Airbnb tokenization
Recently, Airbnb asked the SEC to change some rules in order to give their hosts a stake in the company.
Airbnb is smart and still young, I am pretty sure they are closely following what’s happening in the blockhain world.
This move seems indeed a first step in the right direction: to give users their due.
Josh from Origin Protocol (a blockchain start-up developing a system to create sharing economy marketplaces on theEthereum blockchain and IPFS) says that Airbnb “has failed to reward early buyers and sellers that are responsible for their successes (e.g. the first 100 hosts on Airbnb).”
They built the Origin Protocol, as we have built the Trips Community, on the very premise of rewarding the users contributing to the project success.
So, what will happen now? Nobody knows, not even Airbnb, as it depends on the SEC reaction. I think we can foresee three main cases:
A) No Significant Change
A first possibility is that it won’t be feasible. It’s difficult to change SEC rules and it’s probably even harder to convince investors to go all the way. In this case Airbnb’s hands will be tied and they’ll have to find creative ways to keep users incentivized.
As mature Dapps hit the market and become de facto alternatives sharing wealth trough tokenization, it will be hard for Airbnb to retain some of the users.
As 1,000 USD invested in Airbnb at the beginning are now worth about 3 M, so 1,000 tokens of a decentralized marketplace may be worth a lot of money in the future.
All other things being equal (and yes, we’re still really far from that), many users will choose the decentralized alternative.
B) Some Change
Airbnb manages to share its wealth with all the people who contributed, not just the investors.
Maybe the will SEC approve the move, or Airbnb will find another way to incentivize users. In this case, every time you host or book on Airbnb you get something in return (a token, a share or something else), and you know that if the value of the company grows you’ll be rewarded.
In this scenario Airbnb keeps all the rest centralized and becomes a hybrid centralized/decentralized company.
Read on to learn what I mean by “the rest” and for now let me just say that this is the most likely outcome. A modern corporation can’t simply ignore what’s going on in cryptos, and Airbnb has signaled that they won’t.
Smart move from a smart company.
But there are opposing forces which will resist a radical change.
Maybe the best way to describe them is in what an early investor may say:
“I invested in 100 companies, all failed except Airbnb, I need Airbnb to cover all those losses and make my investment a success. I need a 100X.
Now you are talking about sharing wealth with users? Optimizing user’s input and extracting all the possible value is the bottom line of every marketplace. You can’t change that. That was not part of the deal.”
To which Chesky may reply “we need to react, our business model needs to adapt to the 21st century. You can’t ignore ICOs, STO, Origin Protocol, and all the open source efforts going on in our space. We need to align the interest of all stakeholders”.
What really has to be understood is that Airbnb hosts are finding more and more in a not-so-nice position. They are in practice Airbnb employees without rights, or employment protection, subject to algorithmic firing (the dreaded “your AirBNB account is being terminated” automated letter), and providing their assets to the company “bring your own means of production (the house) at work or don’t show up”. All without sharing the large stakeholder profits.
3) Radical Change
Will the disrupter be able to disrupt itself?
Here’s a few things Airbnb would need to do to go all the way:
- Full tokenization
Tokenize their shares, assign tokens to investors, assign tokens to all Airbnb Hosts since the beginning, proportionally to the value they created, payback tokens to new hosts and guests who transact. - Reduce Commissions
Full tokenization means profits are no longer the key parameter, but token price on the open market is. It also means commissions should just cover costs and maybe some dividends. All the rest of the value has to be absorbed by tokens, otherwise they risk to be useless. - Open Source listings
If Airbnb belongs to all users,then it would also need to be free to create valuable startups on different business models, and verticals. These will only increase the value of the token.
Every day a startup idea dies because of Airbnb closed approach.
Suppose I wanted to create a website just for disabled people: Airbnb won’t give me access to its listings. I would need to find and then contact all the hosts in the world and convince them to join, upload the listing, keep it updated, learn the new platform and so on. Good luck with that.
With open source inventory I could simply contact them all via Airbnb and fire up a new app. - Open Source code
This may be not necessary but it would lower sensibly the barrier to entry.
I can use Airbnb code and even improve it?
Wow, now that disabled people app is even easier to do.
It’s cheaper to try and to fail.
That’s how innovation happens. Airbnb, once the great disrupter, is stifling innovation right now. - More control to users
Airbnb would be able to stop forcing decision on its Hosts.
I am referring to cancellation policies, commission levels, dispute resolutions parameters and so on.
This is not to say anarchy works best, but listening to users with aligned interests may really help the whole ecosystem. - Localize
With users feeling they are really part of Airbnb maybe it would be wise to let them adapt the rules to their local markets.
While some markets need disruption (say, New York with its hotel lobbies) others are really suffering from Airbnb’s approach of incentivizing illegal operations. Local hosts and guests may have a closer feel to local market conditions and could regulate better the access to Airbnb rentals, surely in a more sustainable way than a the current profit-based approach.
Airbnb would need to become a radically different company.
In this case we would have won and we could go home.
If this happens the sharing economy would really become a community effort empowering and rewarding the users of the network, not the company handling it.
There are even more aspects Airbnb in need of a change, but the one I listed here are enough to let you understand ohw it’s going to be really hard to push the changes.
That’s why I think an hybrid approach may be more likely.
As a result, all the efforts going on in the open blockchain ecosystem won’t stop.
I can’t wait to see how these two completely different approaches (centralized-platform based versus decentralized-blockchain based) will converge. Some centralized companies will fade, some will adapt, and some (decentralized-natives) will rise. We will live in a better world, as the profits will be shared by people putting their assets and efforts in the game.
I know, it sounds corny.
This sentence has been misused by countless startups just seeking an acqui-hire, but this time the outcome will really be a (maybe just slightly) better world.
See in our White Paper how we plan a fully open and mostly decentralized Airbnb alternative, based on a decentralized autonomous application.
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