Is Airbnb’s overhaul a turning point?

Brian Chesky
Airbnb Co-Founder and CEO Brian Chesky made a surprising announcement in November.

It shouldn’t have taken two major incidents of fraud and violence to convince one of the world’s leading travel brands to upgrade their approach to safety and security.

Airbnb, the popular online marketplace for lodging and home-sharing, is no fledgling startup short on resources. It’s a corporate behemoth that’s worth an estimated $31 billion, operating in 100,000 cities, and hosting over 2 million people every night. The company has had eleven years to develop methods to prevent scams, protect their users, and improve the experience of hosts and guests. Yet despite all of this, it has fallen short in major ways.

That’s because, like many platform businesses, Airbnb has seen its role as primarily connecting people to each other and charging a fee—not taking ownership of the quality of the full experience that it enables.

While the company has been incredibly successful at getting strangers to interact with each other, its growth has been fueled by a hands-off approach where it has avoided blame when things go wrong. It’s largely left it to users and journalists to uncover major problems and work out the details.

Whether it’s complying with local tax laws or figuring out when to get the cops involved, Airbnb has shirked responsibility for the hard questions.

But that may no longer be the case. On November 6, Airbnb Co-Founder and CEO Brian Chesky announced plans to dramatically improve the way the company treats users and enforces the rules. In an email to employees, he laid out a series of productive and sensible steps to restore and increase trust in the platform and community. Most notably, he promised to verify the accuracy of all seven million listings in the marketplace. This was followed by a The New York Times interview where he stated that as an industry “we have to take more responsibility for the stuff on our platform,” and that his shift in thinking may have been “too gradual.”

It was a remarkable admission—and it may signal a turning point in how we view the economics of Silicon Valley’s favorite business model.

Over the last decade, platforms have transformed finance, media, gaming, and many other industries. Whereas traditional businesses would own everything and deliver services and products directly, platforms work by creating an ecosystem where different parties can connect with each other and exchange goods, services, and information.

This leads to a fundamentally different orientation. Transportation platform Uber owns no vehicles of its own. It makes its money by connecting drivers and riders to each other, while e-commerce platform Alibaba owns no warehouses or inventory of its own. It connects shoppers and sellers.

Platform owners focus on setting the rules and maintaining the infrastructure. In exchange, they typically take a piece of every transaction. As a result, companies have been able to achieve massive scale rapidly, making them enormously disruptive. While the business model isn’t new, advances in technology have made it much easier to match, curate, and analyze different participants and their needs, leading to an explosion in popularity.

The problem has been that in the pursuit of profits, platforms are notorious for cutting corners with moderation and quality control. Issues don’t get addressed until after harm has been caused. They often pass the costs of cleaning up their messes on to individuals, government, and society.

Whether it’s Facebook collecting ad revenue while its users are being manipulated, Amazon selling banned and unsafe products without checking, or YouTube recommending violent videos to children, the issue is the same: a gatekeeper is falling behind, ignoring the downsides, and not doing their job properly.

Airbnb’s announcement is striking because it’s so rare for a platform company to offer to absorb the costs of their own externalities. Instead of deflecting, it is holding itself accountable. If it follows through with its commitments, it will raise the bar for what’s expected of a platform operator. Other companies will be forced to re-evaluate what they can get away with today, and the whole industry may move to a more mature stage of development.

Platform companies often break new ground, and it would be unfair to expect them to solve every problem at the outset. But we should absolutely demand they learn as they grow and take more responsibility for their impacts. Their success doesn’t have to be at our expense. Investing in trust requires a good-faith effort to prevent problems before they occur.

Author Tarun Wadhwa is an entrepreneur, academic, and writer who is working at the intersection of technological advancement, innovation, global growth, security, and public policy.