How Airbnb builds trust between strangers

Wednesday, 01 August 2018

Beverley Head photo
Beverley Head
Freelance Writer and Consultant

    A constantly evolving trust framework underpins Airbnb's success, says the company's global head of trust and risk management Nick Shapiro.

    Global rental accommodation giant Airbnb trades in trust. It’s the critical commodity when you manage a platform that allows two million people to stay with a stranger every night, right across the world. The 300 million people that have rented a place to stay using Airbnb trust their accommodation will be clean and safe. The owners of nearly five million listings in 191 countries trust that renters won’t trash the place. And they all trust Airbnb will make it happen.

    Nick Shapiro has been the company’s global head of trust and risk management since 2015. He leads a team that develops programs to build, maintain, measure, and when required, repair trust. Shapiro was deputy chief of staff and senior advisor to former CIA director John Brennan and the Obama administration’s spokesperson on homeland security and counter-terrorism.

    Airbnb takes trust and risk very seriously. “Airbnb’s product is trust. People think our product is spare rooms or the ability to book restaurants, but our product is building trust between people who have never met,” says Shapiro. “People think trust is in crisis. So how is a business operating on trust doing well and growing at that time?”

    Privately held, although it’s reported to be considering a 2019 initial public offering, Airbnb has a market valuation north of US$31 billion. According to analysis by the Financial Times it generated earnings of about US$100 million last year on turnover of US$3.5b, while bookings grew 150 per cent. It makes its money by taking a cut of nine to 15 per cent on bookings.

    Shapiro says growth follows trust and Airbnb’s approach to trust is based on a hierarchy of needs with safety at the apex, followed by transparency and user support. “We do things to ensure people are safe, understand how to use Airbnb and get to know each other — transparency — and help people if things go wrong.”

    Working alongside Shapiro on the trust framework are other ex-intelligence and law enforcement specialists, product managers, engineers, data scientists, designers, advocacy specialists, cyber experts, crisis managers, insurance experts; even an ex-Stanford University trust scientist working on new trust metrics.

    Shapiro concedes that developing trust metrics is a challenge. Airbnb currently relies heavily on measurement through user surveys and online reviews to assess the degree to which it is trusted. But it will never be infallible.

    Risk mitigation

    “We’re in the travel business and you can’t mitigate all the risks of travel. Our job is to mitigate as much as humanly possible,” he says.

    Each guest and host is checked on financial sanctions lists, and screened against global terrorism watch lists. “Every single reservation is scored ahead of time for risk. We use machine learning, data analytics, behavioural analysis to evaluate hundreds of different signals before we reserve and book accommodation — that’s something hotels don’t do.” Harvard Business School research in 2014 detected unintended bias in the Airbnb platform, allowing non-black hosts to charge about 12 per cent more than black hosts and receive a lesser price penalty for having a poor location score.

    Airbnb has since addressed the bias and Shapiro notes that successful trust and risk management strategies demand constant review and refinement.

    The business also faces external risks, such as attempts by local and state governments to regulate its activities, plus negative publicity linking the rise of Airbnb listings with the decline of affordable housing.

    Shapiro acknowledges the issue, but says that for trust to flourish it’s critical to maintain strong relationships between the Airbnb community and cities and regions; and that the company is keen to work with local governments.

    When it comes to the housing affordability argument he says, “Airbnb is not a factor in the local housing market as much as people think — when you are holding one to two per cent of the total housing market, it isn’t a credible argument.”

    Rebuilding trust

    Shapiro refers to Airbnb’s “trust hierarchy” that has safety at its apex. “Most recently, we put together the hierarchy of needs approach and looked at all the different interactions on Airbnb and the decision-making,” he says. “We focused on safety, transparency and support, and developed a program around those three pillars.”

    “We have a $1m guarantee program to reimburse hosts in case there is any property damage,” says Shapiro. “We offer $1m liability insurance in case someone gets hurt. We’ve got thousands of agents available at all times, in 11 different languages, who are able to offer refunds, rebookings and emergency assistance. If something goes wrong, they need to know we’re there for them, because if we aren’t they suffer a second breach of trust way more impactful than the first. That’s when you start having problems — you’re going to lose that person as part of your community, and all their friends.”

    However, Shapiro believes that if you fix the problem fast, “more often than not you turn that person into an evangelist for you — and turned a bad thing into a good story.”

    He says people also prefer to do business with a company that stands for something. “We took a public stance about President Trump’s travel ban [regarding refugees],” says Shapiro. “It [the ban] was very much against our entire ethos and mission: to ensure everyone can belong anywhere. It wasn’t a hard decision to weigh in publicly because we wanted to stand up for our community. Our brand reputation is in the hands of our users. It’s terrifying, but it makes us extremely authentic.”

    Shapiro believes that keeping it real is critical. “Someone can have a bad experience and suddenly it’s seen and felt and heard halfway around the world.”

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