Moral hazard: costs money anyway you look at it

AirBnb is a great startup which uses the power of the net to facilitate home sharing. When travelling, rather than stay in a hotel, you pay to stay in someone’s home – someone who’s somewhere else enjoying the scenery in someone else’s home. There are optimists and pessimists about how much difference it will make to the market it’s in – the market for temporary accommodation, but it’s a great service. Where lots of Web 2.0 sites facilitate the more productive use of cognitive surplus, this one does the same with accommodation surplus.

But of course there are privacy,  moral hazard and basic safety issues. AirBnb has always known it and so has built these features around its service:

  • Private messaging that lets users learn about each other prior to booking, without revealing private information
  • Reservation system that allows hosts to accept or decline guests, giving them complete control over who books their space
  • Transaction-based reviews that help users build trusted online reputations
  • Over 50 million Social Connections that show mutual friends through users’ Facebook social graph
  • Secure and reliable payment system that holds payment for 24 hours and facilitates security deposits
  • Algorithms that identify suspicious behavior
  • Flagging capabilities on every user profile, property listing, and message thread
  • Verified, professional photographs of Airbnb listings

That’s AirBnb’s CEO talking on Techcrunch. But now after 2 million home stays, someone’s stayed in someone’s home . . .  and trashed it.

The response is bureaucracy and cost.

  • Doubling the size of our customer support staff
  • Creating a dedicated Trust & Safety department
  • Creating a Host Education Center where hosts can find safety tips
  • Designing enhanced tools to verify user profiles
  • Facilitating richer communication between guests and hosts before booking, including experimentation with VOIP and video chat
  • Offering insurance options to hosts

Maybe in the end, convenience considered, AirBnb won’t be cheaper than its competition, the traditional temporary accommodation.

So I wasn’t surprised to see that, according to the CEO, AirBnb’s “vision”, to which it is “fully committed – this is as opposed to half heartedly committed, or even mostly committed) “that one day you will be able to travel to any city or town around the world, and with the click of a button, access local people and cultures safely and easily. We will work tirelessly alongside our community until that day is fully realized.”  A hotel might not be able to offer that as easily.

3 thoughts on “Moral hazard: costs money anyway you look at it

  1. One of my thought-bubble-hypotheses is that the whole of civilisation is an evolutionary response to folk you might characterise as parasites.

    This is just one such example. A world without parasites is straightforward, cheap and efficient — but also ripe for the plucking by the first such to emerge.

    What you might consider an immune system is an inevitability for any sufficiently large system.

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