Trust. This is what most of us want. We expect it from those closest to us. Family. Friends. Co-workers. Colleagues. We also expect it from the things we buy and the services we use each day. We buy things labeled “organic.” We trust Charlie, our neighborhood mechanic. We trust the ER nurse when she tells us that we will be ok. Trust is a huge part of our everyday lives. It is what makes up human.
Trust is also a key factor for predicting business relationships. Before engaging a business transaction, we look for social proof to help inform our decision. And we put more and more importance on what others are saying before determining what to do. When it comes to trust, we believe our neighbors:
As you can see, we rely on information we find online about the experience of other customers. Our assumption is that if that represented someone’s experience, it will most likely mirror our own future experience with that organization.
And so the powerful thing about sharing is that we now we have an economy that is built on this level of trust, because it is built and powered by connected customers. Yes, Airbnb, Uber, TaskRabbit, et cetera, are the toast of the town—especially The Valley. And while some of these companies are still learning what it means to be a real business with real consequences to one’s actions and words, at the heart of why this “sharing” works is trust—and trust in the most disruptive way we have ever seen. It’s subtle. But it’s disruptive. How disruptive? Uber has overtaken Yellow Taxi in New York City in just four years of operation.
Here’s what the sharing economy looks like today—these are the key players (click the image to zoom):
The Airbnb Experience: Meet Jill
Last summer, I headed out to North Adams, MA to see Iron and Wine play at the MassMOCA (an old HS buddy is the bass player). If you are familiar with that area of The Berkshires, you will know that there are not a lot of options for hotels out there. So I decided to take to Airbnb for the first time.
I went to the website. I looked up options in that area. I looked at one place that was “mid-century meets french chateau.” I read the reviews. I read the bio of the owners who lived downstairs. I looked at a map of the surrounding area. I compared it to other options on the website. I compared it to the local hotel (a chain that begins with H and ends with N). I compared it to the area’s most famous bed and breakfast. I emailed the owners with some simple questions. I put in my request to rent the unit. I gave Airbnb my credit card. Then when the day approached I got a very nice email from the owners. They let me know where I might find the key if I was arriving late. They let me know where I should park. One of the owners let me know that she worked at the local college where my old boss from 1995 was president. They told me they too wanted to go to the concert I was attending but could not make it. They were also fans of Iron and Wine. So when the day arrived, I hopped on my Harley-Davidson and made the 150+ miles excursion knowing that everything was in place.
I stopped along the way and bought some tea for the owners. I would never think of doing that for a hotel chain, but somehow this felt right. I knew their first names. I knew I was entering their home—albeit a small apartment that was separated from their primary residence. When I showed up, one of the owners was just returning from the grocery store. She told me that there was fresh coffee beans and English muffins in the fridge. When I walked in the unit, there was a feeling of familiarity; of thoughtfulness; of care. After all, this was a part of someone’s home that they had opened up. They were their own hosts; marketing; PR; brand; and experience.
I stayed there 3 days. I attended the concert. I waltzed around town. I stopped to see my old boss at the local college and got a tour of the campus. I left my Harley parked in the driveway for the whole time. I made fresh coffee every morning along with my English muffin—jam and butter included. I sat in the sitting room and meditated. And when it was time to leave, I left the key on the kitchen counter as they asked me to do and took off for the ride home. I received a very nice and personal email from the owners thanking me for the tea and offering to let me stay again the next time I was in town.
To me, this was obviously very, very different from your typical hotel stay or even a traditional B&B. What made it unique was simply the authenticity of the whole experience. The Golden Rule seemed to be at the core of this. It was a mutual relationship on many parts. Sure, I was paying to stay there but this was someone’s home. Someone took the time and thoughtfulness to fill the bookshelves with real books about the area—and I swore there was some Keats, Hemingway, and Frost on the shelf. Someone put some very nice soap in the bathroom—mind you the tub had claws feet. Someone stocked the kitchen with coffee mugs that made you feel like you were at home.
But like I said, this was a mutual relationship. Had I been a rowdy guest, I know I would have heard about it from Airbnb. I would have spoiled my chances at another place I might want to stay at in the future. I could probably trash a hotel room at some famous hotel in Union Square in SF (not that I have ever done that!) and I could have covered the cost with a credit card (much to the chagrin of our CFO, I am sure) and that would be that. But with Airbnb, the place I stayed at had a name: Jill.
And that is the point of the Sharing Economy. It is made up of people like you; like me; like Jill. It is then easy to make the leap to the concept of “inclusive prosperity,” which defines that prosperity must be available to all citizens, and is essential to building a strong middle class. To achieve inclusive prosperity, it is key to “embrace the new economic opportunities of the 21st century by finding ways to ensure they serve the vast majority of society”.
Airbnb is on track to surpass the largest hotel chain in bookings this year. Such exponential growth doesn’t just happen. It’s backed by a new level of transparency and personalization that the traditional hotel booking model can’t even begin to emulate.
When recently asked about the sharing economy during an interview with the Harvard Business Review, economist Larry Summers went on to say “I’m a believer in the sharing economy. I feel proud to serve on the board of Lending Club. I certainly see enormous efficiencies coming and improvements in economic performance coming from efforts to deploy the economies of housing resources more efficiently through firms like Airbnb or transportation resources more efficiently through firms like Uber and Lyft.”
How Uber helped me mend my broken leg
In October 2014, I broke my right leg in a motorcycle accident (I am fine but let me tell you, it was no fun crashing my bike nor breaking my leg). I quickly became dependent on Uber to help me move around town. Now I have taken Uber in a number of cities (Boston, SF, LA, DC, Houston to name a few) so I knew what to expect. Everyone I met during my recuperation was kind, compassionate, and very thoughtful. They let me ride in the front so I could stretch my leg out. They took my crutches from me and made sure I was able to get in/out of the car safely. They took my backpack off me and put it back on me when we arrived at my destination. This was happening while Uber’s management was shooting themselves in their PR face. I sat in every type of make and model from high-end to the average car. I traveled in all sorts of weather. All sorts of time. I heard all sorts of stories from each driver about why they love driving. Some did it part time; some, full time. Every single person who drove me asked how I was doing. They made sure I was comfortable while I was in their car. They offered advice for how to manage the pain or crutches. And when I got out, every single driver made sure I got in to my destination safely and wished me a speedy recovery. Every single one of them was a good host be it a 15 min ride or an hour.
Charles Eames had it right: ”It’s about being a good host”
Jill in North Adams. Mahmoud who picked me up in Southie (South Boston for those who don’t know). All of them were kind, compassionate, and trusting. They were human. They lived by the Golden Rule. This is at the core of why the Sharing Economy works. Yes, I recognize that managing logistics makes this all possible but the demand is driven by the experience—not inventory; not a nifty app; not a convenient website. It is about people and how we connect. It is about being a good host—and being a good guest.