutilized for a variety of reasons, such as travel restrictions or lower demand for temporary housing of workers.
A notable example of fallow assets in the modern age is Vivo Living, a company converting underutilized hotels into modern apartments with upgraded class A amenities.. Vivo’s properties offer modern economically viable apartment rentals while maintaining hotel amenities such as a fitness centers, pools, outdoor bbq and lounge areas featuring pool tables and shuffleboard.
Despite the fact that the rental marketplace is predicated on the short-term exchange of property (rather than long-term sale), Vivo has several social benefits that may explain the widespread cultural adoption and success of the business; such as reducing waste and sprawl by carefully considering each location’s physical proximity to shopping, markets, entertainment and other quality of life necessities.
Further, Vivo uses green initiatives and sustainable systems with a triple bottom line philosophy to minimize what would otherwise be a substantial environmental footprint.
Whereas traditional fallow assets only offered economic benefits to the consumer and the supplier, modern fallow assets may also offer secondary benefits and positive externalities to broader society (i.e. environmental or social). Environmental benefits from modern fallow assets such as Vivo could result in reduced traffic and pollution from buildings being in proximity to urban centers or public transit. As residents occupy these properties, it could also lead to a reduction in crime due to lower supply of vacant buildings in an area and help establish a stronger local presence for a given neighborhood.
Vivo’s website indicates the demand for their service has not yet been fully realized and plans to expand nationwide with current locations in Arizona, California, Colorado, Florida, Indiana, Nebraska, North Carolina, South Carolina, Texas and Utah. Vivo explains the demand for these fallow assets in the modern market in the following quote:
“Renters are seeing regular increases in housing prices and increased demand in virtually every city in the United States. Hotels with low demand exist in oversupply in most major cities in the United States. Vivo is a response to rapid gentrification crowding out our younger population and exacerbating income inequality across the country” (2).
Complex fallow asset business models
Whereas Vivo represents a fallow asset with a relatively simple business model, there are also other fallow assets with more complex frameworks. Ridesharing businesses consist of primary suppliers (e.g. Uber and Lyft) and secondary suppliers (drivers) while simultaneously benefiting the consumer (rider) and society. The identification of cars as a fallow asset is illustrated here:
“Most people in transportation focus on the five percent of the time that cars are moving. But the average car is parked 95 percent of the time. I think there's a lot to learn to learn from that 95 percent.”
- Pay As You Park (3)
The rapid adoption of ridesharing services demonstrate the market demand for underutilized resources. Despite existing competition in the transportation industry with taxicabs and public transit, Lyft and Uber disrupted the industry bypassing the need to purchase vehicles with independent contractors using their own vehicles delivering a solution which benefits both the supplier and the consumer.
Beyond the economic implications, ridesharing has also seen several social benefits that may have attributed to its success in the market. For example, the advent of ride-sharing companies reduced parking congestion in major cities and enabled city planners to convert parking garages to parks and other spaces which benefit the community (4). Another example, in the case of Uber, a 2015 survey found 88% of respondents over the age of 21 agreed with the statement that “Uber has made it easier for me to avoid driving home when I’ve had too much to drink” (5).Ride sharing companies may continue to expand as these companies are actively developing the use of self-driving vehicles to capture a greater percentage toward full utilization on fallow vehicles (6).
Intangible fallow assets business models
It is logical to infer that surpluses of other fallow assets may still be sitting idly that are not yet discovered.
The contributing factors that present opportunities to discover and make use of fallow assets can vary widely, though two distinct business models have emerged:
Centralized: fallow assets are managed and distributed by a central team (Easie, Vivo, WeWork, Lyft)
Decentralized: fallow assets are managed and distributed by the supplier (Upwork, TaskRabbit, Turo, Craigslist, Amazon MTurk)
While there are likely other fallow assets that have not yet been identified, there also exists opportunity in markets which have not traditionally been defined beyond the physical world: intangible fallow assets.
In fact, some economists argue that demand for intangible assets may exceed that of tangible assets. Since 1939, US service jobs have risen 36.5% while goods-producing jobs have fallen by 61.8%.
Source: Advisor Perspectives Goods Producing Versus Services Providing Employment, September 2020 (7)
Furthermore, US consumer expenditures data also indicates that demand for services has grown to more than double that of physical goods over the past decade as seen in the following figure:
Source: Table 2.4.6. Real Personal Consumption Expenditures, July 31, 2020 (8)
As businesses and developed economies experience shifts in consumer demand towards services, further opportunities may emerge for intangible fallow assets.
Easie hypothesizes that the human workforce and general expertise are being globally underutilized. Considering the effect of the current pandemic on rising levels of unemployment and economic uncertainty, labor is not being used at the same rate seen during times of economic prosperity.
Beyond the implications of current events, it is not uncommon for an employee to experience a lack of productivity during work hours because they have completed all required tasks in less time than prescribed. It would be incorrect to assume these employees are unproductive, they are simply being underutilized in a manner similar to a parked vehicle. This invites a new definition of a fallow asset otherwise known as ‘fallow labor’.
Easie is a proven example of an intangible fallow asset business model
Fallow labor is not a new concept, nor a new venture opportunity. However, companies have historically only pursued a decentralized model where labor and distribution of services were managed by the supplier rather than a central governing body. The Easie business model is predicated upon the assumption that centralized management will result in greater cost savings, implementation of demonstrated processes & tools, organized knowledge and research and profit in the long-term.
Whereas the decentralized model of fallow labor management often results in complaints about quality control and missed expectations, the Easie network is a consortium of predominantly US-based, college-educated specialists that have been vetted and rigorously interviewed by Easie who have a demonstrated history of achievement in their fields of specialization.
These specialists rapidly mobilize to form temporary teams that are quality-controlled and project-managed by the Easie core team.
Each Easie project is situationally priced and most projects are quoted on a fixed fee or per-minute basis. Specialists offer their labor that would otherwise be squandered.
Due to the centralized management model, Easie has seen widespread adoption of unique applications of fallow labor assets across over 40 knowledge domains for both B2B and B2C clients. Key distinctions of this centralized model include:
Quality assurance guarantee which replaces consumer reviews
Exclusive, high-quality customer service rather than high volume, low barrier to entry offerings
Formal proposal process based on outcome-based selling which replaces a decentralized, high-effort bid experience
Centralized project management and quality control
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