Airbnb’s IPO May Remodel the Sharing Economic system–However Not for the Causes You Assume

Years ago I used Elance (now Upwork) to find freelance writing jobs. Elance worked like most sharing platforms: freelancers like me could work with people who had different tasks to do. Elance eased the deal and made a cut in return.

To be honest, it was great. While the cut, as I remember, was about 8 percent, that was cost of sales that I was happy to pay.

What Elance didn’t do – or pay lip service to it – was helping freelancers develop their business, especially with specific tools, infrastructure, etc. The format didn’t encourage any long-term relationship. While I’ve completed a number of projects, each was essentially a one-off.

Again, I’m not complaining. It worked for me. But I knew other people who could have benefited from a broader form of partnership.

The same applies to most companies in the sharing economy. Take Uber. Uber offers the marketplace. Which is great. But if drivers want to invest in a better vehicle or other tools to better run their business, that’s up to them.

Which in turn is fair enough. That’s the deal. Both parties go in with their eyes open.

However, this “relationship” often limits the ability of suppliers to innovate and grow their businesses. This also limits the ability of a company like Uber to provide better service and thereby grow its own business.

Because a marketplace, no matter how great its tools are, is ultimately only as good as its providers.

That’s an issue Airbnb clearly wants to address with its upcoming IPO. The company is holding back over 9 million shares to fund a host foundation that is expected to grow to over $ 1 billion. An advisory board – “a diverse group of Airbnb hosts who meet regularly with Airbnb executives to represent the voice of the hosting community and ensure the hosts’ ideas are heard” – will guide and oversee the spending of this money.

During a downturn, some of these funds could potentially be used to help hosts weather a loss of revenue. In better times, the funds could potentially be used for grants, investments in new products and services, education, or annual payouts to hosts who “are most driving the Airbnb mission”.

Admittedly, Airbnb hasn’t worked out all the details. You have time as the payouts won’t come until the fund is worth $ 1 billion. The spending will mainly come from growth.

However, if the program does work, it could be an important step in solving a fundamental problem in the sharing economy: turning an endless series of one-time transactions between two parties into something that resembles more of a long-term relationship.

When this works, the host abrasion can decrease. When this works, it can increase the overall quality of the products Airbnb hosts serve – as well as customer activity and revenue for the company and hosts.

If it works, the program could serve as a model for other companies on all sides in the sharing economy.

Which means, if it is you, you should definitely pay attention to the result.

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