frankly speaking

Whose House is This? My House…

Start-up airbnb ran into a little trouble this week. Basically, a person rented a room in their house to another person using airbnb’s service and the person who rented the room ended up trashing it and a lot more.

As you read the techcrunch article, there was intimation that airbnb would have trouble getting through this situation, and why not, millions of people use the services and it recently closed a huge funding round at a billion dollar valuation. There has also been a lot of debate as to what airbnb should or shouldn’t do about the situation and what to do about future problems that will undoubtedly occur.

Honestly, I don’t know what would be right for airbnb could do. One simple solution would be to offer renters of rooms a simple insurance policy (at a slightly higher cost) that protects them from situations like this. However, by doing this, airbnb would assume implicit liability and put itself at risk for future lawsuits when incidents like this happen.

This situation is not dissimilar from the situation we frequently found ourselves in at eBay back in the early days. I had the opportunity of working on the Trust and Safety team at eBay and specifically worked in areas of Fraud. Each and every day my colleagues and I worked in situations where our buyers would send lots of money across the world to sellers and (more frequently than eBay likes to admit) the seller never sent the item. Fortunately, through a lot of trial and error, we came up with business rules that minimized the risk that buyers exposed themselves to. And later, through their integration with Paypal, buying something on eBay has essentially become risk free.

But the early days at eBay were challenging, just as they for airbnb and thousands of other start-ups. At their most granular level, start-ups like eBay and now airbnb were platforms that bring together buyers and sellers to transact.

At a higher level, the product that airbnb and others like sell is trust. I trust airbnb to match me with a person who will pay me for time they are allowed to spend in (what is probably) my most valued asset. Similarly, at eBay, buyers trusted that once sellers received their money, they would send them the product they purchased.

To imply that airbnb won’t survive from this is a bit disingenuous; eBay faced many more problems (of greater magnitude, IMO) and managed to become one of the top 5 ecommerce companies in the world. Airbnb’s current problems are publicity related and should attack them as such, they should emphasize the thousands of good experiences that people have had on the site and reiterate they will go out of their way to do away with the distasteful members on their site.

When start-ups start to grow, they need to realize they will attract a number of bad apples. Keeping the bad apples out once they are discovered and retaining your consumer’s trust is one of the most important job’s a start-up CEO will have. Airbnb’s customers have trusted the company with a valuable asset, the question is, how well will airbnb respect that trust.

UPDATE: My buddy Dave added this commentary on his blog yesterday:

Ben, a long time friend of mine posted this well written summary of the AirBNB bluner. 

Having worked at eBay back in the day, at the same time as Ben, I have a really good working knowledge of eBay’s Trust and Safety team operation. Having been a key member of eBay’s trust and safety architecture team, I can agree 100% with Ben on the challenges that face AirBNB (or any exchange platform for that matter). 

It’s relatively easy to find the best players in a crowd using techniques like collaborative filters. But finding the trouble makers from the shadows of an online community is a brutally difficult technical task.

Ben is right, the company can recover from this.  The challenge for them is to not think they can code a solution and create a faceless black box company.  AirBNB needs to step back, decide on how to address problems like this now, and in the the future. Then step forward with boldness and state who they are, what they will do about it, and what others can depend on them doing in the future.

Business history has many moments like this. AirBNB can treat this like Coke did with New Coke in ‘85 or like Johnson & Johnson did with the Tylenol murders in ‘82. AirBNB is not on the scale of what J&J faced, but it is no less a customer service problem.

I am watching to see what camp AirBNB will fall into and if they can figure out how to sell TRUST.