Dear Brain, Joe, and Nathan,
What a crazy educational rollercoaster the last few years must have been: from an air mattress in a living room to a platform with accommodations in 34,000 cities spanning 191 countries. Your strategy has been different from other ‘disruptive’ organizations like Uber. Whereas they, for example, chose a collision course with the market from inception, not taking drivers’ interests or the rest of the market too seriously, you apparently decided to take a more social approach. The past years appear to the outside world as one big success story, sounding something like achieving the American dream, though like any entrepreneur and thinking person may understand, success didn’t happen overnight.
I say success, as I am convinced you have successfully connected millions of people, which would have never found each other otherwise. I myself, for example, stayed with Ayala in Helsinki in a room where Lenin supposedly slept once, and lodged in Tel Aviv with 63-year-old Mati, who told me all about the country. Furthermore, in Elodie’s apartment, I felt for one week a true Parisian.
This very success forces you to make the right choices; the greatest of all choosing between short-term exponential growth or long-term, durable raison d’être. Growth is an intentional choice, as I was taught once by a well-known businessman. Just like you, I’m well-versed in the discussion regarding the perils of city councils being less than thrilled with your growth. I see them struggling. On the one hand, they are happy with the new influx of tourists, but on the other hand, they are in office to protect the interests of the city and its inhabitants.
City councils have to find their way around modern policy with developments like Airbnb. Policy regarding housing affordability, public nuisance prevention, and fair processes in general. Whereas you deal mainly with three parties (yourself, the guests, and the hosts), the city councils’ playing field is completely different.
To get to the point where a community might functionally live together, rules are put into place. Amsterdam’s city council, for example, came up with three rules:
- No more than 60 days out of a year
- No more than 4 people at a time
- Not in social rental housing
In an agreement with the city of Amsterdam, you defined these rules and rewarded the council by taxing tourists through the platform. Other cities were about to follow suit.
Lately, however, I’m reading more and more articles of cities where Airbnb rentals are getting out of hand. Pawn brokers withdrawing houses en masse from the housing market in order to rent them out as illegal hotels. Neighborhoods being impoverished by the uncontrollable stream of tourists. Municipalities creating cumbersome solutions like registration requirements and licenses, spending millions a year on never up-to-date inspectors, and commonly evicting unsuspecting tourists from their apartments. Complications even to the point where they see no other recourse but to ban your service.
Your reaction: ‘Sorry, we’re just an intermediary platform and out of respect for the privacy of our clients we can’t offer you any client details.” When I read your founding story and then this, I’m pretty sure something went horribly wrong. The excuse concerning privacy is –let’s be honest– right down nonsense. You don’t have to release data, as it can’t be too hard to program local regulations into the platform.
Do I live in Amsterdam and would I like to rent my apartment for the 61st day? Impossible. Do I live in social rental housing and would I like to host someone in my house via Airbnb? Impossible. With the in-house knowledge you have acquired, programming this into the site is relatively easy. Just think of what else it might offer you in addition to discussions with municipalities? You’ll be making friends. Everyone would be happy. Short-term, slightly less profit from ‘illegal’ hosts in exchange for a long-term raison d’être. Not that hard of a choice, so it seems to me.
So, in the case that you choose short-term profit, you will only create opportunities for your competitors. Success rises or falls on the trust users place in your services. The power of the Airbnb concept lies mainly in the careless stay, just like a local, in a complete stranger’s house. The power of your concept lies as well, in contrast with Uber (which strives to build a network of autonomous cars and hence their careless attitude towards drivers) in the goodwill of the community. Something you don’t want to risk. Do you?
Dear Sirs, after a turbulent growth, you’re facing two diverging roads: will it be short-time profit maximization and a quick exit strategy, or do you choose to stick it out for the long-term? I can’t imagine that extraordinarily penalized hosts, guests evicted from their apartments, and authorities banning your service, fit into your ideals. You choose.
n.b. photo credit: http://i.vimeocdn.com/video/562080382_1280x720.jpg