The future of Airbnb cooperatives

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New directions

Amongst all the discussions that take place concerning Airbnb, a remarkable message appeared on 21 September. In a letter directed towards the SEC, co-founder of Airbnb Brian Chesky shared his view that ‘twentyfirst century’ companies can only be successful if the interests of the stakeholders are all lined up together. He then proceeded to unveil his ambition to reward the landlords’ role on the platform with share ownership so that they too can benefit from a successful IPO. Besides the question of whether this is part of a sophisticated marketing offensive or whether Chesky is showing genuine intention, it has opened the door to a discussion about a new generation sharing economy platforms.

Power to the middlemen

Platforms such as Airbnb, Booking.com, Uber and Facebook are marketplaces that basically do not own anything. They make use of the means and time that the users make available via the platform. Although these users are indispensable for the value creation of the platform, the profits of the platform go straight towards the pockets of the shareholders. Who are most definitely not the users. In fact, the focus on creating profit maximization for shareholders is an incentive which disadvantages users of the platform.

Platforms United

Chesky’s plan is in line with an increasingly strong international need for a more equal model. The idea of Chesky is not entirely new though. For several years now, experiments have been taking place in many places with so-called platform cooperatives: platforms where the users, usually the providers, have united in a cooperation.

This way everyone invests in the technology they depend on. For example, a group of photographers owns and manages stockpictures website Stocksy, a group of cleaner professional in New York jointly own the Up & Go platform, eight hundred taxi drivers in Denver form a local Uber competitor with Green Taxi and there are experiments in France with cooperative alternatives to Deliveroo and UberEats. Although there are still only a few successful new platform initiatives, it is a reassuring thought that alternatives are possible for some platforms.

The revolution(ary)

Although Chesky’s idea isn’t new, it is unique. Where many platform cooperatives start as cooperatives and often struggle to make an impact and achieve sufficient scale, in the case of Airbnb it would be a reversed world: the platform starts as a commercially and centrally controlled platform and then ends up in the hands of the users. While many experts expect this type of development to come from startups using complex Blockchain technology, it is interesting – and positively revealing- that a model that has existed for more than two hundred years can offer a similar or equal solution.

What’s next?

Chesky’s ambition is groundbreaking if he actually manages to pull it off. But is his plan ambitious enough? The redistribution of ownership is new, but it is still based on an old model where the end goal is that Airbnb will go to the stock market in 2019, and then be subject to the daily craze of the stock market. Why not ante up the ambition a little with a transformation to a cooperative which includes voting rights? Where many ‘alternative’ thinkers detest the idea of making a good return, it isn’t out of the ordinary that an entrepreneur or investor is rewarded for the efforts and the risk that he or she has taken.

“If landlords are co-owners and directors of the platform, a better balance is created”

What if a landlord gets the option to automatically convert 25 percent of the proceeds into a share? This way, the landlords can slowly but surely acquire an increasingly larger share of the platform from a cooperative. With an average of 500,000 overnight stays per day at an average price of $80, it would cost the landlords, when you count the growth forecasts, about ten years to raise $32 billion. The amount which Airbnb is currently valued at. This would enable the cooperative to fully own the platform. The moment that landlords become co-owners and directors of the platform through a cooperative, a better balance is created in relation to the decision-making about the future of the platform and the place it has in society.

Baby steps

Although it is the first step, this model is not perfect either. The current focus on landlords, and not on neighbourhoods and cities, has shown that it is dangerous when not all stakeholders are involved in all of the decision making processes. Alternative platforms such as FairBnB have attempted to do this, but still, have great difficulty in attaining to these goals. A long period of experimenting with new ownership and management models of platforms will prove to display the best possible outcome for all parties.

In any case, it has set the base for an interesting discussion, regardless of the intention to do so.