In the wake of Airbnb's home-vandal scandal, start-ups in the collaborative consumption space are rebuilding peer-to-peer buying's reputation. Here's how.
Airbnb found itself in a public relations nightmare this summer that threatened to undermine its whole ethos of amiable and unique person-to-person connections. Gawker published an account of a user of the start-up vacation-property rental site whose home was ransacked by a vistor who destroyed property, rummaged through her personal belongings, and set fire to sheets. The incident had some wondering if the site was doing enough to protect its users as it facilitates transactions between strangers.
It's a question that stretches well beyond just Airbnb: a number of fast-growing start-ups are bucking traditional methods of booking a room (like Airbnb), renting a car (Getaround), leasing office space (Loosecubes), hiring a helping hand (TaskRabbit), or planning a vacation (Vayable). The new wave is sometimes referred to as "collaborative consumption" because it connects people with limited resources to those with under-used assets and relies on a sense of community among users.
But without the usual marketplace checks and balances in place, how much are customers willing to trust each other to provide safe and reliable experiences? It's one thing when you're talking about buying a used lamp over eBay—but entirely another when you're handing over the keys to your only set of wheels.
The companies say they learned a lot from the Airbnb incident and are taking steps to protect their users, from pre-screenings to providing insurance coverage. But how do you get people to trust a total stranger with something as valuable as their car or home or office? The answer, say the companies, lies in social media and going beyond the typical client-customer relationship.
The San Francisco woman whose Airbnb house was ransacked was followed by more tales of users who returned home to find their belongings rifled through, birth certificates stolen, and general havoc caused by meth addicts. It was a PR double whammy for the company, which was also slammed for not responding fast enough and not fully vetting its users.
Does that mean the new world of collaborative consumption is still just as vulnerable to creeps as Craigslist? The companies say they now have something going for them that you won't find on Craigslist: insurance.
Airbnb says the incident was an anomaly among the thousands of other successful transactions that go through its site every month, and that business did not suffer because of the controversy. But the company also stepped up development of tools in its "Trust & Safety" center on its site to ensure comfort levels, which includes a new $50,000 host-guarantee the site launched in the summer to let hosts know Airbnb will support them in cases of theft and vandalism.
But the Airbnb incident provided an example to other similar start-ups of what they can do to insure customers feel as comfortable as they would buying from a family owned store down the street.
Starting in January, Loosecubes—a office-space leasing site based in Brooklyn, New York—is implementing an optional insurance rider brokered through a national insurance firm that will cover $50,000 worth of damage to the workspace to make hosts feel more comfortable.
"So, just in case a Loosecuber spills a coffee on your iMac or accidentally writes on your whiteboard with a sharpie, Loosecubes will have you covered," says Anna Thomas, the company's chief happiness officer.
It also includes some general etiquette norms in its terms of agreement, such as not sharing sensitive information from other workers in the space.
Vayable, a service that lets users search for and pay for unique travel experiences designed and curated by locals, interviews all of its guides before approving their experience packages, either in person or by Skype, founder Jamie Wong says. The company also reviews packages before they go live on the site to make sure they are clear for travelers to understand. "We feel a strong sense of responsibility to users," she says.
In the case of start-up TaskRabbit, which lets users hire other people for everyday errands or odd jobs, the company puts its errand-doers through a questionnaire, video interview, criminal background check, and an online quiz on the company's manual before accepting jobs through the site. Plus, like most of these new services, the site offers 24/7 customer service.
"Truly, they're our first line of customer service out there in the field," says Leah Busque, TaskRabbit's founder and chief product officer.
Drivers using peer-to-peer car rental site Getaround are required to provide their drivers license number as well as Facebook information for security. But the site also limits what kind of cars can be rented: nothing older than 1995 or with more than 150,000 miles on it. And if all else fails, there's 24/7 roadside service.
Sites that deal with this kind of peer-to-peer connections are increasingly banking on the safety net of social networks, same networks that have caused the decline of real-world communities over the past two decades.
Now, these businesses are not only harnessing a bounce back from that effect—people are looking to make connections with real people again instead of just booking a service through an automated website—they're also counting on the fact that it's hard to remain anonymous in the days of Foursquare checkins and tagged photos.
"Technology is enabling people to get off the Internet and connect with each other offline in a trusted way," Busque says. "Fifteen years ago, there was probably a kid in the neighborhood who would wash your car, mow your lawn. As the Internet initially developed, we lost that sense of community. The Internet really siloed us in early days."
Real-world connections are especially of interest to the people who use Loosecubes. The kinds of developers, creative-industry wrokers, and other independent professionals who need workspace often benefit from being exposed to new kinds of coworkers—even ones from different fields. A recent study cited by the Brooklyn DIY Business Association says that 80 percent of people in co-working spaces end up going into business with their fellow coworkers.
"I think there's kind of this yearning for people to get back together in person," Thomas says. "A lot of really great Loosecubes experience is born out of that kind of serendipity."
The kinds of users who flock to Airbnb and Vayable are looking for something unique that can't be found in a Lonely Planet guidebook, company executives say. They want to feel connected to the community they're visiting by staying in a quaint Vermont tree house or spending their trip taking surf lessons in Hilo instead of just shacking up at the local—generic—Holiday Inn.
"There is a sense of we're all a part of something new," Wong says. "They're hoping to build this. They have sense of ownership over platform and community."
Vayable likes to keep tabs on its users to create more than business relationships.
"We use Facebook groups, keep regular correspondence, build relationships with our guides," she says. "It almost becomes that type of relationship you have with a friend who may not be in your day-to-day life. You're following their story from afar."
Airbnb, which recently launched a similar concierge service to provide that "live like a local" experience, encourages users to go beyond just the renter-rentee relationship.
"We put a lot of emphasis on creating features that build trust within the community so people can feel comfortable bringing these online relationships offline," says Brian Chesky, the company's CEO and co-founder.
From Airbnb down to Taskrabbit, all the entrepreneurs talk about making the world smaller again and creating an economy where people trust each other's assessments of a product or service, instead of just relying on corporate marketing. While they all lead the charge, they all expect the market to get more crowded in the near future.
"This is sort of the next wave of the Internet: access over ownership of items," Busque says. "This isn't a site like Craigslist you just go to and hope for the best."
The companies want these transactions to feel like doing business with a trusted friend instead of an Internet stranger. Take the Vayable story, for example: While working as a field reporter and researcher for The Daily Show with Jon Stewart, Wong used her nine weeks of vacation—spent on a slim budget—to collect unique travel experiences. For instance, she went to Panama and helped friends build a house in exchange for a free place to stay. It was an adventure not found on booking sites such as Expedia or Travelocity.
"The most special memorable amazing experiences were always through connections and people I met," she says. Soon, friends and family began asking her for trip ideas, which lead her to set up a blog of elaborate directions and clues for maximizing a travel experience: clues like which dirt road to walk down to find a specific person to talk to in a certain small shop. "It was not the most efficient way," she says. From there, Vayable was born.
Each is meant to go deeper into an experience than your average tour bus. So instead of taking a Sex and The City group tour with a dozen others, you could book a "Do SoHo with your gay BFF" tour and get a unique, more intimate look at the South of Houston neighborhood of New York City.
In the early days of eBay, winning bidders had users' rankings to gauge their trustworthiness, but those users were still mostly hidden behind anonymous screen names. In the pre-PayPal days, you were forced to send a money order to get your item.
But the change in technological platforms for digital payment, social connectivity, mobile apps, and location-based services has pulled back the curtain on much of the anonymity online.
Many of these new sites incorporate Facebook connectivity so you can see that your Facebook or LinkedIn friends have booked a room or rental home through Airbnb, or whether you have a mutual friend with someone renting office space through Loosecubes.
The Airbnb community can see just how they're connected to each other," Chesky says. "Travelers can filter their search results to see places their friends have reviewed, as well as their connections to hosts through mutual friendships, direct friendships, and school affiliations."
Now, with savvy users becoming more accustomed to having an online presence visible even to perfect strangers, customers get the sense they're dealing with real people, not anonymous spambots.
"That's kind of the magic sauce for making the connection," Thomas says. "It's elevating that connection: 'Hey, you and this other person are mutual friends with the host, this may be more of the vibe you're looking for.' There's an additional layer of comfort knowing you are socially connected to someone."
All of the sites incorporate some sort of review system where users can rate their experiences, suggest improvements and otherwise help inform future perspective users.
"It provides an added layer of security," Wong says. "People got very, very comfortable with technology. It helped create a lot more checks online, buying through established marketplaces."
Entrepreneurs say they see signs of deeper economic forces at work that could shift more people away from buying brand-new or pre-packaged products. The idea behind collaborative consumption is to take advantage of all the under-utilized space, cars, homes, and people in the world, instead of marching into Target or the nearest new-car dealer.
"There's kind of a good-will aspect there. People like to say that they share. It feels good," Thomas says. "They are really buying into this idea of trusting the members of the community."
The founders of Getaround had this in mind in 2009 when starting its service that lets people rent out their own vehicles when not in use. With 250 million cars in the country sitting around for a cumulative 5.6 billion unused hours, they predicted a future where car ownership would be replaced by highly computerized vehicles and shared transportation.
"We don't have magic technology today, but we do have a lot of cars that aren't in use," CEO Sam Zaid says. "It doesn't make sense for 10 families on a street to each have a Suburban, each have a pickup truck. At some point it just make sense to share certain aspects when you don't need them all the time."
This kind of consumption appeals to consumers for both economic and environmental reasons, Thomas says.
"For us, it's obviously maximizing office space that's not being fully utilized," she says. "Why don't you save on gas and not commute 40 miles away? If you're a business owner, why not rent a couple desks to support an office overall?"