The sharing economy is an appealing idea. Our assets have a lot of excess capacity. Our homes go unused for long periods, we have empty seats in our cars, and so forth. There is money to be made from this excess capacity, and companies like Airbnb and Uber have done well from monetizing it.
At the heart of making the sharing economy work is trust. If you book a taxi or hotel rooms, you know that there are regulations in place to stop things going wrong and who to complain about if they do. Equally, the driver and hotelier are afforded protections from government regulations. The main barrier to overcoming the concept of sharing your home or car with a stranger was lack of trust on the part of both renter/driver and customer, and the widespread popularity of companies like Airbnb and Uber seems to prove that, on the whole, society is now more willing to trust strangers under the right circumstances. However, this seems to have been forgotten, and Uber, in particular, must heed the lessons.
In a recent Ted talk, Joe Gebbia, the co-founder of Airbnb, cited a well-designed reputation system as the key element for building trust and the main reason for their success. It was not an easy process, claims Gebbia. For example, they learnt that it was hard to leave a bad review, so they made it so that the reviews cannot be revealed until both host and guest have written theirs. In 2013, they also added identity verification to its platform, which added more transparency and reduced the fear that can arise when strangers do business.
There is a wide range of deep-seated reasons people are willing to put their trust into someone, from physical similarities to learned prejudices, and these aspects of the technology have undeniably helped. However, they are not the real reason the sharing economy has been as successful as it has. The real reason is little to do with the technology or the work culture or whatever else you would like to argue. The real reason was timing.
Airbnb was founded in 2008 at the height of the recession, and Uber not long after in 2009. This meant that they could more easily convince hosts and drivers to join their system as people were desperate for extra money. It also meant that customers were more amenable to the idea of forgoing an element of safety if it meant enjoying the same luxuries they had before the economy went bang.
Ultimately, trust is something you can certainly nurture and build on through reviews, through transparency about your operations, and so forth, but really, people will only trust you if they feel they need you. And since their founding, people’s fears have largely been eased. Even as the economy has improved, they have been successful, and people will now get in a stranger’s car perfectly willingly. But trust is easily broken, and it appears that Uber has forgotten that for the sharing economy to work, it is not the customer who needs the most persuasion to get in the car for a cheap lift across town - it is the driver who allow a stranger into their car. This driver is relying on Uber to set their fares, to pay them, to send them to the areas where they are likely to get a good stream of business, and to ensure they don’t put them in a car with a lunatic.
Despite this, it often appears as if Uber sees drivers as competition to be crushed. According to the New York Times, ‘in New York City, an Uber drivers group affiliated with the machinists union said that more than one-fifth of its members earn less than $30,000 before expenses.’ Such low pay makes being an Uber driver seem hardly worthwhile, and is the most-cited reason by drivers for its terrible retention rate - with only 4% of people who sign up to drive for the ride-hailing service still driving after a year, according to a report in The Information. Uber’s solution, however, is not to increase pay. Instead, it has built a driver retention team which, according to an article in the New York Times, is not there to increase pay or improve working conditions, rather its aim is to develop the kind of manipulative behavioural science techniques and psychological inducements used in video games to try and keep their drivers constantly on the roads and send them to areas where their will not necessarily be much business so that Uber can maintain its coverage. They have ‘concocted an algorithm similar to a Netflix feature that automatically loads the next program, which many experts believe encourages binge-watching,’ writes Noam Scheiber in the Times, and offer ‘noncash rewards of little value that can prod drivers into working longer and harder — and sometimes at hours and locations that are less lucrative for them.’ None of this smacks of a company who understand that they need the trust of their drivers to survive.
Many cities and governments across the world have cracked down on the sharing economy, whether this is by taxing the service, limiting it, or attempting to introduce worker’s rights. If drivers don’t trust that Uber won’t try and use tricks to get around them, however, they likely won’t help encourage them back. A senior Uber official said, ‘We’ve underinvested in the driver experience. We are now re-examining everything we do in order to rebuild that love.’ If it really wants to do this, however, Uber needs to remember that the reason it still exists is that its drivers needed to trust it, and in a better economy, they will have to work much harder to keep this trust. Offering non-cash rewards of little value and secretive psychological manipulation is not the way to do this, and will likely have the opposite effect. As one Conservative writer put it in an article condemning liberals trying to regulate the sector, ‘it is indisputable that Uber drivers earn less than unionized cab drivers. If they don’t like the earnings, then they can look for other work. No one is forced at gunpoint to work for Uber, or any other American company.’ He’s right. They can, and they will.