Airbnb’s Achilles’ Heel

As you probably know if you read this blog and follow me on Twitter, I’ve been thinking about local commerce, local search and discovery for the last 13 years. That means thinking how to create a better match between consumers and local businesses.

I’ve been following with high interest the rise of vertical peer-to-peer marketplaces like Airbnb and I finally had the chance to try the service a few weeks ago when we reserved a Florida house for a family vacation. As you probably all know, Airbnb offers homeowners the opportunity to rent their home or a room to tourists. You can build a very detailed profile and the site relies on strong identity checks and reviews to build up trust. After doing a lot of research, we finally settled on a house that seemed adequate for our family and it had 16 glowing reviews from strangers. Owner was extremely friendly in all his communications and we were looking forward to a well-deserved vacation.

When we arrived, the house was a little more rundown than expected (be aware that “rustic” has an interesting meaning in real estate) but nothing that we haven’t seen before, as we travel a lot in North America and Europe, and we’ve seen a wide variation of accomodation quality. I’ll skip the next two days for the sake of brevity but sadly, we had to take the decision to leave the house earlier than planned. We found too many ants and saw three roaches-like bugs over a 48-hours period in the house. The solution would have been to spray the house with repellent but we feared that this could be harmful to our toddler. I realize that Florida sometimes brings its lot of “domestic” insects but for the price we were paying, we felt it wasn’t worth it. This house wasn’t for us. We thought of complaining to Airbnb but, according to their policies, they require photos and we didn’t take any (it’s not the first thing you think about when you’re in a hurry to leave a place!) We lost our money and rented a hotel room for the rest of our stay. All in all, a very disappointing experience.

My local search mind started thinking feverishly (or maybe it was the hot Florida weather?): given that it’s probably a recurring problem in that house, why is it that, in 16 reviews, nobody mentioned ants and roaches?

Were they fake reviews? No, I don’t think so.

Were people ok with bugs? Maybe that’s a possibility, although I highly doubt everyone is fine with bugs (you just need to Google for the word cockroach in TripAdvisor)

And that’s when it hit me.  In Airbnb, you deal with individuals, not faceless corporations.  Tenants might be more hesitant to leave a negative comment about a fellow human being. There is a reason social media experts have been saying to corporations they need to have a human face and voice. It keeps the conversation more cordial. In addition, tenants and owners can review/rate each other, which means a negative rating from an owner can prevent you from possibly renting a house ever again on Airbnb.

Turning to eBay, the grand-daddy of marketplaces, I also realized that reviews from strangers in a peer-to-peer marketplace eventually become meaningless. You can read many complaints about that on the web. In a review site, what’s often missing is a like-mindedness filter, to let you know if people have the same taste as you. Yelp has that same problem.

I also realized that Airbnb is going after a vertical (hotels) that is more complex emotionally than many local purchases:

  • Vacation = positive moment in life. You mess up my vacation, I’m mad.
  • Dollar amount is bigger. I make a bad choice, I’m mad.

In addition, the hotel ecosystem comes with basic standard:

  • You know brands stand for something, a level of quality. Sheraton, Hilton, Best Western.
  • There is also a standard 5-star system, where in effect you can opt-in to lower quality (and lower prices) with full knowledge.

It also got me thinking about trust and social media. Ken Larson on Quora says:

“We really do not know who to really trust. To an extraordinary degree the age in which we live is requiring us to redefine trust and the degree to which communication and expectation contribute to it. Consider simpler times a few years past (say 50). Trust was necessary in many venues as a means of survival on a day to day basis. We relied on others extensively for our well being from our local store to our banker, from the policeman to the politician. And we knew them all better, we could reach out and touch them and we were not viewing them in sound bites and web sites, nor were we being bombarded with multiple forms of input to digest about them.”

Through all these reflections, I came up with an equation for trust. To have trust in an ecosystem, you need:

  • A strong brand (can be an umbrella brand or an individual brand)
  • Real identities (everyone uses real names and pictures)
  • Detailed Descriptions
  • Solid knowledge about local prices (being able to compare prices for same level of quality)
  • Reviews/recommendations
  • Social graph (friends or friends of friends have bought the product/service)
  • Detailed enforced standards via a certification program

Looking at this list, Airbnb is executing perfectly on almost all criteria except for one: standards. Airbnb has “host obligations” but I don’t think anyone is really enforcing those. Did you know BestWestern has a 30-page standards book you need to respect if you want to be a franchisee? Without solid standards and a certification program, I won’t be going back to Airbnb. They currently have a great brand, but they’re putting that brand at risk every day.

Update 1: less than 30 minutes after I posted this online, I was contacted by Airbnb to discuss my case.

Update 2: because we did not follow the “procedure” (contact the owner and/or Airbnb to try to solve the issue AND capture proof of our allegations), Airbnb could only offer us a $100 credit. Given that we lost about $600 and that we’re probably not going to use Airbnb again, that obviously wasn’t satisfactory.

 

Rumor: eBay to Sell Skype to Google?

Techcrunch reports on a rumor this morning that would have Google either buy Skype from eBay or Google partner with Skype.  According to the site,

“Skype, acquired in late 2005 for $3.1 billion, has been a financial albatross around Ebay’s neck. eBay removed Skype co-founder and CEO Niklas Zennstrom in October 2007, reportedly due to frustration at the financial performance of Skype. Ebay also negotiated down the huge earnout due to Skype stockholders and took a $936 million one-time loss around the transaction.  It’s clear that eBay wants to either unload Skype, or significantly drive performance.  Google, by contrast, is just beginning to think about how to dominate the voice space. They have a VOIP service through GTalk, a free 411 service and GrandCentral, a telephone management service they acquired last year for $50 million.”

What it means: I think this potential acquisition/partnership makes complete sense. IMHO, call tracking and pay-per-call represents a large portion of future local search revenues and Google clearly sees that local search is where they will get tremendous growth in the next 5-10 years.  By buying the Skype infrastructure (and user base) and combining it with the GrandCentral technology and expertise, they instantly get core assets to execute that strategy globally.

Distributing Your Content and Services Leads to Innovation (Live from Web 2.0 Summit)

This morning, at the Web 2.0 Summit, Max Mancini from eBay was talking about “The Hows and Whys of Distributing Your Content and Services”. He discussed the importance for companies of opening up their content and services to the rest of the web and of avoiding the walled garden mentality. In passing, he mentioned the following platform statistics:

  • Facebook: 90,000 developers, and 5,000 applications since May 24, 2007
  • Google: “tens of thousands of active gadget developers”
  • Salesforce.com: 55,0000+ developers
  • eBay: 60,000 developers, 9,000 applications

He also said that in Q2 2007, of all new listings posted on eBay, over 55% of them came from web services tools. And a third of those came from third-party built applications.

What it means: by opening up their platforms to third party developers, these various players have increased their speed of innovation by “outsourcing” some of it to outside players. eBay is often too big to go after niche markets but developers can make a profit because they’re smaller/quicker. In return, the ecosystem gets stronger and customers/consumers benefit from it. Can you also imagine the cost to build all those applications? eBay takes a look at which applications are being used and will acquire smaller tech firms when third-party developed tools become core. So, more innovation, speed to market, cost savings and a stronger ecosystem. Can you ask for more?

Distributing Your Content and Services Leads to Innovation (Live from Web 2.0 Summit)

This morning, at the Web 2.0 Summit, Max Mancini from eBay was talking about “The Hows and Whys of Distributing Your Content and Services”. He discussed the importance for companies of opening up their content and services to the rest of the web and of avoiding the walled garden mentality. In passing, he mentioned the following platform statistics:

  • Facebook: 90,000 developers, and 5,000 applications since May 24, 2007
  • Google: “tens of thousands of active gadget developers”
  • Salesforce.com: 55,0000+ developers
  • eBay: 60,000 developers, 9,000 applications

He also said that in Q2 2007, of all new listings posted on eBay, over 55% of them came from web services tools. And a third of those came from third-party built applications.

What it means: by opening up their platforms to third party developers, these various players have increased their speed of innovation by “outsourcing” some of it to outside players. eBay is often too big to go after niche markets but developers can make a profit because they’re smaller/quicker. In return, the ecosystem gets stronger and customers/consumers benefit from it. Can you also imagine the cost to build all those applications? eBay takes a look at which applications are being used and will acquire smaller tech firms when third-party developed tools become core. So, more innovation, speed to market, cost savings and a stronger ecosystem. Can you ask for more?

RealPeopleRealStuff.com: Craigslist Meets YouTube

(via SpringWise)

What do you get when you cross online classified ads with web-based video? Realpeoplerealstuff.com is equal parts Craigslist and YouTube—a whole new way for customers to reach out to one another to sell their used appliances, automobiles, collectibles, concert tickets and countless other goods and services. “Realpeoplerealstuff.com combines the hottest internet trends in one, easy-to-use site: e-commerce, snarky writing, funny videos, everyone’s desire to be a star and video sharing.”

realpeoplerealstuff Video Classifieds

With a few clicks of a mouse, customers can upload their own video commercials, recorded on their camcorders, webcams, digital cameras or cameraphones. Ads are organized by category and location, and users can enter text descriptions, prices, thumbnail photos and tags along with their video clips. For best results, users are encouraged to engage their personality, creativity and sense of humour when filming their commercials. And who knows? One may well turn out to be the next average Joe or Jane launched into internet stardom. The service is entirely free—for now at least, though there may come a day when, like Craigslist, modest charges apply to select portions.

What it means: I really like the concept as I’m very visual. But I wonder about the quantity of energy needed to produce a video vs. taking a simple picture, even if there are many video-capture devices out there. I remember when I started selling stuff on eBay in 2002. There used to be some barrier to entry if you wanted to post a product picture. Then, eBay introduced one of their coolest seller function: the UPC code product finder. When listing a product in some categories (like videogames), you just need to enter the product’s UPC code to instantly get the default image attached to the product, usually a cover shot. By removing friction, eBay got me to post more stuff for sale. I think Realpeoplerealstuff.com will have to think about how they can remove some of that friction.

I also think that classified advertising is all about local. Right now, local seems to be a second thought to the whole site. They need to embrace local much more to eventually be successful. There’s also a chicken & egg problem with local content. You need local content to make your site relevant to local users. I think Realpeoplerealstuff.com should be looking at doing backfill content deals (maybe with Oodle.com) to improve their local content breadth and depth.

Google & eBay on a Collision Course

Google and eBay had a staring contest in the last few days, which resulted in eBay winning a round against Google.

TechCrunch has a great summary of what happened:

    1. eBay doesn’t allow merchants to use Google Checkout to settle eBay transactions. Google invited eBay online sellers attending eBay Live! in Boston this week to a party that they called the Google Checkout Freedom Party.
    2. eBay decides to pull all U.S. advertising on Google.
    3. Google backs down, cancels the party.

    What it means: eBay is the biggest Google AdWords advertiser (which might be worth more than $100 million in revenues for Google). According to this SF Chronicle article, “EBay’s ads showed up on Google 188.3 million times in March, according to comScore Networks, more than double the number run by Target, the No. 2 Google advertiser.” and I think that does not include Shopping.com numbers. You should never underestimate the power of any of your coopetitors. If you’re coopeting with another large organization, be careful not to disrupt the delicate equilibrium, unless you’re prepared to go to war.

Google & eBay on a Collision Course

Google and eBay had a staring contest in the last few days, which resulted in eBay winning a round against Google.

TechCrunch has a great summary of what happened:

    1. eBay doesn’t allow merchants to use Google Checkout to settle eBay transactions. Google invited eBay online sellers attending eBay Live! in Boston this week to a party that they called the Google Checkout Freedom Party.
    2. eBay decides to pull all U.S. advertising on Google.
    3. Google backs down, cancels the party.

    What it means: eBay is the biggest Google AdWords advertiser (which might be worth more than $100 million in revenues for Google). According to this SF Chronicle article, “EBay’s ads showed up on Google 188.3 million times in March, according to comScore Networks, more than double the number run by Target, the No. 2 Google advertiser.” and I think that does not include Shopping.com numbers. You should never underestimate the power of any of your coopetitors. If you’re coopeting with another large organization, be careful not to disrupt the delicate equilibrium, unless you’re prepared to go to war.