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The Profit of Trust: Trust as the Basis of the Emerging Share Economy

Lisa Brown

There is an interesting phenomenon occurring in the world of business today known as the share economy. Businesses are popping up all over the place that allow people to share their assets with others. This includes car share services like Uber and Lyft, as well as services that allow you to rent out power tools, babysit a dog, or even stay in someone else’s home. Airbnb is a home-share company that is now known as one of the pioneers of the share economy. Through Airbnb’s online platform, users can rent out their apartment, home, spare bedroom, or even couch to travelers. Now travelers have the option of staying with a local family in their home rather than a hotel or hostel. This connects the traveler to the area in a way traditional lodgings have not. It also ignites a spark of trust between host and traveler which make the share economy’s most valuable contributions to society.

Airbnb, as one of the pioneers of this movement, was ranked sixth on Fast Company’s list of “The World’s 50 Most Innovative Companies” in 2014. Airbnb was launched in August of 2008 in San Francisco, CA when founders Brian Chesky and Joe Gebbia rented out air mattresses to people coming to town for a design conference. Soon after launching, they added Nathan Blecharczyk to the team to help with the technical aspects of the company, including the website. The company started small and focused on hosting visitors from large conferences when all hotels were booked. They soon realized the potential of their idea and, after acquiring funding and visiting some of their hosts, quickly began to expand. Their website now offers over 550,000 listings in 192 countries, with an estimated value of $10 billion. While their operations now revolve around travel lodgings, Airbnb’s CEO, Chesky, sees the company expanding within the hospitality industry. His hope is that “Airbnb would no longer be about where you stay, but what you do – and whom you do it with – while you’re there.”[1] This vision highlights one of the company’s strongest elements: their hosts.

Airbnb’s home-share idea changes the way we view travel. Travelers may now stay with locals, which means their travel experience could include a home cooked meal, a family atmosphere, and local traveling advice. It connects the traveler not only with the place but also to the people who inhabit it. The site does not require the host to be present while their guest is staying, but each listing has a unique atmosphere that influences the traveler’s experience with or without direct interaction with the host. The home-share idea encourages us to share our lives with others: to open up our homes to the public, to create new relationships with people from other areas, and to see life as a shared experience. Airbnb’s innovation was not some brand new idea but a new perspective. It was the reawakening of trust.

This is Airbnb’s real innovation. To allow a stranger to stay in your home, or to advertise your personal space on the Internet, requires an immense amount of trust in the larger human community. To use the company’s services means you are required to trust strangers before they prove themselves as trustworthy. In her book, Red Thread Thinking, Debra Kaye writes, “The definition of influence is simple: the power to sway or the ability to change behavior.”[2] True innovation shows itself through the behavioral changes of the consumer. Airbnb’s innovation raises the question, How would our behavior change if we really trusted the people around us? It is this concept that has created the share economy.

The concept of trust can be applied to most areas of our lives. If we trusted each other, we might offer a ride to someone headed in the same direction. We might loan neighbors our power tools for a project. We might even invite someone into our home and allow them to stay in our spare bedroom. The businesses that make up the share economy are companies that, rather than making products, facilitate peer-to-peer sharing, while taking a small cut of the money passed from user to owner. All parties benefit from the trade; the owner receives monetary compensation, the user saves money and may not have to buy a product, and the facilitating company generates revenue. “Forbes estimates the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion” in 2013.”[3] These numbers, and the continued growth of the share economy, shows that there can be profit in trust.

The trust promoted by companies like Airbnb is not a naïve trust. They urge travelers to look at their host’s reviews to ensure that they know what to expect and hosts must accept a traveler’s request before they may book their stay. Airbnb also provides insurance for their hosts up to one million dollars and verifies their hosts’ identities. Similarly, ride-share service, Uber, screens all its drivers’ criminal backgrounds and driving records. The leaders in the share economy understand that naïve trust is dangerous and have taken steps to protect the safety of their customers. As this new market place is built on a foundation of trust, it is in the companies’ best interest to take measures to ensure that that trust is not broken.

Trust is the foundation of human relationships, and when it becomes a value lost by society the implications are grave. When we open ourselves up to trust people outside of our communities, we become open to new friendships and this can lead to a more understanding global community. The share economy reveals a reemergence of the value of trust in our society and is taking the marketplace by storm. While the regulation and taxation of the share economy need work, it is a new type of business that is most likely here to stay. The success of these peer-to-peer sharing companies like Airbnb has shown how societal change can occur through the marketplace. The effect of the share economy on our society is a subject that should be studied and evaluated as it continues to grow. Societal change takes time but it also takes the right ideas and the share economy seems to be a step in the right direction.

 

Sources:

[1] Carr, Austin. “Inside Airbnb’s Grand Hotel Plans.” Fast Company, April 2014.

http://www.fastcompany.com/3027107/punk-meet-rock-airbnb-brian-chesky-chip-conley.

[2]  Debra Kaye and Karen Kelly, Red Thread Thinking (New York: McGraw Hill, 2013), 54.

[3] Geron, Tomio. “Airbnb and the Unstoppable Rise of the Share Economy.” Forbes, February 11, 2013.

http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-the-unstoppable-rise-of-the-share-economy/.