Me on CBC Radio

Self-promotion alert: around 8:30 to 9am on Monday morning I’m going to be on CBC Radio’s The Current with the admirable Anna Maria Tremonti to take part in a panel discussion about “the sharing economy”.

I’ll be the grumpy one.

Sharing economy and informal economy

Earlier this month, New York University business professor Arun Sundararajan presented testimony to the Committee on Small Business of the US House of Representatives. He wants “peer-to-peer” business to be reflected in economic statistics and employment surveys.

When should the sharing economy be treated as part of the real economy, and when should it not? Are you confused? Here is a short guide for the perplexed.

When the sharing economy should be excluded from the formal economy:

  • taxation
  • regulation
  • job protection for service providers
  • platform-owner liability when things go wrong
  • limits on platform-owner freedom of action regarding their “community”
  • when a site’s design enables racial discrimination on the part of its users.

When the sharing economy should be part of the formal economy with all its protections and benefits:

  • recognition of positive economic contribution
  • legitimacy of platform-owner revenue
  • terms of service that protect the platform-owner
  • IPOs
  • when a site’s design makes racial discrimination on the part of its users less likely

I hope that is clear.

Airbnb Stories

Telling stories is a powerful, personal way to communicate. That’s why Airbnb collects stories from its hosts and puts them on its web site and uses them liberally in its publicity.

When the economic crash hit, Tama’s livelihood as a painter and real estate broker was threatened. A serious health condition was only increasing her expenses, with prescription costs at times topping $1000 per month. Receiving guests not only introduced her to new friends—it allowed her to eat, pay her bills, and stay in her home.

But Chris’s story is not on the Airbnb web site.

In San Francisco, Chris lost his home so that his landlord could make more money by renting out apartments on Airbnb. Chris says: “They forced me out of a home I loved. It was incredibly difficult to find a place, especially because I have a really old dog. I ended up paying over double what I was paying there.” Chris is now suing his landlord and his attorney says: ”Airbnb is contributing to the displacement of long-term tenants in San Francisco… It has made it so easy to go into the short-term rental business; it is ubiquitous.”

Most stories on the Airbnb web site are about people renting out the homes in which they live.

Lisa and Byron are both artists, and have been their whole lives. They first met at an art residence in 1986, were married in 1993, and their family home in a Park Slope brownstone is where they raised their three kids.

This past fall, when their son headed off to university, their downstairs sat empty, so when tuition bills started rolling in, Lisa realized Airbnb was a great solution to help pay for them.

But not all Airbnb hosts rent the house in which they live.

In New York, Chris lives in Brooklyn but rents out two bedrooms in a separate apartment he leases in Manhattan, at $100 per night.

Sounds like a nice little earner. Some Airbnb hosts are generous, and are on the Airbnb web site.

When New York City was hit by one of the worst hurricanes in history, Shell, a long time host on Airbnb, realized that the loss for some people was devastating. As the waters rose and people had to evacuate their homes, many of them couldn’t return for days, if at all. Shell decided to go online and list her space for free for those who were in need.

Airbnb is quick to claim Shell as part of its “community”. It has’t been so quick to claim everyone. Not Ken’s tenant, for example.

Also in New York, Ken owns a few buildings in Nolita. He runs a nonprofit that teaches people how to ride bicycles. Now he’s hiring private investigators to see what his tenants are doing. Ken doesn’t like it: “It’s so not me. It’s like how did I become that guy?” But Apartment 3 had become a kind of hotel, charging $250 a night and he suspects the tenant made half a million dollars before he evicted her. He says of Airbnb that  “They see how lucrative her business was… And they refuse to take it down. So they’re not good guys.”

A lot of the Airbnb stories are about friendliness and about connections between people.

Jonathan is a single dad raising three kids in Echo Park, Los Angeles. For years he worked 60-80 hour weeks at a job that was unfulfilling, scrambled to care for his three children, and had let his own ceramics studio fall by the wayside. When his schedule was cut back at work, Jonathan decided to list an extra room in his home on Airbnb. His first guest gave him such a positive review that more lined up, and he was soon renting out a second room as well.

Hosting has become not only an extra source of income, it’s also allowed him to be more available to his own family.

But Jerry’s story isn’t on the Airbnb web site.

Jerry lives in New Orleans. He says that “In the French Quarter it is increasingly difficult to know your neighbors because they change every weekend.”

I have resisted telling stories when writing about the sharing economy, even though almost every media report leads with one and even though I’ve been asked to use them. I’ll continue to avoid them, in general, even though it probably limits the audience I’ll reach. Why? Because selective storytelling is manipulative and I don’t want to be a manipulator and I don’t want my readers to be manipulated. (Trust me.)

If you read a heart-warming story promoted by someone with a vested interest, you’re being sold a bill of goods. It really is as simple as that. The people in the story may be genuine; the story may be true, and they may be lovely people doing wonderful things. But there are millions of stories in every city, and the magic is in the selection (and the photography). By themselves, stories tell us nothing about the bigger picture, and it’s occasionally worth remembering that.

Sharing Economy Startup Generator



If you can’t beat ‘em, join ‘em. Here’s a pithy sharing-economy pitch for the venture capitalist in your life. Click below for more randomness.

It’s Uber for sharing economy startups.
– a sustainable marketplace of regular people.

“That may fool Jeff Bezos, but it doesn’t fool me. Now give me what I want, and give it to me right now.”


On Surge Pricing

Lots of controversy about the “surge-pricing” from car-rental outfit Uber, both during a mid-December snowstorm and on New Year’s Eve. Fares increased up to eight times the normal, so that people were getting charged hundreds of dollars for short rides. The company’s response was that surge pricing is here to stay.

The argument is standard supply-and-demand, economics 101. If demand goes up, increase the price to increase supply. Or, as the company says:

With surge pricing, Uber rates increase to get more cars on the road and ensure reliability during the busiest times. When enough cars are on the road, prices go back down to normal levels.

But there are two things that I haven’t seen elsewhere (correct me if I’m wrong); not even on Matthew Yglesias’s post at Salon, and he is a magnificent observer of this and all other things.

Thing One: I really don’t care if you engage in “surge pricing” on New Year’s Eve, at rush hour, or at any other time when traffic is predictably busy. Knock yourself out, it’s absolutely fine by me. But surge pricing because of severe weather is something different, because at times of emergency we expect people to pull together: we expect people to check on their neighbours (for free!), to help people who are stuck (without charging!) and to generally be community-minded about things. Emphasizing monetary incentives at such a time undermines (or “crowds out”) community motives: if my neighbour and I help push your car out of a snowbank without payment then we’re just doing the right thing, but if my neighbour is being paid and I’m doing it for free, then I’m just being a mug. Surge pricing for reasons of severe weather is a bad idea. You may get a few more cabs on the road, but you make the emergency worse.

Thing Two: Customers were complaining that they didn’t know about the extra pricing until after they had taken their ride. Uber explained that they must have known: there was a perfectly clear screen notifying them about surge pricing, and they tapped the screen to agree to it. Now I used to do online documentation, and I’ve spent my fair share of time frustrated at the stupidity of users who cannot navigate my crystal-clear and elegant design (“Look: the button at the top there. It’s obvious”). But in the end anyone involved in user experience has to acknowledge that the user is right. What’s obvious to a designer or a trained user is not at all obvious to a casual user.

So if you design an app with the express purpose of making it easy to use without even thinking, and if a customer uses it fifty times and gets the same result each time, then they are not going to be paying attention the 51st time, especially after a few drinks. If you then add one extra screen in the middle of the ordering sequence that’s going to cost users an extra $300, then it’s up to you to test it till the cows come home to make sure that people know what they are agreeing to. Arguing that users should have been more careful is a really bad excuse. We should all read license agreements too, but none of us do. We just click, click, click until we get to the thing we want. Read? Of course I don’t read! And who’s ever heard of a $300 button in a mobile app? Sorry Uber: if you charge people an extra $300 for using your app too casually then it’s your own fault.

This Week in the Sharing Economy: Late Edition

In lieu of real content, another set of links.

Picks of the week:

Peers.org:

Airbnb:

Industry:

  • Google invests in housecleaning as Peers member Homejoy hits it big. Homejoy is a Peers partner, but its “professional” employees are, according to Forbes, people who need to show proof of employment to receive government assistance, recruited through municipal employment services.
  • DHL launches its MyWays delivery service, powered by “people who want to deliver parcels and earn some extra money”. Does Peers approve?
  • Meanwhile, Flatclub is like Airbnb but only if you went to a fancy university. Sharing without the hoi polloi.
  • There is a cynicism to the simplistic claim that “systems are broken” and that technology can fix them.
  • Accenture continues to be interested.
  • Lots of actual careers going at Uber (not drivers), Airbnb (not B&B owners), Homejoy (not cleaners).

Softball questions from the media:

Taxis and ridesharing: