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The web-sharing economy and its biggest risk

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The Airbnb horror stories that have emerged in recent days expose the biggest pain point for the economy that has built up around using the web to share “stuff,” whether that’s a house (Airbnb, Crashpadder), a car (RelayRides, GetAround) or an item like a tool (Zilok, NeighborGoods). Protecting the item that is being rented, as well as the person who owns the item, and maintaining the trust of the community of users, should be the largest investment that these “collaborative consumption” companies are making. Some of these companies have seemed to realize this early on, while others haven’t.

In case you haven’t heard, there have been at least two Airbnb nightmare stories, where renters essentially used fake identities and trashed the apartments they had rented and stole items in the apartment. Both victims gave accounts to the media of Airbnb execs being both sympathetic and attentive but also giving mixed messages about compensation for the damages. The story is still spinning out of control, mainstream publications have picked it up and Airbnb has a major PR problem on its hands, which it seems ill equipped to deal with.

What is the right way?

Social Web and the Green Economy: Shelby Clark, RelayRides, and Joe Gebbia, AirBnB at Green:Net 2011If you look to the peer-to-peer car-sharing companies, which include RelayRides, GetAround and Spride Share, they were only able to launch their companies after they figured out how to supply users enough insurance, which included some business-model innovation and also lobbying to get a bill signed that maintained drivers’ insurance while participating in car sharing. RelayRides holds a $1 million supplemental insurance policy that goes into effect during each reservation period.

Because cars are potentially dangerous, and because car drivers already have a model for insurance set up, peer-to-peer car-sharing companies have seemed to take a proactive stance for protecting car renters and owners in their networks. Some companies like RelayRides have gone even further to maintain security and use technology like immobilizers, which keep the cars from being started without valid reservations.

Ensure success

It would seem natural that renting out something as valuable as an apartment would have similar significant insurance policies. Other collaborative-consumption sites that have built an economy around less valuable goods (like CDs or tools) might not need as robust insurance, but every site needs some baseline security system.

Beyond security and damage control, there are also privacy risks involved with renting cars and apartments in peer-to-peer networks. One of the Airbnb victims was concerned about a birth certificate being taken and his identity being co-opted. This new breed of collaborative-consumption sites need to be much more diligent in protecting privacy than their early peers like Craiglist were.

The major concern for me is that this budding movement of using the web to share stuff — which is a disruptive and sustainable new trend compared to ownership — could be dampened by companies that don’t invest enough in security and privacy tools. As Craig Shapiro, a partner at the Collaborative Lab, told me, “For pretty much anything related to sharing resources, thinking through trust and reputation is a critical first step —particularly as it relates to user acquisition.” If these companies don’t make their communities feel safe, they won’t have communities anymore. And the new green web-sharing economy could suffer.

Images courtesy of GigaOM, Collaborative Labs

5 Responses to “The web-sharing economy and its biggest risk”

  1. I’ve used (p2p rental site for any kind of item) to rent to and from strangers and I’ve found that the deposit system that they utilize creates an effective incentive for the renter to bring back the item in the condition they received it. Despite the unfortunate cases that EJ and Airbnb experienced, I’d say the future is still bright for collaborative consumption :)

  2. les madras

    airbnb et al will die a natural death. no matter that greedy vc’s and their anointed twenty-somethings believe the laws of physics or the land do not apply to them.

  3. ecomodo

    This is tragic news for Airbnb and especially as the idea of collaborative consumption can bring so many good benefits for both individuals and the environment alike. But this is exactly why we did our homework before we launched our peer-to-peer service – – last year in the UK.

    Ecomodo (similar to Zilok & NeighborGoods mentioned above) enables people to take deposits for their items which we hold for the duration of the lend, choose an insurance option for lending household goods with a replacement value of over £50 and our feedback rating system checks both parties are happy at the end of the lend – and if not we have a dispute resolution system in place to sort out the problem. On top of this, Ecomodo lenders can automatically restrict who can borrow their items with trusted lending circles (friends, neighbourhood, workplaces, schools, clubs etc). This is why we say – you can “lend with confidence” at

  4. Great post. I’m the founder of a tool peer to peer rental site launching this fall called ToolSpinner. This issue of protection against fraud, theft, and misuse is a major concern. For tools we have some relatively simple methods in place to protect owners. Airbnb has a huge challenge when talking about a bedroom in your house.

    However; I would ask, how many hotel rooms have been broken into this year and personal items stolen? Profit is always and exchange for risk. If you want to profit from your spare room you must accept some risk. It will be interesting to see what measures Airbnb can put in place to lower that acceptable risk.