In my Google news feed this morning there was a clickbait Buzzfeed piece about issues with Airbnb. The piece starts with a host complaining about not being able to rent their place, and it ends with the complaints that I’d expect: cleaning fees are too high, Airbnb fees are too high, and hosts expect guests to do too much work around their place. This is consistent with my experience traveling for large chunks of time during the past year. Hosts — especially “superhosts” who basically manage rental properties for others — have a list of extremely picky requirements posted prominently in their properties. Once you factor in all the fees, Airbnb charges are similar to hotel room charges without the amenities. In addition, hotels are getting more competitive, and hotel rental sites (like Hotels.com) are showing Airbnb-like properties along with traditional hotel rooms. In other words, the oft-worshipped invisible hand of the free market is giving Airbnb, and by extension the hosts, a few slaps upside the head.
Airbnb is an especially egregious example of the fundamental problem that will plague the current generation of “dot com” companies, by which I mean venture funded companies that sold themselves to investors as billion dollar plays that will out-compete stodgy old pre-Internet industries like hotels and taxis. The problem is simple: to generate the return on investment that was promised, these industries must someday suck a huge profit out of both the consumer and the “gig economy” non-employees in their value chain. Airbnb is worse in this regard than Uber and Lyft, because their non-employees (hosts) often pay mortgages by renting out properties on Airbnb, so they also want a big profit out of the exchange. At least Uber and Lyft can just keep screwing their drivers as they always have in their effort to wring an extraordinary profit out of a market that was previously only reasonably profitable.
If you’ve taken a Lyft or Uber lately, you know how they’re planning to make their supernormal profits: by raising prices. Since Twitter only makes money on ads, which aren’t very profitable, it’s not hard to guess why Elon Musk is pledging to lay off 75% of Twitter’s staff. Of course, this is pure Elon stupidity, since these kinds of layoffs will cause all the good technology employees there to flee, not to mention that the platform will be overwhelmed with trolls and bots. Still, details aside, Elon understands that the supernormal profits he craves will require slashing the main costs at Twitter: people. He also doesn’t care how many Nazis invade the platform.
All of this price gouging will leave Airbnb, Lyft and Uber open to competition from some new disruptor that will use a time-honored strategy of lower prices plus better service to out-compete them. Drivers already drive for Lyft and Uber at the same time, so if the new low-priced competitor “Luber” comes into the market, they can just drive for them, too. Similarly, Airbnb hosts can list on VRBO or whatever other competitor gets a few million bucks from Silicon Valley. As for Twitter — well, Twitter can just die. We already have plenty of alternatives.
Personally, I’d like to see local alternatives rise up to replace Lyft and Uber — maybe the ghosts of the former cab companies can finally get their shit together and coalesce around one app in a market that can be used to hail all kinds of different rides. There’s no reason that a ride hailing facilitation app needs to be a billion dollar company, other than to buy billionaires private islands and bigger jets.