Airbnb brings out the best in people. As the UK closes its borders and the Republican nominee for US President chants “Build a Wall!”, Airbnb hosts are opening their homes and cities to people from all over the world.
But Airbnb also fosters discrimination. Check out the #AirbnbWhileBlack campaign on Twitter and you’ll find hundreds of stories of black guests being denied by hosts. Also, black hosts receive fewer requests; in other words, guest discriminate too. And while there is not much activity on the #AirbnbWhileMuslim campaign, it’s a problem, too.
As a white male Airbnb host, I wanted to make sure that I was not discriminating, consciously or unconsciously. To do this, I needed a system to divorce race and religion from my decision-making. So I came up with a standard by which all requesting guests must pass. The parameters for accepting a reservation are:
It's that simple. So if "Ashley from Concord, New Hampshire" whose profile picture is of her looking super cute at Fenway Park fails to meet the minimum standard, she is denied. On the flipside, a man that doesn't look like me and doesn't have a name that sounds like mine meets the minimum standard, I say "Welcome!"
I like this system because it levels the playing field for all inquiring guests. But there is a flaw. If other hosts discriminate, is it fair to use their reviews in my standard? In other words, it's possible that white hosts have unfair expectations of black and Muslim guests and therefore review them worse, or not at all. Ideally, a standard should not depend on another (possibly discriminatory) person.
Compensate Non-discriminators, Tax Discriminators
If Airbnb is serious about combatting discrimination -- which they are -- I suggest a system that rewards non-discriminators and taxes discriminators.
Here’s how it would work. When a host signs-up they establish a standard. One host could chose 4 verifications and 10 reviews (high standard) while another host may be comfortable with 1 verification and 0 reviews (low standard). When a guest requests a booking they are scored against the hosts standard.
If the guest passes the host’s standard
If the guests passes the standard, the request is sent to the host. But instead of seeing the full profile, the host ONLY sees non-identifying information (booking details, guest reviews/verifications, guest message). The host does not see the person’s name, picture or citizenship. With this non-identifying information, the host can accept, deny or request to see the full profile. If the host accepts or denies based solely on non-identifying information, they are rewarded in the form of lower transaction fees and better search results. If the host requests to see the guest’s full profile and then accepts, they are neither penalized nor rewarded. And lastly, if the host asks to see a guest’s identifying information and then denies the booking, they are penalized with higher fees and worse search results. Why? Because by this point, the host was comfortable with everything (booking date, earnings, guest message) but they weren’t comfortable with the guest. Since they denied the guest, it can be assumed they did so based on an identifying factor.
If the guest fails the host’s standard
Hosts may want to see all requests, even from guests that don’t meet their predetermined standard. In these instances, the host sees all information immediately. If the host accepts a sub-standard guest, for lack of a better term, the host is rewarded. Now this is where it get’s interesting. If the host denies the guest, the guest is prompted with a one-question survey: “Do you believe the host denied you for any reason other than the date and nature of your request?” If the guest responds “No”, than the host is neither penalized nor rewarded. But if the guest responds “Yes”, then the basic facts of the case (guest profile, host profile, messages between the guest and the host, and booking details) are sent to a community of hosts and guests. If the community determines no discrimination, then host is neither penalized nor rewarded. If, however, the majority of guest and hosts find discriminatory practices, the host is penalized. While this sounds complicated, several companies (including Airbnb) are already tapping into their user-base with Directly.
Better than Instant Book
Today, Instant Book works similarly. If a guest meets a certain criteria, they can book instantly. But I do not use Instant Book for two reasons. First, you have to be maniacally diligent with your calendar. We got burnt early on with an Instant Book request. One Friday morning, my wife and I decided we wanted to leave town for the weekend. Before I could update the calendar, someone booked. Since we don’t like guest arriving when we are not home, I had to cancel the reservation, which resulted in a penalty. Second, I need the freedom to deny a person based on factors such as their agenda for the trip, the size of their party, or whether they have a dog. For instance, if a guest is requesting one night to host a dinner party for 10 people, I’m denying! That is way too much work and stress for one night. With Instant Book, you don’t have the freedom to deny based on the guests note.
Face tattoos and Confederate Flags
This system is not perfect, unfortunately. Admittedly, I judge guests based on their photos. Call me old fashioned, but I’m weary of people with face tattoos. I’m also hesitant to welcome someone into my neighborhood and home if they are wearing an offensive shirt in their profile picture; for example, the Confederate Flag or a US President with a Hitler mustache. In the end, this is a form of discrimination and the goal is reduce discrimination on the Airbnb platform, so I’m happy to give up these identifying factors for the greater good of the system.
The best part about being in the start-up community is watching other start-ups. Almost every week, I learn about a new company that stops me in my tracks and makes me say, “Damn, that is so obvious. ABC company is going to forever change the way we do XYZ.” Here are three companies that have given me this reaction.
Venture capital was created 56 years ago. Before Eugene Kleiner’s shot-in-the-dark letter that landed on Arthur Rock’s desk, there was no institution for funding smart people with new ideas. That changed when Rock connected Kleiner and 7 other colleagues with Sherman Fairchild. Fairchild invested $1.5 million into the 8 transistor scientists to create Fairchild Semiconductor. Fairchild Semi was a success, at first, but soon the founders left because they did have enough equity. Two Fairchild employees - Robert Noyce and Gordon Moore - went on to found Intel. (To learn more about the fascinating history of VC and The Valley, check out this interview and the movie Something Ventured.)
Venture capital was a tectonic innovation in finance. But in the last half century, not much has change: VCs raise money from Limited Partners and invest in young, un-established companies with mountains of potential. In fact, the major innovation has been the rise of secondary markets like SharesPost and SecondMarket. These exchanges give shareholders of private companies liquidity, which is great. But these markets have not changed the fundamental way in which early stage ideas get funded.
The way that VC offered equity financing for early stage companies, Kickstarter offers working capital finance. This is huge. Before Kickstarter, working capital finance was restricted to established companies that had good relationships with banks. Now, a company with a novel product idea can create a Kickstarter campaign and pre-sell units. Since the company receives the money before shipping the product, they have capital on hand to deliver the promised product.
In short, Kickstarter gives early stage entities a form of finance that did not previously exist for them. The key question is will Kickstarter launch a billion dollar business? Naysayers say no way; Kickstarter is for crafts and movies. I say, if Kickstarter was around in 1976, Jobs and Wozniak would have created the “Apple 1” campaign.
Look at the data. Texting is on the rise; voice calling is on the decline. Recognizing this, TalkTo created an app that allows anyone to text any question to any business. Want to know if Whole Foods has your favorite microbrew? Launch TalkTo, select Whole Foods, and shoot off a text. Running late for a dinner reservation? No worries; TalkTo has your back.
I was in New York City this weekend and used TalkTo half a dozen times. It worked flawlessly. I was able to get a restaurant reservation, change said reservation, and double check that we would be seated outside.
Within one day, TalkTo inserted itself between me and every business that I interact with. In other words, TalkTo -- not the restaurant, bank or hotel -- owns the relationship. This is incredibly powerful: owning the customer relationship is the holy grail in business. In the insurance industry, for example, brokers and underwriters constantly struggle to own the policyholder relationship. Owning the relationship enables companies to better understand customer needs and ensure quality interactions, leading to customers that stay longer and buy more.
By building a simple app that delivers as promised, TalkTo is poised to change the way that people find information about and interact with companies. What company recently did that? I’ll give you a hint. It starts with a “G” and ends with an “oogle.”
I love services that create marketplaces. The two most recent examples are Airbnb and Uber. Airbnb looked at the world and said how can we connect supply (people with spare beds) with demand (people looking for an inexpensive place to stay). Uber did the same thing, connecting underutilized Town Cars with people seeking reliable and convenient car services.
GigWalk is connecting businesses that need market research with people looking to make a few dollars. A brand - think Colgate, P&G, etc - needs to understand (or audit) how its products are being placed on the shelf at retailers. The brand could send in a dedicated “secret shopper,” which is costly and logistically challenging. Or, the brand could use GigWalk to push an alert to anyone in the area and ask them to simply take a photo of the Dental Section.
I particularly like GigWalk because it is an everyday product. A simple trip the grocery store or Starbucks or a restaurant could net a GigWalker a few dollars. In short, GigWalk looked at the world and said how can we use existing tools to mobilize people to solve a business challenge.
A couple weeks ago, I headed into the backcountry of Banff National Park for a 5 day, 40-mile hike. This was my fourth major hike since 2004, and perhaps the most grueling due to the weather. Eight hours into the hike, the skies opened and did not close until the final morning. So as I slogged through the mud, trying not to step on Grizzly Bear paw prints, I asked myself: why am I schlepping a sixty-pound backpack in cold, driving rain and at the risk of a fatal attack by 500-pound mammal?
One reason is that hiking provides an opportunity to see different aspects of life in new ways. During this trip, I realized that backpacking is a lot like launching a startup. Below, in no particular order, are the reasons why.
Limited resources fuels innovation
A hiker’s resources are limited to what he can carry (tent, sleeping bag, clothes) and what the forest provides (wood, water). If you forget – or lose – something, it is gone and you better hope that you don’t need it. After a few days of living with such constraints, the mind becomes incredibly inventive. During this trip, for example, we rigged up a sturdy multi-level clothes-drying rack using nothing but branches and logs. During a past trip, we crafted a way to drag our packs across snowfields in order to limit falling through.
All businesses but especially start-ups are resource limited. Capital, talent, and time are in short order. As a result, start-ups constantly innovate not only in the products they offer but in the way they operate. My favorite story of innovating to survive is Airbnb, which designed Obama O’s cereal and sold the collector-edition munchies to attendees at the Democratic National Convention. They raised $25,000 to fund their start-up.
As start-ups mature, however, they must shed the patchwork operations that they "innovated" during the lean years. Relying too heavily on Excel – or Google Docs – is a prime example. When resources are limited, it is acceptable to cram everything from salary planning to project management into a spreadsheet. As the company proves longevity, it must invest in the proper processes and technologies in order to support sustainable growth. Not doing so is equivalent to using an open fire and rack of branches to dry clothes, despite being out of the woods and having access to an electric dryer.
Risk management takes on a whole new meaning
Hiking is a risky endeavor. Any number of events can happen on the trail, including getting lost, injuring yourself, running into an aggressive animal or getting hit with a major weather event. These events can easily result in death – and it is usually a slow and agonizing death. But they are all avoidable. With the correct maps and trail descriptions and an ability to read a compass, the risk of getting lost is greatly diminished. (Heck, you can even bring a GPS that pinpoints your exact location, but that takes the fun out of it.) Talking on the trail and hanging your food 100-plus meters away from your tent are both actions that reduce the threat of a bear attack. Throw in bear spray and a general understanding of what to do in the event of an encounter and you’re in pretty good shape. Lastly, reducing injury is common sense: never jump; be careful with your knife and around the fire; stay hydrated, dry and warm; carry a first aid kit.
Risk management is dependent upon understanding the probability and severity of an event occurring. Once you understand these two factors, you can triage mitigation. As I walk through the woods, I’m constantly calculating and triage-ing. During this trip, for example, I calculated the risk of a bear encounter to be moderately high; by my calculations there was one Grizzly for every 10 square miles of habitable land, and we were traversing 40 miles. On the other hand, the risk of getting lost was low; the trail was through a valley with steep, rocky mountain faces on each side – the equivalent of bumpers on a bowling alley lane. I adjusted my behavior accordingly.
For start-ups, risks lurk around every corner: system outages, patent trolls, legislatures, unethical employees. A founder’s job is to identify, triage and manage these risks. Unfortunately, though, risk management is often sidelined during the frenzy of creating a new product and winning customers. After all, it is difficult to pull oneself away from the exhilarating and vital task of crafting the next generation of a product to draft a contingency plan that may never be used. Founders also have a difficult time shifting money away from R&D and sales and towards risk management expenses like insurance, lawyers, and monitoring systems.
Remember how fortunate you are
Hiking helps remind me how fortunate I am. I have my legs to carry me, my eyes to take in the vistas and my ears to hear the sounds of rushing mountain waters and high-pass winds. I have also chosen to live a “pre-civilization” lifestyle by sleeping on the ground in a flimsy shelter, pumping water, keeping warm and cooking with fire, and placing myself lower on the food chain. For millions of people this is not a lifestyle choice; 884 million people, for example, do not have access to clean water. Lastly, I’m reminded of the military, who basically hike through the most treacherous places on earth – from the mountains of Afghanistan to the jungles of Vietnam – with one additional risk: enemy fire.
Start-up founders are also fortunate. In many ways, founders are responsible for their destiny. They envision an opportunity and have the courage and talent to execute upon that vision. However, there are factors outside of their control that increase the likelihood of success. Health and physical appearance is one example.
Success is also dependent on origin of birth and residency. Over the last 400 years, the United States has developed systems and institutions that foster entrepreneurship. In the United States it takes 6 days and only a few hundred dollars to establish a legal corporate entity, whereas in Brazil it is four month journey that could cost more than one thousand dollars. Throw in bankruptcy laws that do not discourage risk taking, a court system that upholds property rights and legal contracts and a functioning insurance market, and innovation flourishes. In short, an entrepreneur operating in the United States has a much greater chance of success than his equally talented counterpart in just about any other part of the world.
Stayed tuned to hear the insights from Hike 2012, which will hopefully be in Glacier National.
I'm the Founder and CEO of Peak Support. This blog is my take on early-stage companies and innovation. Every so often, there may be a post about culture, networking, family -- you name it. After all, what is a blog if it isn't a tad bit unstructured.