SAN FRANCISCO: A few years ago, renting out a spare room via the lodging website Airbnb bordered on daring. Now, in thousands of cities around the world, it seems almost conventional.
But as the founders of the emerging category of “sharing economy” companies are learning, going mainstream brings a whole new set of legal and regulatory challenges. Sharing companies enable people to share anything from a car to a house to an office desk, using the Internet to vet and match those who have something with those who need it.
Sharing-economy entrepreneurs say their firms are a boon to the economy, because they enable productive use of assets that would otherwise be sitting idle. And they can enable all manner of people to, in effect, start their own small business.
“We could create millions of entrepreneurs who don’t fit into the market system,” Brian Chesky, co-founder and chief executive of Airbnb, said at a Reuters Technology Summit roundtable in San Francisco this week.
Airbnb itself is an entrepreneurial phenomenon, with venture investors valuing it at $2.5bn. Sharing firms such as RelayRides (rent out your car), LiquidSpace (rent out a spare workspace) and TaskRabbit (rent your free time for errands) are just a few of the myriad new firms with “sharing” models.
“Certainly, this is becoming mainstream,” said Jeremiah Owyang, an analyst at research firm Altimeter Group. Peer-to-peer rental of goods such as toys and electronics is already a $26bn industry, estimates Rachel Botsman, author of What’s Mine Is Yours: The Rise of Collaborative Consumption.
But moving beyond small circles of like-minded people in tech-savvy cities to become national or global services with millions of customers is no simple matter.
Airbnb has run up against local regulations in many cities that restrict the way rooms can be rented. In New York, for example, the city fined Airbnb host Nigel Warren $2,400 for renting out part of his apartment in September.
A judge ruled in May that Warren violated a law forbidding short-term rentals by residents; the city’s Environmental Control Board has granted an extension until July 15 for him to file an appeal. Many cities have similar laws.
But Airbnb’s Chesky said he believes educating officials on the merits of his business could result in the city softening its stance, citing examples such as Amsterdam, where the city was originally against Airbnb and is now allowing it, he said.
One tactic: convincing officials that Airbnb is contributing to the local economy. Earlier this month, Airbnb released a study showing that guests and hosts in Paris contributed $240m to the local economy; Airbnb guests stayed an average of five nights, compared with two for those who stayed in hotels.
Similarly, insurance companies are grappling with how to handle car-sharing businesses, in some cases discouraging their customers from working with them.
RelayRides provides car owners with $1m in liability insurance during the rental. In other words, the owner’s existing auto insurance would not come into play if the rental driver gets into an accident, according to RelayRides Chief Executive Andre Haddad.
Reuters
