One of the most interesting panels at SXSWi was "David over Goliath: the power of the sharing economy" moderated by none other than Tim O'Reilly, on a topic that got the spotlight in a great Forbes article last month.
Here's what to take away from the panel, followed by an interview with Airbnb's co-founder and CTO Nathan Blecharczyk. He explains why Airbnb is recession proof, gives advice to aspiring entrepreneurs, talks women in tech and more.
So why is the share economy so appealing to so many of us?
It's about diversifying your sources of revenue, finding backup plans and alternatives, according to Esty's Communications Director Juliet Gorman. The goal is supplemental income, that little bonus that can make the difference between affording your car or not, another way to lead the life you planned on living before the economy took such a bad turn.
According to Nathan Blecharczyk, most Airbnb users decide to rent their place casually, on a part time basis, and a minority of them only makes it a full time business. Same on Etsy, it's more about expressing yourself creatively while making some extra cash, rather than changing the scale of your business. Indeed, what is so appealing about services like RelayRides, TaskRabbit, SideCar, Lyft, Etsy, Airbnb, and others, is the flexibility and choices they give, at a time when a lot of people feel like their backs are against the wall. It's also an opportunity to pursue a passion or a business on the side, with that supplemental income adding a safety net. It's about empowerment.
There's a lot to figure out though for a service like this to work: trust, reputation, payments, insurance, and a lot to simplify. It took a few years for Airbnb to find the right model, but the reputation system now seems to work for a lot of businesses. That's where regulations come in, and now with SideCar suing the city of Austin, we know the battle is far from over. Blecharczyk added that San Francisco's mayor Edwin M. Lee was a big advocate in favor of the share economy, and better regulations to support it. Let's hold off judgment on that until we see what happens.
Interview with Airbnb's co-founder and CTO Nathan Blecharczyk:
Examiner.com/Nora Poggi: Is Airbnb (and co.) going to stay strong when the economy gets back on its feet and people start making money again?
Nathan Blecharczyk: Airbnb is recession proof. The economy is one of the many factors that spurs our growth, however it's always going to be the case that people appreciate supplemental income, and our difference is that people are having fun. It's hard to quantify, but if people say "I feel more confident in myself now that I'm a host, I feel like I'm providing something of value", then it works. These people are typically older people, they don't have a lot of ways to contribute anymore, and yet it allows them to do that and it empowers them. I think is enduring. Secondly, if you look at how fast we've grown, 4 millions guests over the last 5 years, including 3 millions over the last year alone, I expect that to continue. Where it is today is kinda cool, but I think it's just the beginning of what it could be. The reason why it's growing so fast is not the economy, that's a factor, but it's because people are having such good experiences on both sides of the equation. If you want people to do something, money is a good start, but if you make it fun, that's why it works.
NP: There has been a lot of talk recently about Etsy, who was part of the panel today, and about female engineers and how to improve the ratio for tech companies. As Airbnb's CTO, what's your take on this?
NB: We have an above average number of female engineers for a Bay Area company, 5 or 6 out of 50, which used to be 5 out of 25, but that didn't last long.
NP: That's not a lot...
NB: If you look at a company like Dropbox, similar in size and life cycle, they have almost no female engineers. You know why? Because they provide a kind of backoff service, it's not a consumer product. Airnbn is more about the experience and more on the softer side, so it appeals more to women in general. We have a big design component, a legal department, etc, it's not just engineers, which are primarily guys, but if you look beyond the tech part, more than half the office at Airbnb is female. That makes it easier to attract female engineers as well. At a company like Dropbox it's hard to be a female coming to that environment.
And Etsy reached out to us recently to form a coalition, start a dialogue on this. I think female talent offers diversity in terms of how you see problems, women think differently, we all know that, and I think that's great. They're better at multitasking and better organized so from a project management standpoint that's good.
(side note: we talked a lot with Jessica Lawrence, director of NY Tech Meetup, at another SXSW panel, about the culture of a tech company being inviting or not for women, and how to not be just a brogrammer's land. Culture is definitely the first big step for tech companies as we'll discuss in an upcoming article).
NP: So are you going to have a 50% ratio soon then?
NB: That's just not realistic. I'm very interested in promoting this, whether its working with Etsy, or coming up with our own ideas. It's really challenging to be honest. There's also a lot of efforts going on to teach women how to program. In San Francisco once a month, there are initiatives to get together women interested in engineering, and we send over engineers to help with their training. It's something we've done and we're supporting. That's one way we're giving back. But we can't hire from that pull yet because our criteria for engineers is people with a lot more experience, so we're seeding it, but I don't think its going to bear fruits for years. That's the hard part. It's a long term issue.
NP: What's your advice for aspiring entrepreneurs?
NB: Number one, pace yourself. Nothing works over night. It took us a year before we had any hope. A lot of people go in thinking 6 months, 8 months, they run out of money, they get dispirited. You have got to realize it's a long, long commitment. So have that expectation going in.
Number two, partners are a marriage. If you break up, the company breaks up, often times. I advocate finding a partner, but don't rush the process. If you don't want to find a partner you shouldn't. A lot of things have to come together: you need the right idea, the right team, the right timing.
Number three, we didn't try to raise money until we had something, actually we tried, but no one wanted to give it to us, so we had to prove ourselves and in retrospect I think that's great. You're more in the driver's seat if you can show that you can make money, and self sustain although very modestly, and that you don't need venture capital. It's easier to get capital that way rather than saying, I'm not making money yet, but I will. Wait for that right moment, get to a sustainable point first, and then make that decision to raise money or not.