Airbnb Places Wake Up Call to Sharing Entrepreneurs

By now most of you have probably heard about EJ. Her home was ransacked in late June by someone who rented it through Airbnb. A comprehensive account is here.

What started out as a tragedy for EJ burst into a firestorm of criticism directed at Airbnb for their poor handling of EJ’s loss. While it’s impossible to know exactly what happened between EJ and Airbnb, this much is certain. Airbnb’s reputation has been severely tarnished. And three days ago, Brian Chesky, CEO of Airbnb, apologized:

…we let her [EJ] down, and for that we are very sorry. We should have responded faster, communicated more sensitively, and taken more decisive action to make sure she felt safe and secure. But we weren’t prepared for the crisis and we dropped the ball.

My heart goes out to EJ, whose life has been turned upside down by the crime and its aftermath. As for Airbnb, I’m angry about how EJ was treated. I expect more from Airbnb, from anyone. While Airbnb’s apology and recovery plan were late in coming, they appear to be sincere about making good. We’ll see.

So what now? Not much can be done to stem whatever damage Airbnb’s gaffe inflicts on the sharing economy. Airbnb abused the trust that their service relies on to work. It’s too early to say what impact this blow to trust has on their service and other sharing services. Personally, I’d like to see Airbnb pull through, not only for the sake of other sharing companies, but also because I like their service. I’ve used Airbnb three times with great results.

Regardless of how Airbnb’s fiasco plays out, it should be a giant wake up call to sharing entrepreneurs everywhere. If you’re one, learn from Airbnb’s mistakes. Take action now. Don’t wait until a crisis erupts to come up with a plan like Airbnb did. Be prepared for the worst.

Below are my top five ideas to keep your customers safe and happy, and your company out of the media’s crosshairs. Many of these ideas come from the first decade of my career when I worked daily with customers as part of AT&T’s sales and service team. I learned to manage screw ups the hard way - by fixing hundreds of them.

1.) Be Human First

Like all life-changing wake up calls, Airbnb's fiasco revives a fundamental idea. Be human first. And an entrepreneur second. If a person is harmed by your service, immediately do whatever it takes to help that person recover fully. Not because it’s good for business. But because being an excellent human being is good for everybody. It inspires. It makes life worth living. I admire Paul Carr’s recent post on Techcrunch, “A Billion Dollars Isn’t Cool. You Know What’s Cool? Basic Human Decency”, which ends with this thought, “What’s cool is keeping your soul, whatever the financial cost.”

Getaround is a good role model. Jessica Scorpio, a cofounder, told me recently that they have a “do whatever it takes” policy to keep customers happy. I also know about their policy from Sarah, a neighbor, who was left stranded on a trip when the owner of her Getaround rental didn’t show for the key exchange. Sarah called Getaround customer service for help. Getaround immediately found and paid for a traditional rental. Sarah continues to car share using Getaround.

2.) Remember, You Lead a Service Business

You are not a tech company. Intel is a tech company. They put billions of microscopic transistors on a piece of silicon the size of an emoticon using the most sophisticated manufacturing process known to man. You are not this. You provide a service that is enabled by technology. Yes, I know, it’s much harder to find investors for a service business versus a tech business, but don’t believe the useful fiction you tell investors, the press, or your date. Know in your heart that you lead a service business.

Embrace this, and follow the lead of Zappos.com. Zappos’ phenomenal growth rate is due largely to their legendary customer service. 75% of purchases are from repeat customers. They take care of their customers who spread the good word all over creation.

3.) Have a Plan for When Shit Happens, Because It Will

Now that I’ve made it clear you lead a service business, you need to grasp this too – you will have service failures regularly. Customers will become upset regularly. This is a normal part of a service business. So have plans for service failures. Hire people who know how communicate empathically and satisfy unhappy customers. Empower them to solve problems independently. Here’s a little secret – customers who are made happy after a service failure are more loyal than those who have experienced flawless service. Fail forward.

4.) Act Fast, Listen, Apologize, Take Control, Be Real

When something goes wrong, your customer will be lost and confused. It’s your job to lead them back to the island of happiness as quickly as possible. So don’t waste time trying to save face. Listen carefully to your customer. Empathize. Say you're sorry. Accept responsibility for failure immediately and completely. Communicate a solution that you can definitely execute. If you don’t know the solution at the time, tell your customer when you’ll have a solution. Execute your solution to the minute, to the letter, and then deliver more than you promised. Stay in constant contact until the customer is happy. Be real, open, and vulnerable through the process. This will re-establish trust.

Take the example of Pinboard, a social bookmarking site for introverts. They suffered a significant service disruption due to an FBI raid on the site’s web host. Pinboard earned respect from their techie customers by explaining the situation quickly, candidly, and thoroughly. This FAQ helped.

5.) Protect Your Customers and Company

Sharing businesses, especially the peer-to-peer flavor, have unique legal and liability issues. Learn them inside and out. You may need to consult a lawyer or an insurance specialist to understand them. Don’t assume your sharing service is legal. It may violate zoning, health, safety, or insurance laws. Or it may lay in a gray area. If in doubt, check with Janelle Orsi, the sharing lawyer, or the Sustainable Economies Law Center.

You may also need specialized insurance like peer-to-peer carsharing companies RelayRides and Getaround. But don’t rely solely on insurance or any single solution for protection. Use multiple methods to protect your customers and company - reputation systems, several forms of identity verification, business policies and practices that keep your service legal, by leveraging existing affinity groups and online social networks to increase safety, and by building a culture of caring.

If you do the above, your service failures will likely never become PR nightmares like Airbnb’s recent one did. You’ll be better able to focus on creating a sharing service that outcompetes ownership on safety, fun, value, and convenience. That’s what it’ll take for your business and the sharing economy to succeed. So go forward, help the multitudes share, and be ready when the shit hits the fan, because it will.

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