A BLOG of PHILOSOPHICAL REFLECTIONS & SPECULATIONS

You Can't Check Out of the Peer-to-Peer Motel

Published on Friday July 29th, 2011

The startup blogosphere is abuzz with news of “EJ”, a San Francisco woman who rented out her apartment on Airbnb and returned to find it ransacked and robbed. This comes just a few days after closing a round of funding that valued the company at $1.3 billion. Part of the controversy is over Airbnb’s response to the event: did they respond quickly enough? Are they falsely claiming that a suspect has been apprehended because they need a a happy ending for PR purposes? Are they being as helpful to the victim as their press releases say?

One reason these questions are important because Airbnb bills itself as a different kind of company - more human, more caring, less profit-seeking - purusing a socially-responsible form of capitalism. Skeptics wonder if these aren’t just feel-good marketing slogans and scrutinize companies like Airbnb to ensure that they’re truly living up to them. This evinces a belief that the pro-social values they claim to represent really are desireable, the question is only whether their committment to them is authentic or not.

Airbnb’s precursor is CouchSurfing, a social network that draws its members from the global backpacker scene and seeks to connect travelers with people who are willing to share their spare rooms and couches with them. Their mission statement is “A world where everyone can explore and create meaningful connections with the people and places they encounter,” and it’s run as a non-profit that gets all of its funding from member donations and guided by principles like:

CouchSurfing is an exemplar of progressive values, and the motivating force behind conscious capitalism is the idea that a corporation could have these values too. With an authentic committment, capitalism could be reformed and become a force for good in the world.

In Airbnb’s case, these values are an important part of their brand, but it’s not just superficial marketing slogans – it creates a form of peer-to-peer resource sharing, they really do connect individual travelers with individual owners, and that makes their cheerful global-village-of-sharing brand very compelling. Their tag line is “Travel like a human” and “Rent nightly from real people,” an implicitly “anti-corporate” message that asks us to reject the aesthetics of the faceless, impersonal budget hotel chain to form real connections between people.

How does this anti-corporate corporation work? It outsources the traditional costs of running a hotel – reception, housekeeping, facilities management, risk management, security – to a very large, global network of individual owners. Airbnb takes their cut because they run the booking website. And from that perspective, it’s difficult to see how they are legally liable for crimes committed by guests, any more than Expedia would be liable if someone trashed a hotel room that was booked through them.

But still, it feels like Airbnb should be liable. And this is largely an effect of their marketing, which convinces individual owners to think of the risks and costs of renting out their house as prosocial behaviors that you wouldn’t think of being compensated for – trusting your guests, sharing your home with them, welcoming them to your city, making sure they have clean sheets, little human touches like a bottle of wine or flowers, etc. All of those things add to the value of booking through Airbnb, but they’re free so the company ends up with a unique value proposition that’s price-competitive with hotels.

Airbnb wants its hosts to act out of generosity, not greed. With absolute sincerity, it wants hosts to think of their relationship with guests as pro-social and interpersonal; not market-based, profit-seeking and transactional. And in some weird alignment of the stars, it’s actually profitable! Everything that Whole Foods CEO John Mackey have been saying, that conscious capitalism can be profitable capitalism, is true.

But this is because individual will work harder for less pay, and take on more risk that should be born by the corporation because they believe in those values. Taking on personal risk for Airbnb becomes a sign of your commitment to generosity, diversity and cultural exchange, in exactly the same way that taking out thousands of student loans so that corporations don’t have to invest in training you is a sign of your committment to life-long education.

The real danger is not that corporations will whitewash their image with ideals they only pretend to believe in while continuing to act like psychopaths. It’s that they don’t do that, that they really commit to those values and it lets them push risk and costs on to workers.

The final perverse twist in this story: various proposals have been circulating on the internet on how to redesign Airbnb to reduce the chances of a guest vandalizing a host’s home. The solutions have not generally centered on Airbnb’s profits coming at the expense of hosts taking on risk, which would imply that Airbnb ought to purchase insurance for them. Instead, the problem is perceived to be a failure of information - hosts can’t properly evaluate the risk of a guest without knowing personal details about them. Effectively, in order to ensure that Airbnb’s peer-to-peer crowdsourced hotel revolution is successful, we must all give up anonymity and submit to increased surveillance.

Colloqium

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