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Raz Godelnik headshot

Is the Sharing Economy Getting the Culture Wrong?

By Raz Godelnik

In 2012 Airbnb co-founder and CEO Brian Chesky asked Peter Thiel, who invested in the company, for the single most important piece of advice he had for Airbnb. Thiel replied, “Don’t fuck up the culture.”

This was a great advice, not just for Airbnb but also for every organization operating in the sharing economy. However, a couple of years later it seems that Thiel’s advice was mostly ignored, and the sharing economy has been f&*%ing up the culture.

And no, this is not just about the usual suspect (aka Uber), but also about many other companies taking part in the sharing economy, including those that actually make a more serious effort to get the culture right, like Airbnb or Lyft.

The main reason I believe this is not because sharing economy companies don’t know how to build an effective culture, one that eats strategy for breakfast, but because they try to adopt a culture-building model that fits traditional firms, not networked peer-to-peer platforms.

A good starting point is to acknowledge that the sharing economy mostly includes what Esko Kilpi describes as platform companies. “The central aggregator of enterprise value will no longer be a value chain, but a network space, where these platform companies are fully market-facing and the customer experience is defined by applications connecting to the platform.”

As Tim O’Reilly described it: “One way to think about the new generation of on-demand companies, such as Uber, Lyft, and Airbnb, is that they are networked platforms for physical world services, which are bringing fragmented industries into the 21st century in the same way that e-commerce has transformed retail.”

The rise of this new business model raises questions not just about the future of firms (why do we need firms now if the new model can create and deliver value cheaper and better?), but also about the culture of these new platform companies: How do they build their culture? Are they doing it similarly to traditional companies or not?

I’m not sure we have the answer yet, but looking around, I believe there’s a good chance it is the former rather than the latter. To put it simply, it looks like the culture-building of most sharing economy companies is a top-down process, reflecting the core values and vision of the founders, with little input from the other main elements in the platform – service providers and customers, who are expected to adopt the culture and live by it.

While one could argue that this type of culture-building is effective or ineffective in traditional companies, I would suggest that when it comes to peer-to-peer networks, this model is disastrous. A great example showing it is the death of the fist bump.

In the early days of Lyft, the company encouraged passengers to greet drivers with a fist bump and sit in the front seat. The idea was to make it the ride more social -- as Carmel DeAmicis pointed out: “… [The] first bump and front-seat arrangement set Lyft apart from the taxi or Uber experience. By encouraging the connection between riders and drivers, Lyft fostered a community environment, where part of the ride-sharing benefit was getting to know a stranger.”

Some people (myself included) really liked this manifestation of the company founders’ human-centered vision. Others not so much – New York Times tech columnist Nick Bilton, for example, wrote on how “all these socially awkward rituals prevented me from using Lyft for nearly a year.” Finally Lyft decided to scale back, informing customers in an email “they could sit in the back seat and wave hello, rather than sit shotgun or rub knuckles.”

The lesson is very clear: In platform companies, it’s ineffective to use a traditional top-down approach to build a culture around the founders’ core values, no matter how worthy they are.

This is even a more difficult mission if you insist that your culture ambassadors, aka your workers are independent contractors, not your employees. This is more than fair working conditions -- it’s the type of narrative you try to form and if it has any merits or not.

Right now, for example, we see a growing discourse on sharing economy platforms functioning as an app, or sophisticated algorithms matching supply and demand. Some companies gladly adopt this metaphor. Uber, for example, described itself according to the ruling in the case of Barbara Ann Berwick v. Uber as “neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.” It’s almost like Uber is nothing but Tinder for transportation.

This narrative only adds to the complexity of the picture, as we could learn from another example, this time from Airbnb. In an answer to a question on how they make sure the hosts are reinforcing the culture of Airbnb, Chesky explained that his approach was at first that everybody could be a host on Airbnb, only to find out that “not everyone was a great culture fit. These people actually did cause us a lot of problems.”

He said this was a lesson for him. “We realized hosts are like partners and they need to believe in the same culture we do. So now we have this program called the Super Host program where they have to demonstrate values to reach this kind of badge, which gets the priority customer support and distribution. We are having this important host convention where we bring all the hosts in and will be talking about reinforcing our values.”

This is a fairly progressive approach, but it still is based on a top-down process of defining the values of the company with what seems to be relatively narrow space for input and feedback from the hosts. Hence the framework, is in terms of reinforcement of the values, not building, sharing, exploring and learning.

To me the bottom line is very clear: If the sharing economy actually presents a new paradigm, then it should reinvent not just the ways value is created and delivered, but also the ways effective cultures are built. It’s time we see the sharing-economy equivalent of the new types of cultures that companies like Netflix and Zappos have created in the corporate world.

A combination of culture-as-usual with business-as-unusual just doesn’t work. It’s time sharing economy companies start understanding it and stop &*%ing up their culture.

Image credit: Flickr/John December

Raz Godelnik headshot

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

Read more stories by Raz Godelnik