Is Airbnb CEO Brian Chesky Telling Us the Truth About His Company?

Posted: 10/17/2015 9:46 am EDT Updated: 10/19/2015 11:59 am EDT

The following post was excerpted from:
RAW DEAL: How the “Uber Economy” and Runaway Capitalism are Screwing American Workers
Reprinted with permission from St. Martin’s Press
(c) 2015 by Steven Hill, published on October 20, 2015


The third actor in this passion play is Mr. Brian Chesky himself, Airbnb’s 34 year old CEO and co-founder. A former bodybuilder and graduate of the Rhode Island School of Design, Chesky’s rise to the ranks of billionaire hospitality mogul has been remarkable. A video floating around online of Chesky’s commencement speech that he gave at his college graduation shows, if nothing else, major amounts of chutzpah. The future Airbnb chief struts on stage in full cap and gown to the throbbing bass line of Michael Jackson’s “Billie Jean,” and proceeds to rip off his black graduation gown, revealing a white tuxedo underneath. He starts clumsily moonwalking and crotch-grabbing to the beat, egged on by the cheers of his classmates, before delivering his address to the graduates, families and faculty. His speech is more entertaining than profound, mixing quips, funny one-liners and even occasional bodybuilder flexes with a 22-year-old’s version of wisdom. The young man in the video is working hard to be liked, is slightly grandiose but also self-aware enough to say that he is uncertain of his future (with an art and design degree, after all). He is confident enough to relish his moment on the graduation stage, and displays definite leadership qualities, kind of like a head cheerleader urging on his homies at their final big hurrah.

That was in 2004, and now in his new role, the chutzpah, leadership and cheerleading have remained and come to the fore. When Chesky spoke at a hospitality conference sponsored by the University of San Francisco in April 2014, he offered no acknowledgement of the complexities, much less the downsides, of his business model. People like Theresa Flandrich and her elderly and disabled neighbors who are being evicted under the pressures of the assault on the San Francisco housing market, which Airbnb’s service has greatly contributed to, are not on his radar. Instead, rather unbelievably, he cast his company into another role in this script–that of the blue helmets saving the world.

“[Airbnb] is like the United Nations at every kitchen table. It’s very powerful,” said Chesky. In the masthead of his company, Chesky has assumed the role of Ideologist-in-Chief. His early interviews as CEO, viewable on YouTube, show an awkward young man, wide-eyed, hands flailing, who scarcely can believe his and his cofounders’ good fortune. He has an “aw shucks” charm. But several years later, as the same old questions become more pointed and specific, Chesky’s vague responses come off as evasive.

It’s not just that Airbnb refuses to be responsive to the increasingly wide path of destruction it is hewing. It’s also that Chesky wraps it all into a New Age-y kind of rap about trust, sharing, community and belonging. In early 2014, Chesky and his cofounders took a deep breath from their incredible success story to reconsider their mission. Chesky posted his thoughts about the newly revamped Airbnb, an 1100-word sermon to his public that, like his college graduation speech, was another revealing moment into this young phenom.

“Joe, Nate, and I did some soul-searching over the last year,” wrote Chesky. “We asked ourselves, ‘What is our mission? What is the big idea that truly defines Airbnb?’ It turns out the answer was right in front of us. People thought Airbnb was about renting houses. But really, we’re about home. You see, a house is just a space, but a home is where you belong. And what makes this global community so special is that for the very first time, you can belong anywhere. That is the idea at the core of our company: belonging.”

Like that young, slightly presumptuous college speaker holding forth at center stage, Chesky then goes on to wrap his company’s growing commercial empire in a grandiose vision that he positions as a solution to a civilization gone awry, indeed as a reaction to the wrongful drift of history.

“We used to take belonging for granted. Cities used to be villages,” wrote Chesky. “Everyone knew each other, and everyone knew they had a place to call home. But after the mechanization and Industrial Revolution of the last century, those feelings of trust and belonging were displaced by mass-produced and impersonal travel experiences. We also stopped trusting each other. And in doing so, we lost something essential about what it means to be a community… Belonging is the idea that defines Airbnb. . . Airbnb is returning us to a place where everyone can feel they belong.”

Like a newly converted evangelical, Chesky explicitly tries to tap into a rich, red vein filled with the loneliness and isolation of this modern life. He does this as a bid to position his company as more than simply a hospitality business: it’s a vehicle for building a global movement, a community of trust and sharing. But not over religion or to provide humanitarian aid, or to end human rights abuses, as previous visionaries have tried to do – no, Chesky is no Albert Schweitzer. Instead, in a sign of the times, his revolutionary act involves. . . a commercial transaction . . . providing short-term rentals to tourists.

Chesky’s Hallmark greeting card homily to his public was brilliant, akin to channeling John Lennon’s “Imagine” and merging it with a hotel business. It’s even more audacious than Nike’s “Just Do It” or Apple’s “Think Different.” In a topsy-turvy world, in which both government and big business have let us down, leading to the most disastrous economic crash since the Great Depression, Chesky’s words sound reassuring. He simultaneously attempts to mine feelings of loneliness and isolation, a longing for community, a sense of history and an economy gone off the rails, as well as the desire for travel to exotic places–and merge it all with a real financial need among Airbnb hosts in difficult economic times to use their own homes to earn income. To “monetize” their lives and their loneliness. It is one of the most audacious marketing pitches ever deployed.

Like any true evangelical, Brian Chesky seems to sincerely believe his newfound faith. But like so many fundamentalists of one kind or another, he is blinded by it. He deletes from his picture whatever fact or story doesn’t fit. In his talk at the University of San Francisco conference, Chesky crowed, “For us to win, no one has to lose,” and like that college commencement speaker he championed his “on-message” message with such a boyishly good-natured enthusiasm that audience members keyed into the hipness and coolness of his rosy version of the world. Yet sadly, Chesky has rendered invisible all those people like Theresa Flandrich and so many others across San Francisco–across the world–who in fact are not winning because they are being evicted under the housing pressures that Airbnb has helped unleash. He ignores all the upset neighbors who have some pretty strong feelings about the hotelization of their neighborhoods, with complete strangers and their rollaway luggage now traipsing in and out at all hours. He slickly hides the fact that increasingly “regular people” renting spare rooms are not the core of his business — instead it comes from professional landlords and multi-property agents, some of whom have converted entire apartment buildings into tourist hotels, even if they have to evict elderly and sick people to do it. Indeed he ignores all the disappearing housing stock and rising rents for local residents, not all of it attributable to Airbnb but his company has become a key catalytic factor.

Brian Chesky and the rest of Airbnb’s executives and venture-capitalist backers seem to feel little responsibility for upending so many people’s lives. Their company is like a rumbling jetliner that flies low overhead, but doesn’t want to be blamed for its noise. They are either oblivious to their impact, or they have rationalized it away as the necessary collateral damage for their “sharing revolution.”

Perhaps the biggest tragedy in all this is that at the core of Airbnb is a really good idea-it has cleverly used Web- and app-based technology to bust open a global market that connects tourists with financially strapped homeowners. After interviewing some of Airbnb’s “regular-people” hosts, I’m convinced that this service legitimately does help some of them make ends meet. But by taking such a hands-off, laissez-faire attitude toward the professionalization of hosting by greedy commercial landlords and multiproperty agents, Airbnb has become its own worst enemy. As the number of victims piles up, it undermines its own “sharing and trust” ethos.

If Airbnb and Chesky really believed in that ethos, the company could partner with local governments and tenants associations to draft laws that take account of this new business model. Chesky could delist the professional landlords and multi-property agents from the Airbnb site, severely limiting their ability to turn badly needed housing into tourist hotels. He could forbid any professional property agency from managing the listing of another person on the Airbnb site, which would crack down on absentee hosts. He could cooperate with cities like San Francisco and Portland, that require hosts to register with local officials, by delisting any unregistered hosts. Airbnb has the data and knows who all of these violators are.

Chesky’s company also could pay hotel taxes in all 34,000 cities in which it operates, or collect it from the hosts and hand it over to local authorities. He could stop refusing to supply the data that cities need to enforce regulations and taxation, including the number of rental nights and rates charged by each host. This is not rocket science, all that’s needed is the will.

The clear and simple truth is that Airbnb has drifted very far from its origins, and is no longer simply a platform of “regular people” hosts. It has morphed into a giant loophole for professional real estate operatives, allowing them to evade local laws and taxation, evict long-time tenants and convert entire buildings into tourist hotels. Brian Chesky can preach all he wants about sharing, trust and belonging, but he and his investors have shown no willingness to kill their golden goose, despite the damage that greedy professional landlords and multiproperty agents are causing to the very fabric of the cities where they operate. That’s not “sharing,” it’s just raw, naked capitalism.

Airbnb And Uber Are Terrible For The Economy

Travis Kalanick Uber Cover Illustration_03

The “sharing economy” – typified by companies like Airbnb or Uber, both of which now have market capitalizations in the billions – is the latest fashion craze among business writers. But in their exuberance over the next big thing, many boosters have overlooked the reality that this new business model is largely based on evading regulations and breaking the law.

For the uninitiated, Airbnb is an internet-based service that allows people to rent out spare rooms to strangers for short stays. Uber is an internet taxi service that allows tens of thousands of people to answer ride requests with their own cars. There are hundreds of other such services that involve the renting or selling of everything from power tools to used suits and wedding dresses.

The good thing about the sharing economy is that it facilitates the use of underutilized resources. There are millions of people with houses or apartments that have rooms sitting empty, and Airbnb allows them to profit from these empty rooms while allowing guests a place to stay at prices that are often far less than those charged by hotels. Uber offers prices that are competitive with standard taxi prices and their drivers are often much quicker and more reliable – and its drivers can drive as much or as little as they like, without making a commitment to standard shifts. Other services allow for items to be used productively that would otherwise be gathering dust.

But the downside of the sharing economy has gotten much less attention. Most cities and states both tax and regulate hotels, and the tourists who stay in hotels are usually an important source of tax revenue (since governments have long recognized that a modest hotel tax is not likely to discourage most visitors nor provoke the ire of constituents). But many of Airbnb’s customers are not paying the taxes required under the law.

Airbnb can also raise issues of safety for its customers and nuisance for hosts’ neighbors. Hotels are regularly inspected to ensure that they are not fire traps and that they don’t pose other risks for visitors. Airbnb hosts face no such inspections – and their neighbors in condo, co-ops or apartment buildings may think they have the right not to be living next door to a hotel (which is one reason that cities have zoning restrictions).

Insofar as Airbnb is allowing people to evade taxes and regulations, the company is not a net plus to the economy and society – it is simply facilitating a bunch of rip-offs. Others in the economy will lose by bearing an additional tax burden or being forced to live next to an apartment unit with a never-ending parade of noisy visitors, just to cite two examples.

The same story may apply with Uber. Uber is currently in disputes with regulators over whether its cars meet the safety and insurance requirements imposed on standard taxis. Also, many cities impose some restrictions on the number of cabs in the hopes of ensuring a minimum level of earnings for drivers, but if Uber and related services (like Lyft) flood the market, they could harm all drivers’ ability to earn even minimum wage.

This downside of the sharing needs to be taken seriously, but that doesn’t mean the current tax and regulatory structure is perfect. Many existing regulations should be changed, as they were originally designed to serve narrow interests and/or have outlived their usefulness. But it doesn’t make sense to essentially exempt entire classes of business from safety regulations or taxes just because they provide their services over the Internet.

Going forward, we need to ensure that the regulatory structure allows for real innovation, but doesn’t make scam-facilitators into billionaires. For example, rooms rented under Airbnb should be subject to the same taxes as hotels and motels pay. Uber drivers and cars should have to meet the same standards and carry the same level of insurance as commercial taxi fleets.

If these services are still viable when operating on a level playing field they will be providing real value to the economy. As it stands, they are hugely rewarding a small number of people for finding a creative way to cheat the system.

This article originally appeared on






Post Capitalism


Jonathan Taplin on Jul 25

The British journalist Paul Mason published a provocative except from his new book Postcapitalism in the Guardian last week. His theory is that the sharing economy is ushering in a new age.

Postcapitalism is possible because of three major changes information technology has brought about in the past 25 years. First, it has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages. The coming wave of automation, currently stalled because our social infrastructure cannot bear the consequences, will hugely diminish the amount of work needed — not just to subsist but to provide a decent life for all.

Second, information is corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant. The system’s defence mechanism is to form monopolies — the giant tech companies — on a scale not seen in the past 200 years, yet they cannot last. By building business models and share valuations based on the capture and privatisation of all socially produced information, such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.

Third, we’re seeing the spontaneous rise of collaborative production: goods, services and organisations are appearing that no longer respond to the dictates of the market and the managerial hierarchy. The biggest information product in the world — Wikipedia — is made by volunteers for free, abolishing the encyclopedia business and depriving the advertising industry of an estimated $3bn a year in revenue.

Since the 1930’s when Lord Keynes worried about a future in which we would have so much leisure time that we might not be able to create enough poets to fill our evening hours. So of course I am skeptical as most of my friends are working longer hours than 10 years ago when their every waking hour wasn’t harried by smartphones chirping.

But I do believe that Mason’s point, about the potential of Open Source technology to break up the “fragile corporate edifice” constructed by the tech monopolies that I have written about, is real. Consider the edifice that was Microsoft’s Windows operating system in 1998 when the Justice Department brought its anti-trust action. Since that time two Open Source software systems, Linux and Apache have made huge inroads into the corporate and Web server business. Both systems were constructed by hundreds of thousands of man hours of free labor contributed by geeks interested in improving the software and sharing their improvements with a large community for free. So in that sense, Mason is right that this is a post capitalist construct.

But here is the current problem with the sharing economy. It tends towards a winner take all economy.

Whether Uber ends up buying Lyft is yet to be determined, but my guess is that market will look like markets dominated by AirBnb, Instagram, Facebook, YouTube and Google. As Susie Cagle recently pointed out:

While technology has provided underlying infrastructure to spark and support new peer-to-peer network behavior, it hasn’t really changed anything about how those networks are built and owned. For example, we now have the tools and ability to disrupt the taxi industry by allowing collectives of drivers to reach customers directly — but instead, we have Lyft and Uber, multibillion dollar companies that neither offer benefits to their drivers, nor truly give them the opportunity to run their own independent businesses.

Likewise, we have the tools and ability to build collectively owned messaging and social platforms — but instead, we have Twitter and Facebook, which mediate what users can see from other users and collect personal data to better tailor advertising sales.

My concerns relate to the media and entertainment industry that we study at the USC Annenberg Innovation Lab. And in that world the possibility of using the Open Source model to build a new kind of Digital Distribution Cooperative seems very possible.

Ask yourself this question: why should YouTube take 55% of the ad revenue from a Beyonce (or any other artist) video when all they provide is the platform?

They provide no production money, no marketing support and their ad engine runs lights out on algorithms.

Imagine in today’s music business a distribution cooperative that would run something like the coops that farmer’s use (think Sunkist for orange growers). Here is how they are described.

Many marketing cooperatives operate through “pooling.” The member delivers his product to the association, which pools it with products of like grade and quality delivered by other members. After doing whatever processing is necessary, the co-op sells the products at the best price it can get and returns to the members their share of total proceeds, less marketing expenses.

In our model (much like the early days of the United Artists film distribution company formed in the 1920’s by Charlie Chaplin, Douglas Fairbanks, Mary Pickford and D.W.Griffith) the producers of music would upload their new tunes to the coop servers, do their own social marketing and probably end up getting back 85–90% of the revenues rather the 45% they get from YouTube. The coop could rent cloud space from Amazon Web Services just like Netflix and Spotify do.

All of this is possible because in the world of entertainment the artist is the brand. No one ever suggested to you, “let’s go to a Paramount movie tonight.” It is possible that we are entering a post capitalist age, but it cannot exist as long as the sharing economy is dominated by a few monopolists. Perhaps some bold experiments on the part of music artists could point the way towards a truly innovative way of using technology for the good of the artist rather than for her exploitation.

Resisting the “sharing” economy

Under the guise of “innovation,” capitalism creeps into our personal relationships, networks and community.

He’s helped you a lot in the past and you don’t think twice about saying yes.

When the day comes, you pick him up in your car and drive together, alternating between chatting and singing along, badly, to the radio. You drop him off at the gate, give him a hug and wish him well on his trip. He offers to pay for gas, but you shake your head and say he can cook you dinner when he gets back instead. He smiles and takes his bag into the terminal. You wave and get back into your car.

You come to that dinner a few months later. The smell of food fills his apartment. As you wait for the dish to finish in the oven, he talks about his trip: all the places he went and the people he met. He said that a friend of someone he met there has been backpacking in this area and will be staying on his couch for a week or two. It was the least he could do, he said, after they treated him so well when he was there. A timer goes off and your friend goes to the oven to remove dinner. About an hour later, you’re both stuffed and, looking at what’s left, realize that he probably made way too much food. A conversation about food waste bubbles up and soon your friend gets an idea.

Your friend knocks on his neighbor’s door while you hold the tin of way-too-many leftovers. The neighbor opens up and your friend explains that he made more food than he could ever eat before it would spoil and so was wondering if she wanted some. She smiles and gets a tupperware that your friend fills up, she asks the two of you to come in for some wine, which you both eagerly accept. It’s tart and strong and refreshing. You stay for about 15 minutes and talk about cooking. After leaving, you and your friend repeat this with more of his neighbors until the leftovers are all gone, though you’re not exactly empty-handed: you have a small pie from one neighbor, a loaned book from another, two bottles of beer from a third, and a bunch of fresh basil from the forth, all given without any prompting or expectations, and accepted not as payment or exchange but as an expression of goodwill reflecting that which your friend sent to them.

What you witnessed that night is technically called “community”, but it’s something so fundamental to the human experience and so foundational to human well-being that even those without the word would recognize it for what it is: social relations for the sake of social relations, the benefits coming not as part of some market mechanism but from simple human connections, the very thing that allowed humans to survive without the teeth and claws that other creatures enjoyed. It’s something that has sustained us before the capitalist economic system was even conceived of.

Because of this, it doesn’t follow the logic of the market, the ruthlessness and greed that give meaning and horror, to the capitalist system. It follows, instead, the logic of solidarity and friendship – it cannot be turned into a stock, it cannot be sold in stores, and it cannot be hawked on an infomercial. Indeed, that is the point. And it is because of this that the capitalist system finds it so threatening and why it works so hard to dismantle it.

While capitalism has always produced alienation, the rise of the so-called “sharing” economy, facilitated through smartphone apps and fueled by mountains of venture capital, is the apotheosis of the system’s war against the non-economic sphere. You can share cars, apartments, even meals with the touch of a button. It promises to take power away from the large corporations and put it into the hands of the individual, turning a top-down command economy into a peer-to-peer networked one. In reality, however, it is nothing more than capitalism rebranding itself. Having studied complaints about it with all the seriousness of a market researcher, it has launched the same old product in a bright, shiny new package, the New Coke of economic systems. Don’t believe it. The end goal is the same as it always was: profit.

The rhetoric surrounding these “services” is nothing more than a cover for capitalism’s direct colonization of our social interactions, our personal relationships becoming nothing more than one more means of production for some far off executive congratulating himself for a job well done. No longer content with monopolizing our physical world, it has now turned to our social relations as well, seeking to reduce something fundamental to who we are into a line item on a balance sheet.

Under this system, getting a ride to the airport, staying at someone’s house when traveling, cooking meals and sharing leftovers, are actions undertaken not in the name of friendship and camaraderie but as an impersonal economic transaction. The “sharing” economy is nothing of the sort – it is a way for companies to get people to do their work without having to deal with things like wages or benefits. It’s a way to build a hotel empire without having to build any actual hotels; it’s how you make money off selling food without making, or even buying any yourself; it’s a fleet of taxis without having to deal with things like fuel costs, liability insurance and licensing (not to mention ornery unions). At best, it should be called a renting economy. The participants take on all the work and all the risk. All the companies do is provide the connections, something that can easily be done for free, and has been for centuries and yet, for some reason, the people who create these services are praised as innovators. It is a parasitic relationship that masquerades as symbiosis.

The tragedy of all this is that it has turned an idea with revolutionary potential into one more manifestation of the dominant economic paradigm, a top-down structure where anything outside the bottom line is, at best, a secondary concern best dealt with after the quarterly earnings report comes out, so as not to spook the investors. It’s like if someone invented the steam engine and the only thing people used it for was to get wrinkles out of shirts, for a hefty price. We shouldn’t really be surprised about this, though. This is what capitalism does: it expands and absorbs anything it touches. It has to grow, or it will die. It constantly needs new things to monetize, to commercialize, to turn into products that it can feed its captive global market, and so when it begins running out of other things to make money off of, why not turn to our social relations? At this rate, nowhere and nothing and no one will be free of its influence, to rise above the status of a commodity.

There is still a chance to preserve this one last bulwark against the hungry market, however, while the “sharing” economy is growing, it has yet to surpass the size of the real sharing economy, the old connections we share and the new ones we make every day. We must discard parasitism disguised as sharing and promote mutual aid and solidarity; networks of people that can sustain themselves and each other outside the ruthless logic of market relations. We must share food, not because we can make some money,but because we care about each other. We must share rooms, not because we have aspirations of becoming some mini-entrepreneur, but because we value our connections. We must open up to new relationships, not because they present more opportunities for monetization, but because we want to reverse the alienation and isolation that has been foisted on us by a cruel and uncaring economic system. We must not allow the last refuge from rapacious market relations to fall to capitalism, turning even our most intimate relationships into something with a calculable dollars-and-cents value that can be bought and sold like a used car.

This battle presents unique opportunities for resistance, because it is one that is largely decoupled from the physical world. They are fighting us on the ground of our personal relationships and it is here that we, not they, have the home field advantage. We can fight and we can win, as long as we have our friends.

— Chris Cunderscoreg is the founder of the blog We Are the 99 Percent.

Robert Reich: The sharing economy is hurtling us backwards

The former secretary of labor outlines the increasingly dystopian future of America’s workforce

Robert Reich: The sharing economy is hurtling us backwards
Robert Reich

How would you like to live in an economy where robots do everything that can be predictably programmed in advance, and almost all profits go to the robots’ owners?

Meanwhile, human beings do the work that’s unpredictable – odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours – and patch together barely enough to live on.

Brace yourself. This is the economy we’re now barreling toward.

They’re Uber drivers, Instacart shoppers, and Airbnb hosts. They include Taskrabbit jobbers, Upcounsel’s on-demand attorneys, and Healthtap’s on-line doctors.

They’re Mechanical Turks.

The euphemism is the “share” economy. A more accurate term would be the “share-the-scraps” economy.

New software technologies are allowing almost any job to be divided up into discrete tasks that can be parceled out to workers when they’re needed, with pay determined by demand for that particular job at that particular moment.

Customers and workers are matched online. Workers are rated on quality and reliability.

The big money goes to the corporations that own the software. The scraps go to the on-demand workers.

Consider Amazon’s “Mechanical Turk.” Amazon calls it “a marketplace for work that requires human intelligence.”

In reality, it’s an Internet job board offering minimal pay for mindlessly-boring bite-sized chores. Computers can’t do them because they require some minimal judgment, so human beings do them for peanuts — say, writing a product description, for $3; or choosing the best of several photographs, for 30 cents; or deciphering handwriting, for 50 cents.

Amazon takes a healthy cut of every transaction.

This is the logical culmination of a process that began thirty years ago when corporations began turning over full-time jobs to temporary workers, independent contractors, free-lancers, and consultants.

It was a way to shift risks and uncertainties onto the workers – work that might entail more hours than planned for, or was more stressful than expected.

And a way to circumvent labor laws that set minimal standards for wages, hours, and working conditions. And that enabled employees to join together to bargain for better pay and benefits.

The new on-demand work shifts risks entirely onto workers, and eliminates minimal standards completely.

In effect, on-demand work is a reversion to the piece work of the nineteenth century – when workers had no power and no legal rights, took all the risks, and worked all hours for almost nothing.

Uber drivers use their own cars, take out their own insurance, work as many hours as they want or can – and pay Uber a fat percent. Worker safety? Social Security? Uber says it’s not the employer so it’s not responsible.

Amazon’s Mechanical Turks work for pennies, literally. Minimum wage? Time-and-a half for overtime? Amazon says it just connects buyers and sellers so it’s not responsible.

Defenders of on-demand work emphasize its flexibility. Workers can put in whatever time they want, work around their schedules, fill in the downtime in their calendars.

“People are monetizing their own downtime,” Arun Sundararajan, a professor at New York University’s business school, told the New York Times.

But this argument confuses “downtime” with the time people normally reserve for the rest of their lives.

There are still only twenty-four hours in a day. When “downtime” is turned into work time, and that work time is unpredictable and low-paid, what happens to personal relationships? Family? One’s own health?

Other proponents of on-demand work point to studies, such as one recently commissioned by Uber, showing Uber’s on-demand workers to be “happy.”

But how many of them would be happier with a good-paying job offering regular hours?

An opportunity to make some extra bucks can seem mighty attractive in an economy whose median wage has been stagnant for thirty years and almost all of whose economic gains have been going to the top.

That doesn’t make the opportunity a great deal. It only shows how bad a deal most working people have otherwise been getting.

Defenders also point out that as on-demand work continues to grow, on-demand workers are joining together in guild-like groups to buy insurance and other benefits.

But, notably, they aren’t using their bargaining power to get a larger share of the income they pull in, or steadier hours. That would be a union – something that Uber, Amazon, and other on-demand companies don’t want.

Some economists laud on-demand work as a means of utilizing people more efficiently.

But the biggest economic challenge we face isn’t using people more efficiently. It’s allocating work and the gains from work more decently.

On this measure, the share-the-scraps economy is hurtling us backwards.


Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie “Inequality for All” is in Theaters. His widely-read blog can be found at

Thinking of Trying to Make Money Off Airbnb or Uber? Read This First

The so-called ‘sharing economy’ is becoming a booming industry for middlemen, but for you, it’s complicated.

Photo Credit:

Joining the sharing economy as a provider of services – accommodation, transportation or whatever else the market calls for – gives you a chance to make money while being part of a “movement”. It sounds tremendously appealing, doesn’t it?

The companies being built around this new zeitgeist have different enough business models for it to be worth discussing them as if they do, indeed, fall into a different category from more traditional bastions of capitalism. To some, the appeal is the ability to feel like part of a community by pooling their resources: helping a neighbor or network member to cut the cost of everything from a pricey textbook to a baby stroller, or a ride from San Francisco to LA and an overnight stay in someone’s spare room. It’s a far cry from shopping on Amazon, and checking for plane fares on JetBlue and shopping around for hotel bargains on Priceline – somehow morepersonal.

But make no mistake: it’s a business. And you forget that at your peril, regardless of how you’re participating in the sharing economy.

Here’s the bottom line: none of the businesses that have sprung up to serve the sharing economy are 501c3 non-profit entities. Rather, they are corporations whose goal is to make a profit out of a much less formal sharing economy that already existed. Long before Airbnb was launched in 2008, a friend of mind traveled across Europe using a couch-surfing style network called Servus. I’ve formed some lasting friendships with people with a free Airbnb-style network, Hospitality Club, that offers hosts and guests the chance to review each other, Airbnb style. Airbnb has just formalized those arrangements, while ride-sharing companies like BlaBla Car have done the same with those old-fashioned ride share boards on walls or online – and build in a profit for the middleman.

But you don’t get to become one of the most valuable venture capital-based businesses in the world, as Airbnb has done, and to be worth an estimated $10bn (more than some hotel chains) if all you are is part of a “movement”. Nope, you have to have found a way to make being the middleman pay off very handsomely indeed – and that’s capitalism 101, not a movement.

All of which means that if you’re doing business with Airbnb – or Uber, or Parking Panda, or Liquid, or any of the other sharing economy enterprises springing up – you need to think of it in those terms, too.

First of all, while you may think of this as just generating a bit of extra income on the side – a way to pay off your student loans, to make your summer vacation pay for itself, to fund your weekends out with friends or to help save up to pay for a wedding or a downpayment for your house or car – the IRS won’t see it that way.

And if you think the IRS won’t ever know, well, let me disabuse you of that right now. You’ll fill out tax forms – and come January, you’ll get a 1099 form. Depending on the figure on it, you may end up kissing your expected refund goodbye, or facing an unexpected tax liability. If that 1099 form doesn’t show up? Don’t heave a sigh of relief and fail to report that income. If you think an unexpected tax liability is bad, getting on the wrong side of the IRS is exponentially worse.

The best idea of all is to talk to your accountant and ask for their input. At what point does sharing economy income change your tax picture by putting you in a higher tax bracket? Are there any additional writeoffs you should be aware of? Sure, this might cost you an hour of her time – but it could save you a lot of money down the road. And remember, you’re thinking of this as a business – just like the Airbnbs, Ubers and others who are quite happy to scoop up a percentage of what you collect.

Before you delve into the sharing economy, consider the regulations governing the micro-business that you’re choosing to enter and how they might affect you. In New York, for instance, it’s illegal to rent out a room in your apartment unless you’re there during the guest’s stay; generally, apartment rentals of under 30 days are illegal. (Depending on who you ask, this is an attempt either to make sure housing stock remains available to people who want to live in it, or a result of fierce lobbying by the hotel industry.) That doesn’t stop people from publicly violating both the law and the terms of their own leases – but Airbnb has made it crystal clear that they are on their own when it comes to sorting out those problems. So if you’ve got a landlord – or neighbors – who you know are just itching to bid you farewell for whatever reason, handing them an ironclad reason to do so might be foolhardy.

(Meanwhile, Airbnb is confronting some of these issues itself: this past week Barcelona slapped a fine on the company for violating laws that require rooms rented to tourists be registered with government authorities.)

What does set this new breed of business apart from its peers and predecessors is the emphasis on collaboration: hence, the alternative moniker of “collaborative consumption”. That’s a reason to assume that it’s less businesslike in nature (just as the Internet startups of yore were no less focused on making millions just because their founders wore khakis instead of suits). What it means for those of us hoping to make a much smaller amount of money alongside the capitalist creators of these businesses is that marketing may matter much more than before. Expectations are pretty low for customer “service” from traditional businesses; they’re higher from your peers in the sharing economy community who will be rating things like the cleanliness of your home and the promptness with which you respond to queries.

The “sharing economy” isn’t going anywhere, and the temptation to become a micro-entrepreneur is only going to grow. But if you’re on the verge of succumbing to temptation, ask yourself whether you’re ready to view this as a business. If not, you’re probably not ready to deal with the risks you’ll be taking onboard along with the much more widely touted rewards.

Net neutrality is dying, Uber is waging a war on regulations, and Amazon grows stronger by the day

Why 2014 could be the year we lose the Internet

Why 2014 could be the year we lose the Internet
Jeff Bezos, Tim Cook (Credit: Reuters/Gus Ruelas/Robert Galbraith/Photo collage by Salon)

Halfway through 2014, and the influence of technology and Silicon Valley on culture, politics and the economy is arguably bigger than ever — and certainly more hotly debated. Here are Salon’s choices for the five biggest stories of the year.

1) Net neutrality is on the ropes.

So far, 2014 has been nothing but grim for the principle known as “net neutrality” — the idea that the suppliers of Internet bandwidth should not give preferential access (so-called fast lanes) to the providers of Internet services who are willing and able to pay for it. In January, the D.C. Court of Appeals struck down the FCC’s preliminary plan to enforce a weak form of net neutrality. Less than a month later, Comcast, the nation’s largest cable company and broadband Internet service provider, announced its plans to buy Time-Warner — and inadvertently gave us a compelling explanation for why net neutrality is so important. A single company with a dominant position in broadband will simply have too much power, something that could have enormous implications for our culture.

The situation continued to degenerate from there. Tom Wheeler, President Obama’s new pick to run the FCC, a former top cable industry lobbyist, unveiled a new plan for net neutrality that was immediately slammed as toothless. In May, ATT announced plans to merge with DirecTV. Consolidation proceeds apace, and our government appears incapable of managing the consequences.

2) Uber takes over.

After completing its most recent round of financing, Uber is now valued at $18.2 billion. Along with Airbnb, the Silicon Valley start-up has become a standard bearer for the Valley’s cherished allegiance to “disruption.” The established taxi industry is under sustained assault, but Uber has made it clear that the company’s ultimate ambitions go far beyond simply connecting people with rides. Uber has designs on becoming the premier logistics connection platform for getting anything to anyone. What Google is to search, Uber wants to be for moving objects from Point A to Point B. And Google, of course, has a significant financial stake in Uber.

Uber’s path has been bumpy. The company is fighting regulatory battles with municipalities across the world, and its own drivers are increasingly angry at fare cuts, and making sporadic attempts to organize. But the smart money sees Uber as one of the major players of the near future. The “sharing” economy is here to stay.

3) The year of the stream.

Apple bought Beats by Dre. Amazon launched its own streaming music service. Google is planning a new paid streaming offering. Spotify claimed 10 million paying customers and Pandora boasts 75 million listeners every month.

We may end up remembering 2014 as the year that streaming established itself as the dominant way people consume music. The numbers are stark. Streaming is surging, while paid downloads are in free fall.

For consumers, all-you-can-eat services like Spotify are generally marvelous. But it remains astonishing that a full 20 years after the Internet threw the music industry into turmoil, it is still completely unclear how artists and songwriters will make a decent living in an era when music is essentially free.

We also face unanswered questions about the potential implications for what kinds of music get made in an environment where every listen is tracked and every tweet or Facebook like observed. What will Big Data mean for music?

4) Amazon shows its true colors.

What a busy six months for Jeff Bezos! Amazon introduced its own set-top box for TV watching, its own smartphone for insta-shopping, anywhere, any time, and started abusing its near monopoly power to win better terms with publishing companies.

For years, consumer adoration of Amazon’s convenience and low prices fueled the company’s rise. It’s hard, at the midpoint of 2014, to avoid the conclusion that we’ve created a monster. This year, Amazon started getting sustained bad press at the very highest levels. And you know what? Jeff Bezos deserves it.

5) The tech culture wars boil over.

In the first six months of 2014, the San Francisco Bay Area witnessed emotional public hearings about Google shuttle buses, direct action by radicals against technology company executives, bar fights centering on Google Glass wearers, and a steady rise in political heat focused on tech economy-driven gentrification.

As I wrote in April

Just as the Luddites, despite their failure, spurred the creation of worker-class consciousness, the current Bay Area tech protests have had a pronounced political effect. While the tactics range from savvy, well-organized protest marches to juvenile acts of violence, the impact is clear. The attention of political leaders and the media has been engaged. Everyone is watching.

Ultimately, maybe this will be the biggest story of 2014. This year, numerous voices started challenging the transformative claims of Silicon Valley hype and began grappling with the nitty-gritty details of how all this “disruption” is changing our economy and culture. Don’t expect the second half of 2014 to be any different.


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