Much has been written about the long-term impact of the “sharing economy,” with most focused on the sociological, cultural and monetary aspects by implications of an economic model that depends on more people sharing fewer resources. I for one am very impressed by how firms such as Airbnb, Bike Share and Lyft have been able to capitalize on the technological innovations of the Internet and social media. What I find more remarkable about these firms is that they are able to overcome the biggest impediment to Internet commerce, the trust deficit.
The trust deficit is how I describe the phenomenon that has emerged since the advent of the Internet that gave us the potential for previously unheard of anonymity. Everyone has probably experienced it on a daily basis. Spam e-mail is the most common example of why the trust deficit exists. Are you really the long-lost relative of a Nigerian prince who will give you three times your investment if you just wire him a little cash to get out of a tight spot? I for one am quite sure I do not have Nigerian noble blood in my veins.
The trust deficit isn’t just too-good-to-be-true scams. It has permeated every level of Internet commerce. When I have old possessions I want to sell for cash I am more likely to use a pawnshop than Craigslist. I fear if I use Craigslist I will end up in a hole somewhere arguing about the timely application of aloe vera lotion. While that scenario has a 99.99% chance of not happening, as humans we are natural risk mitigators. If one person on Craigslist is a deranged psycho, there is a good chance there are more.
This constant fear of the worst possible scenario playing out is what drives consumers to avoid using peer-to-peer Internet services like Lyft and Airbnb. Yet both firms have been able to overcome those fears in a number of ways. First by creating a physical presence that can be contacted on or off line. Craigslist had no customer complaint line last time I looked. They just direct you to their “we are not responsible if the person you did business with on here was a nutter, please see safe transaction page.” Airbnb is available by phone or e-mail as is Lyft. Although both companies can do very little for people who get exploited by their services, as was demonstrated by the recent case in Florida in which one woman struggled for 90 days to evict a pair of Airbnb squatters. Those companies that create an impression of involvement and self-regulation provide a mental safety net. It should be noted that Airbnb did provide the woman with legal information and permanently banned the squatters from using the site.
The second aspect that has allowed these sites to overcome the Internet trust deficit is the crowd sourcing of reviews. People who use these services are encouraged to post reviews for individual locations and providers. This allows future users to navigate the site more successfully and the company to filter out troublesome providers. Verbally abusive Lyft drivers seem to not last, although verbally abusive cab drivers seem to multiply.
The crowd-sourced user reviews add to the safety-net impression that customers of these services have. While things still go wrong, it should be noted that Airbnb has 15 million transactions per year, while Lyft and other car-sharing services handle thousands each day, most without incident. When there are problems it will make headlines, such as the squatting case or a car-sharing driver assaulting a passenger.
When these incidents are viewed from a macro perspective, users are able to say, “yes, bad things happen, but there is a safety net” to minimize these instances. The trust deficit is overcome and using an Internet peer-to-peer service becomes like swimming in the ocean – yes you may get attacked by a shark, but the odds are in your favor.
Jeff Hawn was born in 1991 and represents the “millennial generation,” the people who have spent their entire lives wired and wireless. His adult life has revolved around cellphones, the Internet, video chat and Google. Hawn has a degree in international relations from American University, and has lived and traveled extensively throughout Europe and Russia. He represents the most valuable, but most discerning, market for wireless companies: the people who have never lived without their products, but are fickle and flighty in their loyalty to one company or product. He’ll be sharing his views – and to a certain extent the views of his generation – with RCR Wireless News readers, hoping to bridge the generational divide and let the decision makers know what’s on the mind of this demographic.
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