In my last post I talked about where I thought the sharing economy was going to be going. I wrote that I felt that Uber would grow up a little bit and change how they manage working with cities. This prediction has already born fruit in that Uber is taking a 3 month hiatus from Portland to allow the city to create new rules governing how the city licenses Uber and ridesharing. I think that this is an instance where both the city and Uber were acting like adults. Uber forced the issue, a bit like thugs, the city sued, so both flexed their muscle a bit then both backed down and came to the table to figure things out. We’ll see what happens in April whenever the city has completed its rule making to see how Uber responds.
AirBnB behaves in a similar fashion, moving into cities and pretty much breaking how things operate. The legacy industry wants the city to shut down the ability for people to rent out rooms from companies like AirBnB, while the cities want to collect more taxes from this newly created revenue source, and of course people want extra money from their unused rooms/spaces. So pretty much Lose-Win-Win. However, recent data argues that the hotels aren’t losing out on much of anything. Which means that AirBnB might be catering to a wholly different demographic than what typical hotels do, which might be the couch surfing crowd.
AirBnB already has plans to test turning people’s kitchens into restaurants. Which offers a pretty interesting opportunity for all those folks that you always have felt that should make a restaurant, but can’t afford to. I think that this has the unique opportunity to allow more people to eventually start food trucks and then move into a full restaurant after some time and enough demand. However, this venture has even more potential legal issues than renting or replacing cabs. This is because, there are a lot of people that are pretty much slobs and have cockroaches. It doesn’t even have to be your fault that you have them. When I lived in Pittsburgh we had tons of baby cockroaches because our neighbors next door, where we shared a wall, were dirty filthy slobs that didn’t take care of things. Personally, I found it pretty disgusting to be dealing with the roaches, so we had our land lord clean it. However, if you didn’t live there you wouldn’t know about it. My guess is that for this to be successful AirBnB will have to work with local governments to figure out the best way to address these concerns, they are valid after all. I believe that what should happen is that AirBnB either creates its own agency to do the policing or partners to enable policing of homes that want to sign up for this. AirBnB will likely have to develop some sort of background check and methodology for ensuring safety and quality at their “restaurants.”
Once AirBnB conquers the kitchen, it’s likely that they could move into Uber’s space, because after bedrooms and kitchens there’s cars. Other options could be to rent out a home or a space to host parties, where the home owners could act as cooks, wait staff, and/or a combination of both – this could depend on the price and the offer made by the home owners. AirBnB could of course move into more conventional hotelier, however, this drives down their profit margins and makes them liable for a lot more activities. I don’t see this happening in the near future, unless they begin to put the competition out of order. Another space could be managing office spaces or shared spaces, similarly to what a lot of hotels do now.
I think that AirBnB has a lot of options to innovate without pushing up against local governments, however they will still have to figure out how to manage their restaurant idea first. I think they will work with that out with a pilot city first, figure out what works for them (probably NYC), then they can more likely quickly expand into other markets with that approach. I think they will also very likely work with the governments beforehand. I’m imagining that a city like Portland might be a second or third market for them to move into since it’s great for food trucks and already has a great relationship with AirBnB.
I think that AirBnB is going to have an easier time with local governments than Uber because it has a better reputation and seems to have been working with the governments from the start. I’m interested in seeing where they go in the next few years.