AirBnB CEO on the Sharing Economy

McKinsey and Company is an ultra-high end management consulting firm. They help set the direction for the Fortune 500, and their advice in the past has included Burning Man as an example of “how to excite your customers”. They’ve just published a video interview with AirBnB founder and CEO Brian Chesky.

Two of AirBnB’s Vice Presidents sit on Burning Man’s Board of Directors, and this year they added “Black Rock City” to the 34,000 cities in 190 countries that they rent rooms in.

In the last couple of years Burning Man has hosted panel discussions and given media interviews to position themselves as part of the Sharing Economy trend. The main difference between BMOrg’s interpretation of the model and most others, is AirBnB, Uber etc share the profits. That’s what makes it an “economy”.

Later this month AirBnB and Burning Man will be giving “mind-blowing” talks at the CMX Summit in San Francisco on “How To Build Community: Learning From Burning Man, AirBnB and NASA”:

Jenn Sander, BMOrg

This event is packed with thought leaders, CEOs, and community experts representing organizations like NASA, Burning Man, Airbnb, ProductHunt, Zynga, Salesforce, BetaBrand, Exposure and more…

Burning Man is one of the best examples we have today of a massive, organic movement with a thriving offline community. There’s a great deal we can learn from the programs that Burning Man runs to apply in our own work every day as community builders.

Jenn Sander is an innovation, communications, and engagement strategist with a passion for uniting international communities around arts, technological innovation, and physical space. For The Burning Man Project, she focuses on connecting their global networks and developing demonstration projects.

 

AirBnB founder and CEO Brian Chesky’s words have a timely resonance for the Burner community. Given their strong representation on the Burning Man Project’s Board of Directors, and BMOrg’s claims to be a similar example of the Sharing Economy, it’s interesting to get an insight into the way this company thinks and the language they speak.


 

Transcript re-blogged from mckinsey.com (emphasis and image selection ours):

 

For $35, you can buy the CEO's body-building DVD photo: Gawker

For $35, you can buy the CEO’s body-building DVD. photo: Valleywag/Gawker

Since its founding, in 2008, Airbnb has spearheaded growth of the sharing economy by allowing thousands of people around the world to rent their homes or spare rooms. Yet while as many as 425,000 people now stay in Airbnb-listed homes on a peak night, the company’s growth is shadowed by laws that clash with its ethos of allowing anyone, including renters, to sell access to their spaces. In this interview with McKinsey’s Rik Kirkland, Airbnb cofounder and CEO Brian Chesky explores how the company’s relationships with cities can evolve. An edited transcript of Chesky’s comments follows.

Starting a revolution

It’s a currency of trust, and that used to live only with a business. Only businesses could be trusted, or people in your local community. Now, that trust has been democratized—any person can act like a brand.
Airbnb is a way that you can, when you’re traveling, book a home anywhere around the world. And by anywhere, I mean 34,000 cities in 190 countries. That’s every country but North Korea, Iran, Syria, and Cuba.

The reason we started was I was living with my roommate, Joe, in a NYC Sublets, and I couldn’t afford to make rent. That weekend, the International Design Conference was coming to New York. All the hotels were sold out. Joe had three air beds. We pulled the air beds out of the closet, we inflated them, and we called it the “Air Bed and Breakfast.”

The reason it’s grown so fast is, unlike traditional businesses, we don’t have to pour concrete. The infrastructure and the investment was already made by cities a generation ago. And so all of a sudden, all you needed was the Internet.

The ‘disruption’ debate

I never really loved the word “disruption,” because it suggests that maybe it’s the kid in a class who was disruptive, who probably didn’t add a lot to class. I think that we have a lot to add to society.

Over time, cities have gotten so big that the sense of community has gotten lost. And I think once you know everyone, that community can reemerge. And as far as our relationship with cities, we can’t succeed without a city. Or we can’t really thrive without a city. We don’t want to thrive in spite of a city. And I think if we work together, it’s going to be amazing. I think the people win. And I think if we don’t work together or if we fight, the loser isn’t really us or the city—it’s the people in that city.

Getting cities to embrace sharing

airbnb-coverFundamentally, the idea of the sharing economy is going to be great for cities. It means that people all over a city, in 60 seconds, can become microentrepreneurs. And they can be empowered. And they can make an income. Now, this is amazing, but it’s also complicated because there are laws that were written many decades ago—sometimes a century ago—that said, “There are laws for people and there are laws for business.” What happens when a person becomes a business? Suddenly these laws feel a little bit outdated. They’re really 20th-century laws, and we’re in a 21st-century economy.

It’s probably going to be a fair amount of work to revise some of the laws and rethink the way cities and platforms work together, but I think that work is worth it. Because what cities don’t have to do is invest billions of dollars in infrastructure to create jobs. Whereas historically, to create opportunities, cities would need massive projects and investments, these jobs only require the Internet. Now what they need to do is navigate the legal framework, which is typically outdated. We want to work with the cities. We’re not telling them that their laws are terrible. The world continues to change. Laws must continue to adapt for that world.

We want to help cities understand what our world looks like so they can modernize the laws to make sense. We’re not against regulation. We want to be regulated because to regulate us would be to recognize us.

Airbnb’s plans for growth

We want travelers to be able to book homes anywhere. Anywhere includes Asia. Asia’s a nascent market for us. Number two, we’re also looking at other use cases. Airbnb started as a way for travelers to find a budget way to vacation in a city. But now we’re starting to see people who aren’t on a budget. They want a much more high-end experience. And the third is that at the end of the day, if you’re traveling to Tokyo, you’re not traveling to Tokyo to stay in a home or a hotel. You’re traveling to Tokyo—if you’re on vacation—because you want to have an experience. And we’d love to do more to make that experience special and memorable.

The future of sharing: Your free time

I don’t think people would view the jobs created in the sharing economy as jobs. I don’t even know if they get counted as jobs when the White House has a new jobs report. They are jobs. As far as I can tell, people are working, they’re making income, and they depend on that income. Half of our hosts depend on it to pay the rent or mortgage. Maybe it’s a new kind of job. Maybe it’s like a 21st-century job. Tom Friedman talks about how in the future people may not have jobs. They’ll have income streams.

I believe that the sharing economy broadly can probably provide tens of millions of jobs or income streams for people all over the world. This is going to have a pretty big effect on the economy, mostly a good one.

The sharing economy started by democratizing and creating access to probably two of the biggest assets people have: their homes and then their cars. But I think the whole idea of ownership is changing. When my parents were young, owning things was a privilege, and there was a sense of romance to owning a house, owning a car.

Today’s generation sees that ownership also as a burden. People still want to show off, but in the future I think what they’re going to want to show off is their Instagram feed, their photos, the places they’ve gone, the experiences they’ve had. That has become the new bling. It’s not the car you have; it’s the places you go and the experiences you have. I think in the future, people will own whatever they want responsibility for. And I think what they’re going to want responsibility for the most is their reputation, their friendships, their relationships, and the experiences they’ve had.

So I think the biggest revolution will be in the biggest asset of all. The biggest asset is not a house. It’s not a car. It’s people’s time. People’s time may start with just gigs: waiting in line for you, delivering something for you. Over time, I think it’s going to move upmarket. And eventually, menial tasks become real trades, and real trades become art forms.

Somebody may say, “I cook a great brunch. I wonder if people would enjoy having brunch at my house?” And you could be able to book a brunch at someone’s house, instead of at a restaurant. That person isn’t trying to create a restaurant, they’re just allowing someone to have brunch. They build a reputation. One day, that person can be a Michelin-rated chef in their house.

how airbnb started

17 comments on “AirBnB CEO on the Sharing Economy

  1. Pingback: Week Four – Counterculture | Networked Societies

  2. I have a question. Could AirBNB be sued for “technically” ,making money off of the artists there who’s work we are “technically” paying to see? Im no lawyer, but it seems to me a portion of their profits should go to the artists of Burningman in paying for artist performance and exhibitions. Artists never said they’d perform for free for AirBNB and their associates.

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  5. 🙂 ~♥~ bURnIng mAn 2014 ~♥~ 🙂
    To me is the bEst viSuAl aRt fEsTIvAl oN thE pLAneT 🙂
    Also with bURnINg mAns association with San Fran roots with the
    hIPpie reVoLuTion whos ethos – nature’s harmonics, free though, kind sharing caring loving … ♥ 🙂
    and with the hipPIES roots in pAgAniSm – Wickerman – bURn tHat man:-)

    🙂 dIgItAl rEvOlUtion 🙂
    1940 – 2050 🙂
    The switch from machine power to computer power 🙂
    Communicaton – 1946 – Encryption – Decyption 🙂
    Capitalism Phase II – An Inquiry into Digital Wealth in the Universe 🙂
    Neighbourisation 🙂
    2016 – Fibre into every home 1gb asyncronous 🙂
    Internet, Airplanes, Mobiles, ?? 🙂

    🙂 iNdUStrIAl rEvOlUtion 🙂
    1740 – 1920 🙂
    The switch from human power to machine power 🙂
    Cotton – Mechanisation 🙂
    Capitalism Phase I – Adam Smith, Glasgow 🙂
    Urbanisation 🙂
    Railways, Motor cars, Telephones 🙂

    (-: ☆♫♪ 💫★❤✿☮♥ Ƹ̵̡Ӝ̵̨̄Ʒ aC Ƹ̵̡Ӝ̵̨̄Ʒ ♥ ☮✿❤★💫 ♪♫☆ 🙂

    Liked by 1 person

  6. It’s funny to me that the CEO of Air BnB so proudly points out all the new ‘jobs’ that the sharing economy is providing. There’s no mention of the loss of all the real jobs of the people who work at hotels. Air BnB, Uber and the like aren’t making more money or jobs for the economy they’re just moving it around.

    Liked by 1 person

  7. All I know and have been pounded while attending Burning man is that the only allowable commercialization is coffee, ice and. Ticket sales by Bmorg they threaten people w lawsuits and make photographers sign forms so where in this did I sign a form or contract w bmorg that my art, my art car or our theme camp was for sale? Is it in small print on the ticket that what I bring is sellable and commercialized by bmorg? Is there a check waiting for me from Air bnb or Travis Pugsley for selling my art and creativity? I am being shown that apparently this even is becoming slick w under the counter deals for tickets, placement and profiteers who seem to also be the same people who are very tight w mega corps. Ok so I want to be paid a fee by every person or company that charges to be at the burn. my art is not for sale unless we make a deal, and our camp drinks are not free unless your paid com campers have the correct wrist band, right isn’t that the normal order of protocol now. So here on burners me the wicki leaks of the bmorg the truth is unsettling and all us long time bringers are not being paid and we are not in contract yet we wait for our placement approval deep in July barely a month prior to bm yet mega Corp. Camp pugsly Inc. Presells all year wow now Air bnb is gonna book there spots in the web? Who is placing them the two board members really, you require more wealth and padding, the success of your meg million dollar venture is not adequate financial gain you need to take from and profit off artist who work from the heart and struggle in broken old trucks and budgets that starve before they profit, really? Your advisement is to push out the magical essence and replace it what exactly? Our 60 person theme camp is heavily conversing in if we ever bring a theme camp again, so many people took but did not bring, it’s a mega resort and we are ththentertsinment staff without pay and worse your selling private tickets to our show, well sorry not ok! Not even for money… Try and sell a show that is not there please Edm a stage or three and see how that goes. Lamesauce bmorg your shifty on your in words and people and honestly a class action lawsuit off your profiteering should be coming soon! My art is not for sale nor is our camp or anything we bring.

    Liked by 2 people

  8. For all their faults, the old-guard BMORG was comprised mostly of misfits with an art bent and/or people with passions OUTSIDE of their day-to-day jobs. Every one of the new guard has spent their professional lives figuring out how to package and commodify human interaction. AirBnB is a poster child of this phenomenon. Much of startup culture in general has this at its core.

    Liked by 2 people

    • Spot on! That is the problem, everyone is scurrying around trying to figure out how to commercialize, monezite, exploit and extract “value” from everything. In fact in their mind not doing this is stupid and if you don’t you are a fool. This seems to be the attitude of the BMOrg and the “leadership”: all the burners who donate their time, energy, creativity and passion and don’t make money off of it are rubes who should be taken advantage of. You are either exploiting or being exploited their is no gift for giving’s sake only a gift as a way of creating an environment that can then be commodified.

      Liked by 2 people

  9. Wasn’t there another example in history of an economy where the owners profited from the work of others? Of course, it was the pre-civil war agrarian-based economy that relied heavily on slave-worked plantations in the southern states; and look how well that worked out for everyone in the end.

    Liked by 1 person

  10. The BMORG should be a Coop wholly owned by the participants of the current year with all staff positions and salaries and compensation for the next year voted on by those participants. All grants should be voted on in the same way. The budget for the next year as well. And, all surplus funding should be either returned to the participants proportionately to their ticket purchases or donated to a charity of their choosing. This can be done (pseudo)anonymously using Crypto-currency/blockchain technology if that is an issue. The current system is not a radical departure from “business as usual”.

    Liked by 2 people

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