Opinion A platform of trust

Why the 21st century economy will be powered by people.

July 21, 2014 12:05 AM IST First published on: Jul 21, 2014 at 12:05 AM IST

By: Thomas L. Friedman

From Ukraine to the Middle East, some bad actors — Hamas, Vladimir Putin and Israeli settlers to name but a few — are trying to bury the future with the past and divide people. Instead of focusing on them even more, I prefer to write about a company that is burying the past with the future, and actually bringing strangers together. Last year, I interviewed Brian Chesky, one of the co-founders of Airbnb.com, about the emerging sharing economy, led by companies like the on-demand taxi app Uber and Airbnb, which provides a platform for people to rent their spare rooms, homes, castles and yurts to strangers with the same ease you can book a room at Marriott.

We just got together again, and Chesky laid out the growth spurt his company has experienced in the last 12 months — a spurt so fast that it’s telling you this new sharing economy is the real deal and will increasingly be a source of income for more and more people. Chesky offered this sample of Airbnb’s latest metrics.

“We have over 3,000 castles, 2,000 treehouses, 900 islands and 400 lighthouses available to book on the site. On a recent night, over 100 people were staying in yurts.”

“Fifty-six per cent of guests staying on Airbnb on a recent weekend were doing so for their first time. Over 17 million total guests have stayed on Airbnb. It took Airbnb nearly four years to get its first million guests. Now one million guests stay on Airbnb every month.”

“Roughly 120,000 people stayed in Brazil in Airbnb-rented rooms for the World Cup, including travellers from over 150 different countries. Airbnb hosts in Brazil earned roughly $38 million from reservations during the World Cup.” July 5, 2014, was Airbnb’s biggest night ever. “Its platform hosted over 330,000 total guests staying around the world — in thousands of cities and over 160 different countries,” said Chesky. What’s the secret? Who knew so many people would rent out rooms in their homes to strangers and that so many strangers would want to stay in other people’s spare bedrooms? The short answer is that Airbnb understood that the world was becoming hyper-connected — meaning the technology was there to connect any renter to any tourist or businessperson anywhere on the planet. And if someone created the trust platform to bring them together, huge value could be created for both parties. That was Airbnb’s real innovation — a platform of “trust” — where everyone could not only see everyone else’s identity but also rate them as good, bad or indifferent hosts or guests.

The 20th-century economy was powered by big corporations that standardised everything because they never really knew their customers, argued Chesky. “The 21st-century economy will be powered by people” — where the buyers all have identities and the producers all have personal reputations — “so I will be able to sell something directly to you and delight you and surprise you, and the selection you’ll be able to choose from won’t be 4 but 4,000,000.”