Airbnb, Uber, and local laws

2016-03-06 3 min read

    Yesterday I read an interesting piece on Airbnb in New Orleans. The content itself isn’t new - it highlights the typical conflict between those that view Airbnb as violating local ordinances and ruining the city and others who believe that Airbnb brings value and is helping New Orleans rebuild after Katrina.

    But what was interesting was the repeated claims of Airbnb and the other rental marketplaces that it’s just not scalable to follow local policies for every city and it’s up to the users to know their local regulations and follow them. I understand it’s difficult to localize complex products but these responses just feel like an excuse.

    Representatives of the larger home-sharing companies have met with New Orleans officials, but they are seldom heard from in more public forums. Officials of Airbnb and VRBO (Vacation Rentals by Owner, a HomeAway brand that is popular in New Orleans) point out that they operate in so many places they cannot possibly get into the specifics of local policy; they are merely private businesses offering services to consumers. So it is up to New Orleans and other cities to devise their own regulations, and up to users to follow them.

    According to Mr. Rivers, Airbnb and VRBO told his staff that it would be too onerous to adjust their software to accommodate every regulatory arrangement for thousands of municipalities around the world. Spokesmen for Airbnb and VRBO confirm that rewriting their platforms in this way is not practical.

    Contrast this with Uber. They also run a marketplace that’s highly sensitive to local regulation but work within the confines of the law (including pushing to change legislation). Both Uber the company as well as the Uber app have adapted a localized view. When I open up the Uber app in New York City I see a variety of options that I don’t see in other places. In fact, Uber can even push idiosyncratic updates that may only last a couple of days - for example a special “De Blasio” ride option that came with a 25 minute wait time.

    The goal of technology companies is to come up with elegant solutions to real world constraints. Uber has embraced it by building their company and product to embrace local differences while Airbnb adopted the attitude of a single product for the whole world. I’m confident if Airbnb wanted to build a flexible product that worked for local markets they’d be able to and it would actually be a fun and interesting product and engineering challenge. Startups need to embrace their challenges and this feels like Airbnb being complacent. I understand there’s a high cost to localize Airbnb and it comes with a world of risks but if they do it right they’ll be able to capture significantly more share and markets.