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Reach of Confidence A slew of new companies are banking on an age-old concept: trust.
By Melinda Mahaffey Icden
On a trip to Amsterdam two years ago, my husband and I decided to skip the traditional hotel stay and give Airbnb, the popular accommodation booking site, a try. Two sets of friends had recently used the service, which matches travelers with individuals looking to temporarily rent out their living spaces, and had nothing but rave reviews for the San Francisco–based “community marketplace” that’s fostered 11 million bookings since its founding in 2008.
But despite the fresh strawberries laid out in the sunny kitchen and a specially made guidebook listing the owner’s favorite local spots, I never really warmed to the idea of staying in a stranger’s apartment. I touched as little as possible, I used as little as possible, and I nervously encouraged my husband to do the same.
So I was blindsided when, upon our return home, we received an irate email from the owner, who accused us of scratching her floors. She was mad about the alleged damage to the expensive bamboo, certainly, but what she was really angry about was something far less quantifiable: She felt deceived because we had left without saying a word about it.
The situation we found ourselves in ultimately boiled down to an issue of trust. She felt betrayed that we would attempt to shirk our responsibilities; I was hurt that she was accusing us of something that, to the best of my knowledge, we hadn’t done. It seemed we both felt that the other person had violated the Golden Rule of the arrangement: Treat the other person (and their stuff) the way you would like to be treated.
But let’s stop for a moment at seemed and felt. Trust is not quantifiable; rather, it’s a judgment, a perception, a feeling. Despite the innate fuzziness, it’s also an essential human trait, one that’s been around since the dawn of civilization. “The reason we trust is because we can accomplish more by working together than we could on our own,” says Dr. David DeSteno, a psychology professor at Northeastern University and author of The Truth About Trust. “By the division of labor, human society has flourished.”
We need trust to prosper, even if it can feel risky at times, so it should come as no surprise that a host of startups are banking on just that. These new companies are off to a good start—but how will an age-old concept hold up in a postmodern future ruled by the Internet?
When people use the term “sharing economy,” also called the collaborative or gig economy, they’re referring to a revolutionary batch of businesses that allow you, the user, limited use of a stranger’s possessions—things like homes, cars, and power tools—while that individual makes some extra cash off something he or she already owns.
Airbnb, for example, offers ac-commodations for rent, from extra apartment bedrooms to castles and backyard tents. Car services like Uber and Lyft provide rides, while Spinlister facilitates the shared use of bikes, skis, and snowboards. On NeighborGoods, you can borrow a ladder, hammer, or drill, and DogVacay supplies a home away from home for your pooch.
The sharing economy also encompasses more amorphous concepts like time and expertise, allowing people to put their “extra” hours and skills to income-generating use. On TaskRabbit, you can hire able hands to build your IKEA furniture; your Homejoy housekeeper will tidy up your pad; and Postmates links you up with a courier who will purchase food or merchandise and have it to you in less than an hour. The common thread between all of these ventures? They each facilitate, via the Internet, the exchange of goods or services from one individual to another.
“These are really old market behaviors that are being reinvented through technology,” says sharing-economy expert Rachel Botsman, co-author of What’s Mine is Yours: The Rise of Collaborative Consumption. “We used to trade in villages. Now we live in a global village, and we can use this in ways and on a scale we’ve never experienced before.”
Indeed, the scale is large: Although these companies are often termed startups, some are not all that new—or financially precarious. RelayRides partnered with General Motors in 2012 and has raised $19 million from backers such as Google Ventures (which was also behind a significant portion of the funding that pushed Uber past a $3 billion valuation last year), and Lyft, already worth $700 million, recently garnered another $250 million. As this issue was going to press, Airbnb was reportedly in talks to raise more than $400 million from Silicon Valley venture capital firms, which would value the company at $10 billion, making it worth more on paper than entrenched brands like Hyatt and Wyndham despite not owning any actual lodging properties.
Beyond those outsized valuations, the sharing economy has earned a nice chunk of change for the little guy, too. In January 2013, Forbes estimated that the industry would collectively generate more than $3.5 billion that year alone for its participants—people like you and me. And this way of doing business shows no sign of slowing down: There’s news of money raised or initiatives launched seemingly every day. “The collaborative economy is representative of a deep socioeconomic shift,” Botsman says. “It’s what I call distributed power, and that’s only going to move forward.”
Trust is not the only issue facing the industry—various states are currently navigating the legality of apartment and ride sharing, for example, and the regulations and taxes that come with it—but it’s arguably the linchpin to its continuing ascension.
For the millions of successful transactions that have already taken place, you usually only hear stories about the traffic accidents and trashed apartments, which have a greater effect on public perception than tales of success. Think about hitchhiking. Once upon a time, it was associated with the freedom of the open road, but it fell out of favor after the general public began to perceive it as scary. Today, critics point to the legitimate dangers and insurance issues of car-sharing, but it raises a question: Why do we so willingly get into cabs? Isn’t that driver also a stranger you know absolutely nothing about? We do it because we assume—we trust—that the driver and company have been properly vetted by the appropriate authorities and are following all rules and regulations.
But in the early days of any Internet endeavor, a lot of those built-in security systems don’t exist, especially when it comes to peer-to-peer transactions. When you buy something on eBay, for example, you don’t have an opportunity to judge body language, and a rating system is only a small—and potentially flawed—window into the seller’s past behavior. With the sharing economy, that risk only gets heightened because the consequences of a failed transaction can be much more serious. When you buy online, you’re risking a thing; if that pillow looks cheaper in person than it did in the photo, annoying as it may be, you’re only out a bit of money. More importantly, you’ll always have a buffer because no matter how acrimonious the situation may get, you’re never going to physically meet the seller. When you share online, however, you’re potentially risking yourself; if the car doesn’t arrive or that apartment doesn’t exist, you could be left out in the cold—literally.
Thinking about the risks that come with trust can send you careening down the rabbit hole. The power players in the sharing economy know that, and they’re proactively working to create policies to protect their users.
“This is a brand-new experience for a lot of people, and trust is central because we’re at the forefront of creating online-to-offline interactions,” says Phil Cardenas, a former U.S. Army intelligence officer who now heads Airbnb’s 80-person Trust and Safety team. “It’s the lens through which we think about all of our projects.”
The company already has a no-fee, $1 million guarantee against property damage for its hosts in a number of countries, and it recently began offering safety devices like first-aid kits and smoke detectors to U.S. hosts. In 2013, Airbnb rolled out its Verified ID program to make sure that users’ virtual profiles line up with their real-world identities. “When you check into a hotel for the first time, you give a credit card and a copy of your ID,” Cardenas says. “We’re trying to create a sharing-economy version of that kind of verification.”
This sort of program isn’t limited to one company: A number of enterprises, including Traity, Virtrue, and Fidbacks, have popped up to provide solutions for establishing and verifying user identities.“I truly believe the value of being anonymous in these kinds of Web marketplaces is ending,” Botsman says. “You will come to value your identity and want to build that profile because otherwise you won’t be able to enter into these new venues. Your reputation will become a commodity.”
The current verification options may not yet be perfect—DeSteno’s research has found that an individual’s trustworthiness is situational and based on his or her assessment of short-term versus long-term risk, making the past a poor indication of future behavior—but they’re a start at creating new protocols for how we as consumers, and, more importantly, as people, comport ourselves online.
Will verification push us toward an online Age of Aquarius where we all become better people? It’s easy to be your worst self when you’re not publicly accountable for your words or deeds, but to thrive in an economy built on trust, we all need to be on our best behavior. Research suggests that people are more likely to trust someone like themselves, a tendency that’s on the rise. Future verification systems might help remind us that the people behind the screens are individuals just like us, not just avatars or funny usernames. And then, when we actually come together, face to face, because we’re sharing a car or a living space or a bicycle, we’ll remember how much we have in common—perhaps discovering, as we navigate an ever-changing digital age, that we’ve actually been brought closer together.
Melinda Mahaffey Icden is Spirit’s contributing senior editor.
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