When someone first told me about AirBnB I immediately dismissed it - just like Fred Wilson did. It fell in the group of ideas which I just find puzzling because the concept is totally alien to something I would want to do/buy/participate in.
I don't get why anyone would want to rent out their couch or spare room to a transient stranger - even 'vetted' within a community (and we can see that vetted is very lose here).
Sure, I sort of get the appeal for the renter but I'm lost as to why a homeowner would want to do this - especially considering the risk/reward here. The upside is a few dollars here and there, the downside is $10k's of damage - like this.
If you've never owned a house, you won't know that it's a labor of love and something you invest more than just your money into. Why you would want to risk someone destroying it, I don't know.
AirBnB needs to offer insurance as part of the deal - just like the car sharing programs seem to have negotiated their own insurance for the duration that the other person is driving your car. Otherwise it just seems an unwise risk to offer accommodation on AirBnB.
There's an increasing trend toward startups that disintermediate between traditional providers / purchasers.
eBay and Craigslist were early instances. I'd count eTrade and other online trading startups as another instance. Blogs, generally, cut out the middleman in publishing.
There's couchsurfing.com, various direct-lending startups, etc. And now AirBnB.
Some of these are fairly low-risk activities.
Craigslist, having been in the business for nearly 14 years (the domain was registered 11 Sept 1997) have a prominently displayed and long list of ways to protect yourself against fraud, including very explicit warnings and suggestions. It smells very real. And there are still a ton of posts to the feedback/help forums asking / warning / telling of scams attempted or perpetrated. And a few notorious headlines.
Startups especially like to portray the world as consisting of mostly nice people. This may be the case, but the exceptions to that rule can be, well, exceptionally bad.
Close family friends run a B&B. They've done it successfully for nearly 30 years, and have mostly good stories to tell, as well as some cool celebrity guests. It takes a mindset, especially when you're inviting strangers into your house (their current setup has separate guest cottages), and it's a lot of work.
Ultimately, AirBnB is going to have to look at whether or not they want to put a bunch of rank amateurs in touch with one another (with the inherent risks), or serve as an intermediary for more established entities (much eBay and CL traffic is now through at least semi-official dealers and brokers).
I can think of some explicit steps EJ could have taken to protect herself: having a storage locker and moving valuables off-site would have been a good first step. Meeting the guest another. Some sort of in-apartment surveillance, at least of entry an exit areas, a third. At the very least this would help track the perp / establish whodunnit.
AirBnB could self-insure or take a guest deposit of some sort (possibly encouraging credit-card fraud) against such issues. I suspect they'll have to or fold with the publicity of this story.
One of the lending companies I spoke doesn't assume systemic risk (based on credit scores and such), but does assume all risk in the event of identity fraud. This would be a very good model for AirBnB to follow. Bruce Schneier has long railed on how credit card / debit card fraud proliferates in large part because banks bear little of tye risk (most falls on merchants, some on cardholders).
Thank you for a rational response to this. This is far from crippling for AirBnB; if some of these things haven't been worked out yet, then there's no reason they can't handle that.
The main damage will be from the publicity from this story. Now there's at least one cement example of somebody suffering greatly, that fear will penetrate anybody who uses this service from here on out.
Well, AirBnB certainly didn't create the idea that someone would rent out their home to a stranger, they just made it easier. My grandparents were renting out ski houses in Tahoe for a few days at a time 50 years ago.
And a few hundred dollars? The people I rented from in Paris were pulling in over $4k a month through AirBnB per property and they owned several.
If they simply charged a refundable deposit against damages like your average vacation rental, made people sign a damage contract and AirBnB secured the identity so you could prosecute someone if they destroy a place completely, a lot of these problems would go away.
Insurance probably requires a hotel reception-like presence (person on site, cam surveillance, security coverage, signed contracts, in-person ID validation and a way to prove who did what in case something bad happens).
I can't imagine any insurance company signing up for insuring "rented your home while being away" guests at rates that would be considered affordable for the rental model, nor a lot of AirBnB audience willing to turn their property into a de-facto hotel establishment.
I found this very glib, while we may mock insurance for certain things there are professionals in that industry.
If an insurance company specialising in unconventional insurance don't think they can make money out of a premium, that does actually say something pretty insightful about the risk you're taking.
The professionals in the insurance industry specialize in estimating the risk associated with any endeavor. Innovation, especially disruptive innovation, is extremely risky in the beginning and is almost always perceived to be riskier than it is. This does not mean that it will stay risky forever and perceptions certainly change. Innovations that go mainstream become progressively less risky.
If you'd like a specific example, consider that insurance companies in 48 states can and will likely cancel insurance policies of anyone who rents their car to another individual, even if they hold a separate insurance policy to cover it[1]. This means that the tens of millions of cars sitting in garages would never be shared even if a startup decided to insure those doing peer to peer sharing.
GetAround, which won the TechCrunch Disrupt audience prize last year, or RelayRides which does the same thing, would never have started if they followed this rule. It's a bit early to claim that they have changed the world for the better, but I am optimistic they will.
I think what I said may be somewhat pithy but I certainly wasn't being glib.
You're arguing against yourself here - GetAround obtained insurance even while being disruptive.
More to the point, neither GetAround or AirBnB are in any way deep into territory that insurance hasn't ventured before. Insuring against burglary/damage in rental properties happens all the time, just like for rental cars.
The only times when insurance is unattainable is when the risks highly outweigh the premiums (SEE: Flood insurance in the Mississippi Delta) or when there is no actuarial data available which is tough to come by at this point.
For the first point I'm going to say the parent is very correct in avoiding this type of un-insurable behavior. And as for the latter, you had better have deep, deep pockets because if you can't even convince an insurance company of the risk, are you sure you've thought it through?
I am not arguing against myself. People had been trying and failing to get insurance for car sharing for decades before Getaround succeeded at it. My co-founder is one of those people. Yet, even today, if you become a Getaround subscriber, your insurance company can cancel your policy. If that doesn't convince you about the slow moving nature of insurance companies, I don't know what will.
I know of few disruptive markets for which actuarial data sets are available.
Obviously you should think through the risks of starting a business not endorsed by insurance companies. If you have an appetite for such risk and believe the rewards (to yourself and/or to society) outweigh the risk, you should do it. Do you think Google could have bought insurance for their self driving cars before they started working on them?
I am an airbnb host. If the upside were a few dollars here and there I wouldn't do it. The upside is 60% to 120% of my rent every month. I imagine it could put a similar dent into a mortgage.
"When someone first told me about AirBnB I immediately dismissed it - just like Fred Wilson did. It fell in the group of ideas which I just find puzzling because the concept is totally alien to something I would want to do/buy/participate in."
I felt the same way about Ebay. How would you guarantee you didn't get junk shipped to you by some individual who changes his ID every day? How would you make sure that the top bidders actually go through on their agreement? The whole things seemed shaky. But it seems to have worked out for them.
I don't get why anyone would want to rent out their couch or spare room to a transient stranger - even 'vetted' within a community (and we can see that vetted is very lose here).
Sure, I sort of get the appeal for the renter but I'm lost as to why a homeowner would want to do this - especially considering the risk/reward here. The upside is a few dollars here and there, the downside is $10k's of damage - like this.
If you've never owned a house, you won't know that it's a labor of love and something you invest more than just your money into. Why you would want to risk someone destroying it, I don't know.
AirBnB needs to offer insurance as part of the deal - just like the car sharing programs seem to have negotiated their own insurance for the duration that the other person is driving your car. Otherwise it just seems an unwise risk to offer accommodation on AirBnB.