Airbnb CEO Tells us His View on the Sharing Economy

Brian Chesky is not only the CEO of home-share platform Airbnb, but also one of the first to become a billionaire off the shared economy. Last week he discussed his predictions for the Sharing Economy at the Atlantic Aspen Ideas Festival. Considering Chesky's success his bold predictions are worth paying attention to.

Airbnb does business in 34,000 cities, has a valuation of over 10 billion dollars, and in a very short time has disrupted the world of hospitality and travel.

He explained that society started on micro-entrepreneurial roots:

"Cities used to be generally villages, and everyone was essentially kind of like an entrepreneur, before there were factories. You were either a farmer, or you worked in the city as a blacksmith, or you had some kind of trade. And then the Industrial Revolution happened." 

Throughout the interview, Chesky makes several predictions about the future of the sharing economy and its impact on society.

Chesky predicts that not only will the industry be able to create upwards of 100 million micro-entrepreneurs, but it will also save us from future recession and robot-worker society. We'll also be living in a world where people can become businesses versus the traditional work-for-the-man archetype. He also predicts that everything will be small with less big chains and outright ownership. "You're not going to have big chain restaurants. We're starting to see you have farmer's markets, and small restaurants, and food trucks. But, soon, restaurants will be in people's living rooms."

While worth the watch, If the 1 hour video is too long for you check out the recap from Venture Beat. Gregory Ferenstein's article "Airbnb CEO Spells Out the End Game For the Sharing Economy in 7 Quotes" breaks down the main points of Chesky's interview.

Let us know what you think. These are pretty bold predictions and the one thing we'd love to hear is a timeline. Is this the future of the Sharing Economy? Will we see it in this lifetime?

Airbnb's Agreement in New York

This week New York State's attorney general Eric T. Schneiderman, succeeded in obtaining a subpoena for anonymized data on New York Airbnb hosts. Schneiderman recently targeted the housing-rental site stating that some hosts are "large, commercial enterprises with dozens of apartments - truly illegal hotels". This was Schneiderman's second attempt to get Airbnb records as the first deemed over-broad by a New York Supreme Court Justice. Schneiderman narrowed his focus and submitted a new subpoena the next day which was approved Wednesday. 

The attorney will have a year to sort through the data and identify those in violation of local laws. Scheiderman has stated that he only plans to pursue anyone who's running illegal hotels. If his office finds something suspicious, Airbnb must identify the host. Airbnb's head of global public policy, David Hantman, called it "a strong agreement that best protects our community's data and sets us on a positive path forward." 

So far, it looks like both parties are claiming this ruling a victory. We have yet to hear how NY hosts feel about the agreement. For many, inviting a stranger to stay in their home is much more comfortable than opening it up to regulators.

Schneiderman is one of many regulators keeping their eye on the digital economy. He announced his intentions for sites like Airbnb and Uber in a press release last month:

Regulators should not be deterred and, as a practical matter, they can’t and won’t be — we are now living in an online world, one that offers great promise but is also becoming one of the primary crime scenes of the 21st century. Major service providers cannot be allowed to treat it as a digital Wild West. The only question is how long it will take for these cybercowboys to realize that working with the sheriffs is both good business and the right thing to do.

 Schneiderman claims that the deal was "a template for other places in the country where the issue has been raised."

Perhaps it will become a worldwide template as Airbnb was also in international news this week as one host ran into legal problems in France. A young man was found guilty of breaking his lease after subletting out his room in Paris for €450 ($613) a week. The man was ordered to pay € 2,842 ($3,872.79) in damages to his landlord. 

The judgment – a first involving Airbnb in France – coincides with a wider crackdown by the French government and the Paris town hall on the flourishing market for letting rooms or whole apartments to tourists. It also coincides with the settlement of a legal battle between Airbnb and New York State, which could lead to the prosecution of thousands of people who have defied state laws and let rooms or flats to tourists.

We are curious to see how this plays out. What do you think? Is this an example of over regulation or did Airbnb have this coming? Check out Airbnb's Blog Post on the deal and let us know what you think.

Transparency Rules the Sharing Economy

Last week's blog post talked about trust in the sharing economy and different views on whether peer economy users are experiencing honest, organic trust or not. Whether you believe that the sharing economy is a trust inducing system or that it's all an illusion you can't ignore that it's an economic model that is increasing in strength. 

But how are they doing it? Peer-to-peer Sites like eBay and Craigslist have been around for almost 2 decades and while both have done well, they didn't necessarily inspire the intensity of excitement that we are seeing from the success of companies like Uber and Airbnb. Carl Alviani explains why in his recent WIRED article "Uber Learned the Hard Way: Transparency Rules the Sharing Economy". Alviani talks about Uber's recent struggle trying to explain their surge-pricing policy:

This is far more vitriol than you’d expect from a simple price increase, but makes more sense when you recognize how much consumers hate opacity and unpredictability. So when CEO Travis Kalanick announced that Uber’s app would indicate when a current surge period is scheduled to end, fans breathed a sigh of relief. Kalanick describes the move as an attempt to “bring more humanity to our communications,” but it’s more accurate to say that Uber is finally coming to grips with active transparency, which has become standard throughout the Sharing Economy.

Alviani goes onto to talk about what other platforms, such as Airbnb and Etsy, are doing to promote transparency. Essentially, they highlight everything that could go wrong with your connection and what to do about it. All with the clarity and care that you'd find on any other part of their site. 

This is why established peer-to-peer marketplaces like Etsy and Airbnb make a point of using their design chops to celebrate information that others sweep under the rug. Go to their websites and you’ll encounter pages outlining terms of service, cancellation policies, dispute resolutions and other boring details, treated with the same elegant design and clever copywriting as taglines and banner ads. Features like searchable photos, well-written descriptions and sensible interaction flows are everywhere, not because they’re nice to have, but because they’re the foundation that allows this trust-based model work. These are what make browsing for vintage furniture more comfortable on Etsy than on eBay, and meeting people on Match.com less creepy than on Craigslist.

It appears that Uber has learned their lesson and it will be interesting to see what else they will make transparent. Check out the entire article by Alviani on WIRED and let us know what you think. Why do you think transparency is such a huge part of the sharing economy? Better yet, why does this feel like such a new concept? What organization would you like to see be a little more transparent?

Trust and the Sharing Economy

This last week several articles came out regarding one of the collaborative economy's most popular keywords, trust. It's a massive piece of what it takes to be an active participant of the peer economy and now a hot topic of conversation.  

Jason Tanz' recent Wired article "How Airbnb and Lyft Finally Got Americans to Trust Each Other" covers everything from interviews of Sharing Economy users to a history lesson on when America's started losing trust in each other in the first place (according to Tanz, sometime in the mid-19th Century). 

Shortly after Tanz' article released, Christine Lagorio-Chafkin of Inc. published "Why Trust Is the Sharing Economy's Pipe Dream", which concluded that any sense of real, organic trust "still feels like a hologram".

A recent Wired cover story seemed poised to explore how companies in the sharing economy foster compassion, community, and trust, but it actually surfaced a more complex and compelling argument, one with which I agree: These companies actually have built quite a sturdy backbone of protections for users (certainly these fail from time-to-time, but they exist) that they've eliminated much of the need for that elusive trust by customers.

Lagoria-Chafkin goes on to quote Tanz's article who writes:

Indeed, for the time being the boundaries of the sharing economy are protected fairly rigidly. If you’ve ever been caught driving more than 20 miles over the speed limit, you can't rent a car on RelayRides. Aspiring Lyft drivers must pass a background and DMV check and get approved by a mentor, who judges applicants not just on driving ability but on personality. DogVacay hosts go through a five-step vetting process that includes training videos, quizzes, and a telephone interview.

She goes onto say:

In comparing the evolution of the modern marketplace economy to the explosion of institutional banking and insurance in the early 20th century, Tanz continues: "this new system acted as a trust proxy; it didn't require people to trust one another, because they could rely on a centralized system to protect their interests."

The digital marketplace as a trust proxy: Now this makes a lot more sense. 

Both articles make interesting points. Read Jason Tanz's enttire article advocating trust here and Christine Lagorio-Chafkin's rebuttal here. 

What do you think? Is the Sharing Economy based on real, organic, neighborly trust? 

Some Setbacks for the Sharing Economy

"Scrutiny of the so-called sharing economy seems to increase every day" and today it's in San Francisco, one of the collaborative economy's model cities.

The San Francisco city attorney sued two landlords Wednesday, claiming they illegally converted residential housing into short-term rentals that were advertised on Airbnb and similar services. The former residents, two of whom were disabled, were evicted using the Ellis Act, a controversial California law that allows landlords to reclaim properties for their own personal use.

Jim Wilson/The New York Times

Dennis Herrera, San Francisco City Attorney

Ouch. While Airbnb states that this particular landlord has been banned from the using the site, it doesn't mean it won't happen again.

This isn't a new discussion, especially in San Francisco who is currently in the midst of an affordable housing crisis. "Housing advocates say the law is often abused by landlords seeking to cater to the lucrative tourist market".

Ride-sharing also continues to be a topic of constant scrutiny and platform Uber is currently under investigation by New York attorney general, Eric T. Schneiderman for illegal price-gouging  (selling goods at higher than reasonable or fair prices). Schneiderman is also seeking information from Airbnb which ended in court (again) this last Tuesday. 

Check out the rest of the article from The New York Times Blog and let us know what you think. Are these setbacks only the beginning? How can a sharing economy services such as Uber and Airbnb prevent users from abusing services? And how should the law respond?

Airbnb becomes the Sharing Economy's first Billionaires

This last week it was announced that Airbnb was in talks of funding that would value the company at $10 billion making it's co-founders the first billionaires of the Sharing Economy.

“The trio’s first funding came in 2009, when they got into famed tech incubator Y Combinator and eventually impressed founder Paul Graham as well as Sequoia Capital, who put up $600,000 in seed funds after the program. The company’s raised money from a range of Silicon Valley elite investors since Sequoia, which was joined in a Series A round by Greylock, SV Angel, and angels including Ashton Kutcher. In 2011, it raised $112 million at a valuation north of $1 billion led by Andreessen Horowitz and joined by DST and General Catalyst Partners as well as Amazon.com CEO Jeff Bezos. The next year, it raised $200 million in a Series C round led by Founders Fund along with its existing investments in a deal that values the company around $2.5 billion.”

Now valued at $10 billion from private equity sources, Airbnb is worth more than Hyatt Hotels. Check out Forbes coverage of the big deal here and let us know what you think. What does this mean for Airbnb and the sharing economy? Will this become an ultimate goal for all sharing economy platforms? 

The 'Sharing' Hype - Do companies like Lyft and Airbnb help democratize the economy?

“How can a movement that has been started by corporate and venture capital be any kind of socialism?”

2013 marked significant growth in the new sharing economy, ride-sharing company Lyft saw a twenty fold increase in users and room-sharing platform Airbnb gained 6 million customers. Last year also exposed the legality issues of sharing services and has now intertwined the sharing economy with regulators. Currently, most legal focus is on ride-sharing (e.i. Lyft and Uber) and room-sharing (Airbnb). However the sharing economy has a directory of hundreds of different platforms that provide peer-peer sharing that have the potential to violate some sort of established regulation. The sharing economy has been referred to as an "ugly throwback to the dark days of socialism". The article by In These Times asks "Is the sharing economy in fact socialist, or in any way anti-capitalist?".

In these Times met with David Golumbia, assistant professor of English at Virginia Commonwealth University and author of The Cultural Logic of Computation, Neal Gorenflo, co-founder and publisher of Shareable Magazine, and the SolidarityNYC collective to discuss the sharing conundrum. Check out the full article here and let us know what you think. Does the sharing economy encourage an anti-capitalist economy? Or a socialist one?