a16z Podcast - a16z Podcast: The End of Ownership

Episode Date: November 17, 2014

What happens when the importance of access to things trumps the value of owning those same things? The end of ownership. From computer hardware, to houses, trucks, cars, and more, the notion of ownership is changing as software enables the matching of people and organizations that have things and those that need them. Joining a16z’s Balaji Srinivasan to pick apart this trend are Joe Gebbia, Airbnb co-founder and chief product officer; John Stanfield co-founder and CEO of Local Motion; and Ben Uretsky, co-founder and CEO of DigitalOcean. The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. My name is Balogistian Vosin. I'm a general partner at Anderson Harwitz. And today we have with us, Airbnb, DigitalOcean, and Local Motion to talk about the end of ownership. And so just to jump right in, you know, I'm going to basically throw out some questions. We will have each of our panelists kind of, you know, respond.

And then at the end, if we have some time, maybe we can do like an audience Q&A. So just to, you know, start things off, how did you please also introduce yourself when I, you know, kind of go over. Joe, how do you define the concert of the end of ownership and maybe give a little background yourself? Sure, I'm Joe Gabby. I'm one of the co-founders and chief product officer of Airbnb, and we certainly seen this trend

pick up in the last seven years since the concept launched in our living room seven years ago. I think that there's just been a general trend of what I've seen of the importance of access to things, trumping what we normally would put the value on of

the ownership of those things. And I think a great analogy for this is actually the music industry. If you rewind about 15 years ago, the way to consume and to buy and purchase music was to physically own an asset of that piece of music. And, of course, we're in a role today where you don't need to own music anymore. It's actually more valuable to have access to all the music you could ever want right at your fingertips. Okay. Hi.

My name is Ben Yuretsky. I'm co-founder and CEO of DigitalOcean. and we're simplifying cloud infrastructure for developers. So the way we think about the end of ownership is we deal with a real physical asset, which is server space and computing resources sitting inside of a physical data center, which empowers online applications. But the idea is that we abstract that data center away, we abstract the server away, and what we present is a computing resource

that we term a droplet to a user. And what that's allowed the user to do is essentially use a variable cost approach to build in their applications. And it's enabled so many companies to emerge in this new app economy and the new internet that we see spreading across the world. So people from emerging markets are able to deliver their applications faster as a result. They're able to start businesses, whereas before they had a huge upfront fixed cost. That was a difficult hurdle for them to jump, but as a result of the flexibility that virtualization creates and cloud provides to these users, they're able to actually build a business, and the barrier to entry into many markets has significantly dropped as a result of that, and cloud is really leading the way. We are one of the few companies that actually provides that raw server infrastructure that powers the Internet. And I'm actually proud to say that in the majority of the servers that we use, we don't own directly either.

And, you know, the banks actually own those physical assets. And it's not a real, you know, it's not a differentiator for us because it's still the same silicon at the end of the day. It's an Intel processor, it's some memory component, and some storage that connects to a network. And what we deliver transcends the physical asset. and it really goes to create the experience for people that ultimately use that product. So we're actually the fastest growing cloud provider on the planet today, and that's because we've built an experience that looks like nothing else that's out there. So by being able to abstract away from the physical world,

we're able to deliver a really unique experience to our users. John, you want to talk a little bit about what Local Motion is and yourself? Sure. I'm John Stanfield, CEO. and co-founder of Local Motion. And what we do is we bring the sharing economy to the enterprise. We work with large groups of high dollar assets vehicles, and our target is to get to the 8 to 10 million vehicles that are in fleets across the United States today in large organizations,

whether that's university or private corporation, public corporation, or government. We can basically walk in the door and save 20 to 30% on the fleet costs over time, which if you have 1,000 cars and it costs $7,000 to $8,000 per vehicle per year, that's quite a sum of money. So optimizing these fleets is done through sharing and through making the experience of sharing actually better than owning. So we focus on the user experience at the door, making sure that everybody who walks up to a car that needs to have access can have access. And then once they're in the car, making that experience better than owning. So everybody wants to use it.

Right. So, you know, one way you also thinking about sort of the end-of-ownership concept is it's a consequence of softwareing the world in the sense that, you know, software is about, for example, it used to be manufacturing a CD. So you wrote the code at high fixed costs and you manufactured CDs at very low variable cost. And that's a very common theme, you know, Airbnb DigitalOcean and Local Motion. You are reducing fixed costs for people, reducing upfront commitments, upfront prices, turning that into variable cost. So kind of, you know, how is that affecting people's behavior? what kinds of things have you seen both of your employees and customers and you know what surprised you about behavior change so kind of like the principle the sharing economy is to look around and find what's going underutilized and connect that with somebody who wants it it's like somewhere from the South just told me recently oh yeah we've been talking about this for centuries it's called need hay have hey and you connect those who want with those who have which we can do now in a way that's that's faster than we've ever seen thanks in the large part to mobile and that there's billions of devices in people's pockets thanks to the large part to mobile and that there's billions of devices in people's pockets thanks to the large part how quickly it is to get ideas into people's hands. And thanks in part to how much trust has been built up on the Internet through social networks over the last decade, that can now transfer back offline. So what we see in Airbnb is a platform

where you just put the pieces out there and your community comes to you with this creativity of, well, sure, I have a bedroom, but there's actually 4,000 boats on Airbnb, where boat owners are seeing this as a possibility to say, when my boat's just sitting in the marina going idle, I could actually be leveraging that asset to make some extra money to pay off my cost for that boat. There's also people with, believe it or not, there's 500 tree houses on Airbnb.

And one of our kind of classic stories is this couple up in Vermont, this beautiful treehouse, right in the middle of the woods. If you love autumn and New England, this is the place to be. You literally stay in the trees. They use the tree house to pay off their mortgage on their main home. So it's about like seeing the world a little bit differently, seeing how to reuse the resources around you. Awesome. Ben, what is DigitalOcean done?

How has it changed people's behavior when they've got churned fixed costs and variable cost? Yeah, I mean, I can take all the credit, but I think cloud in general, what we're seeing is this huge shift from, you know, the enterprise approach to the user experience approach. And what I mean by that is in the traditional infrastructure space, companies would build out massive infrastructure to try to stay ahead of user demand. And sometimes they did a reasonable job,

a capacity planning, and we're able to stock up sufficient resources. And at other times, especially in a holiday season or some kind of peak burst event, maybe a news story or something else that's relevant, that capacity may not always be sufficient for that spike demand. And as a result of cloud and this,

where you don't actually own the infrastructure underneath, you're relying on a larger part, who can actually excel of that, you're able to switch the driver, rather than it being the enterprise that's going on and procuring those resources, the focus is now on the users that are actually beginning to use the application. And you can essentially bake an algorithm that reacts to that user demand. So the user is the one who's now beginning to drive the actual procurement cycle, and it's been really useful because businesses are able to operate at a much higher efficiency, a result of that closer parity between what a user is requesting and the deployed resources that they have to match that demand. So, you know, the other interesting thing is that because the experience becomes that much

better, it's less about, in some regards, it is a little bit less about the efficiency. So we've seen companies that care less how efficient they run each individual server, but that they have sufficient resources to service that demand. And I think it's interesting because their focus is final. finally, like, let's get out of, you know, the building. Let's make sure the users are having an amazing experience rather than, hey, how do we get enough servers in the building to service that demand? Awesome.

John, so Local Motion, you take a company's fleet, you turn it into something where anybody can drive any car. How does that change people with behavior? Yeah, for us, it's a little different because the fleet operators generally have the assets already either ownership or a lease has signed, so the money has basically been spent. So what we find really interesting for the future of Fleet is taking that fixed cost and saying, okay, how can we turn this cost center potentially into a profit center? So if you think about a fixed group of vehicles, there's a very determinate time that it's used during the day.

And you can very easily map that now with our technology in every car. We can show the owners of these assets where that demand versus the supply of vehicles is. and we can lower that, you know, just to at least the match to save them on the overall cost of the fleet. Then we can take it a step further and say, okay, we notice, for example, in the French Postal Service that the vehicles aren't used after 2 p.m. And so we're talking to some of the innovation officers there saying, you know, why don't you start making these available to other entities or to the public and actually make money back on these assets? And that's a very interesting conversation and really flipping this on its head and saying, you know, here are all these vehicles that you already. own, why don't you make money from them? Interesting.

So, you know, each of your companies, you don't own things directly. You don't, you know, Airbnb, you don't own houses, you know, digital ocean, you don't actually own your servers, locomotion, you don't know the cars. How did you see your core value add? What kinds of things are you adding, you know,

starting with you, Joe? I think probably for all of us. It has to do with, like, the mechanics of the platform. Like, you really, you don't own the home, in our case, but we do own the platform that our hosts put the home on and the platform of the guests discover and book those homes. So behind the scenes, it takes an incredible amount of work to figure out how to make the mechanics of something like this. Like, how do you actually get someone comfortable with opening up their home to someone they've ever met? That takes an incredible amount of work to try to figure out.

So I think in many aspects, we own the platform, we own the trust between our customers. We own certainly the customer service aspect. There's a couple components, kind of like the railroad tracks underneath it all, that I think we own. Ben? Yeah, I would just piggyback on Joe's statement and say really what that boils down for us is the experience that the product ultimately creates, right? It's not so much the foundational elements that go into it, although they do play a huge part, but it's the interaction that a user has that really reigns supreme here.

And that's what each one of our companies actually owns, is that touch point with the user. As far as their concern, you know, it's DigitalOceans, Airbnb. be, you know, it's a local motion, right? And they associate naturally that product with everything underneath it, right? So

perhaps, you know, if I stayed at an amazing villa, I would say, oh, wow, that was a great Airbnb rather than saying, hey, it's a villa that belongs to John Smith. And So the branding moves to the platform. Yeah, exactly. And the brand really is the expression of the product and the experience

and the user. And that's, you It actually takes a lot of work, like Joe said, to really understand the user's needs. And I think that's something that we really are able to focus on more so as a result of abstract in a way that things that aren't really vital to our success. Awesome. John? Yeah, I would agree. I think I mentioned experience already, but I think in our case, the user experience

actually at the asset, at the vehicle, at the door is essential because if it only takes one or two experiences where you try to open the vehicle and it doesn't open. before you go back to using your own car. And that's a failure on our point. So we obsess about that. And that's a really hard thing to do. It's a very technical solution, which we take a lot of pride in. On the other side of this, I would also say, you know,

that the industry as a whole, on the vehicle side of the owned asset world has kind of become very distributed because of there hasn't been a great deal of data flowing back to the managers. So they really have no intel on what's happening on the ground in real time. And so being able to share. show them a way to pull these assets into more of a centralized model, allows more clarity across the board from the people who are actually managing the assets all the way down to the user.

Excellent. Yeah. One thing I would also kind of say sort of integratively is that the code isn't visible, the data isn't visible, but it's very complicated. You guys are writing hundreds of thousands, if not millions of lines of code at this point. And that's not tangible to people necessarily, if, I mean, they're seeing it through the website, but they're not seeing the complexity of that always. So then kind of, you know, relate to this, you know, as you start, you know, having your purchases become more frequent and more small, you know, you're buying smaller increments of things, smaller rentals of houses or of servers, community reviews and that kind of thing become more important because you're making more buying decisions. You want to see star ratings in line. So, you know, how do you think about that, Joe, with the context of Airbnb?

beat. Well, I think that was a big learning for us, actually, was in the early days, like, one of the biggest blockers to get someone to try this new behavior, right? Of, like, I previously have always stayed in hotels, and now there's this new offering of a home, and who's this person that's renting it out? So to get people to cross that bridge, it had all the classic ingredients of behavior change. And so one of the key things that we learned to get people across that bridge was social proof. It was really showing you that people just like you, ideally your friends, but if not your friends, people who were just like you, they're in the same industry,

your same profession, they look like you, like they're using this, they're having a great time, and you can actually track the metrics and see the cohorts of as reviews were added over time how the adoption started to get into, we're in the middle of hypergrowth right now. And all, you can all

trace that back to like getting this first proof points of really positive reviews from people. Yeah, actually, I think it was probably one of the first sites where Facebook integration was actually useful. You know, where, you know, are you Totally. Facebook integration. You can see where your friends have stayed.

You can see friends of friends who are hosting. It just reduces the kind of complexity of like, do I know this person? We show you one of three ways, which you already do. Awesome. So, Ben, with DigitalOcean, you don't have the same kind of problem in the sense that you don't have an untrust or semi-trusted environment where you're a platform and you're mediating transactions to houses that you haven't personally vetted, the servers you vetted. But the software that people would deploy on the platform is not 100% trusted.

It's sort of analogous. Have you guys solved that? How do you think of your community? Yeah, we actually paid a lot of attention to the community early on, and I think that's one of the big differentiators for DigitalOcean is, as we focus on the developer segment worldwide, what we found is that there isn't really

a central gathering place where everyone can communicate and talk about open source technology, how to leverage it, and what actually best fits the business problem. And the community that we've created, It draws nearly 3 million visitors per month at this point really talks about the challenges that companies go through and trying to figure out the right software stack

to solve a business problem. So because customers and actual, you know, just prospective users are visiting this community and they're finding out the right tool for the job that's vetted by people just like them rather than it being force-fed and saying, hey, you know, we as the provider recommend that you use X, Y, and Z, They're communicating with each other and saying, I solve this problem using this technology.

And we just provide that central communication place as well as like a rich profile with, you know, likes and essentially trust. Can you trust this person's opinion? And the more the conversation happens, the likelier you are to try it and then going back to the variable cost, since it is so flexible and it's so easy to get started, they're much more likely to try out a number of different solutions for their problem, and then ultimately land on one. And the ultimate expression of that community is if the user finally comes back and says, you know what, guys, I tried these three recommendations,

and I ultimately chose this one because it was the best fit. And so other users then learn from it, and it's a repeating cycle. Excellent. So, John, in your case, and correct me if I'm wrong, you wouldn't have the same sort of reputation. you know, economy kind of issues, but whereas would say DigitalOcean, you'd use kind of the data to say install or don't install the software. In Airbnb, you'd say, you know, rent or don't rent this house. In your case, you guys are using data slightly differently, which is buy or don't

buy an extra car. Can you talk about that? Yeah, or in many cases, you know, maintain the number that you have and just turn the dial up on the number of users, increased utilization per vehicle, which is really powerful. Something when your first question kind of sparked, to my mind was something interesting that we learned at the very beginning was, you know, we built scheduling devices and tools for people to plan their mobility in advance and, you know, ways to communicate with users, et cetera. And then what we found was that most people don't plan at all. And so we had to very, very clearly communicate with the user in real time out the door. So when they walk out the door and they're on their phone or doing whatever

they're doing and their head pops up and they scan the parking lot, they see the option and they can walk to it and utilize it. And that was something that was anticipated, but the effect of it was very surprising because more than 90% of all of our rides during the day are what we call tap and go. So people just don't plan ahead. I knew that about myself, but I didn't know that about the general population, which was really fascinating. That's interesting. Yeah. I mean, like one kind of common theme we can abstract out is sort of, you know, the end of ownership means greater mobility, greater flexibility, greater experimentation.

So, you know, you're not going to live in a treehouse your whole life or a boat, but you can actually now go and try it without going and buying it. And you can also try out a new piece of software, and it's, you know, even if it crashes your thing or it's incompatible, boom, just wipe it and then, you know, get a new one, and obviously one becomes more mobile. So kind of becoming more nomadic, more experimental.

Well, and kind of in that spirit, I remember, like my dad growing up always wanted to get a vacation home that the family could go to. And it's like kind of, in 2014, he doesn't need a vacation home anymore. the whole-time share. A few hundred thousand to choose from own Airbnb and other sites. So it's like that whole premise, this whole kind of shift, the way of thinking is shifted to, I don't need to own it anymore.

It's more important to me to have access to many, many options. Right. I mean, like, that's kind of a thought of, you know, 1950 the idea was to own, you know, the American Dream own large consumer durables. You know, maybe by 2050, the goal is to own nothing at all and call everything on your phone, right? So, okay, so kind of relate to that,

other industries maybe entering the, of ownership. You know, I have my thoughts, but I'd love to hear your guys. So maybe starting with Joe. Hmm. You know, when I travel, it turns out there's actually thousands of companies regionally around the world, whether it's in Europe, South America or Asia, that have taken the basic premise of the sharing economy and said, like, okay, we see this local problem. Let's just connect people who have and who want in our city. And probably the most remarkable one that I heard of, probably the funniest one, was I was in Seoul, South Korea. An entrepreneur comes up to me

introduced to hand me his business card, and I read the card and it says, we're a sharing economy company for business suits. And I look at him, and it was explained to me later that in Seoul, it's very important when you go to an interview to have a really nice suit on, but it's like a catch-22 because you don't have the job yet, you can't afford the suit. So this whole marketplace has been spun up in Seoul. It's actually doing really well from what I hear, so that if you have an important job interview, you can have access to a really nice business suit.

I have a twist on that. I want Airbnb or some hotel to actually offer. suits so you don't have to pack. Right? So this way you could just fly over there and not pack, pick up the suit. That'd be an amazing profit center. And then you just, put them like this, throw it in the wash. The mobile closet.

The mobile closet, exactly. That's right. And then over time, then, you know, airplanes could take away the overhead bins if you get enough falling, but that's a long term. Okay. Ben, what do you think? What other industries are entering the end of ownership? I'll talk about it a little bit more broadly.

I think what we're seeing is a shift from a convention. way of doing business where it's a closed system and enterprises and companies are making huge CAP-X investments into building out what they consider to be a competitive advantage or perhaps not even an actual advantage, but a way of doing business. And one of the biggest trends that I think will begin to emerge over the next decade is as enterprises become more aware that these nimble startups provide essentially a better service, a better experience, a better level of infrastructure at the same time at a lower cost than can be created inside of a company, the daring, courageous businesses will go ahead and adopt the new way of doing business

because it actually doesn't benefit their user and it doesn't benefit their bottom line. And I think inherently, because we've done business this way for the last five decades, it'll be very difficult for many different industries and different companies of all shapes and sizes to make that transition. And so I'm not sure exactly which industry, but I think we're seeing this across the board is that as technology becomes more prevalent, you're able to really change the business model. And it's important to, you know, kind of get your head out of the clouds and really take a look around and make sure that the way that you're building your company today still is relevant in 2014,

and it's not predicated on a business model that was developed decades before. John, what do you think is going to be? Yeah, very concretely for us, you know, large high-value assets like dump trucks and graders and, you know, things that are not used every day, but sit around for the majority of the year. Forklifts, stuff like that. And again, it's the same problem. There's absolutely no data flow in how these things are being used and no ability to limit

them or schedule them in the future. Another very interesting point there is actually licensing. So, for example, you really don't want me driving a dump truck around. I think that's a bad idea. But, of course, there are people that are licensed professionals that do that. And so you want to make sure you can not only know where these assets are and make sure they're utilized to the best of your ability, whether that's sharing with adjacent counties or whatever.

But you don't want people that are unlicensed and unqualified actually operating the equipment. That reduces or increases your liability when you have, you know, basically the doors open. So for us it's really about looking at the next level of equipment that's sitting around. Interesting. One of my candidates for an industry entering the end of ownership or that may eventually is education in the sense that, you know, you have a huge upfront commitment of K-12 and then four years of college and then maybe grad school and so on. And, you know, with MOOCs and with Stack Overflow and GitHub and all this online help, you can start turning that more and more into on-demand rather than this enormous upfront fixed costs and learn

basically all on the go contextually as you need it. So, okay, just, and we can enter a Q&A in a bit, but, you know, kind of in a few sentences, what do you think of the implications of this space, this concept for people in the room, CMOs, CIOs, other executives, what does the ownership mean for their business? I love your comment about education. Can we come back to that? Sure, yeah. I feel like you can kind of see the beginnings of what's going on with education happening now. And Sebastian Thurne shared this crazy story.

He runs Udacity, which is online. education. And he talked about how he opened up artificial intelligence course to the global audience. They ended up getting a few hundred thousand people around the world for the Stanford artificial intelligence course. And he shared an email, which I'll never forget, because it's changed the way that I thought about this, about a student, a teenager in Afghanistan who wrote in to him and said, Professor Thurne, I'm really sorry I missed my homework yesterday. My village was getting bombed. But I was able to sneak into an Air Force base and get an hours worth of Wi-Fi. Here's my homework. It just showed

the great lengths that people will go to for education if they have access to it. Yeah, absolutely. So, Ben, thoughts on implications and Joe, I agree, by the way, if you have thoughts on implications outside the industry,

Jim. Yeah, I think the variable nature of these costs allows a much greater level of experimentation, and you know, as an enterprise scales, ideally you also have profit. That scale along with it. And being able to allocate a portion of that profit towards new endeavors,

creating R&D labs, and really trying out new technology, new ways of doing business, and figuring out what the future looks like is something that's really exciting. And many of the companies that are staying relevant today are branching out and trying new ways of doing things. And so I think it's important for us to look around the world and figure out the services that are complementary to, you know, the industry that we're in and take advantage of them to try new things faster and ultimately grow our companies, right? Because if you're not growing, then you're dying. And so I think this is a much faster and easier way to continue that growth. John, what do you think implications of the space for people in the room? Yeah, I agree.

I mean, I think it's very valuable to have all these, in my case, all these mobile sensors roaming around and basically helping us predict how people move and where they move because the larger problem here is as I experienced this morning trying to get here from Mountain View is there are just too many people in single occupancy situations so once we have more information flowing into us about how people are actually moving in real time our goal is to be able to build models of how we can help reduce that that demand curve basically and really that's super powerful and it affects everybody in this room regardless of your position it just sucks to drive on the freeway by yourself and overall we're you

know we're trying to build a massive connected network of vehicles that are communicating with us and with the user and through that network we can connect auxiliary services you know push deals etc there's a lot of opportunity there to connect other services but really being able to predict that that demand is is it's time to do that excellent yep I would say, you know, my gloss on this in terms of implications for people in the room is any fixed cost that you have, think about how you can transform it into a variable cost. Any large upfront commitment or long-term, you know, kind of contract, can you turn

that into something which maybe is more expensive on a monthly basis, but that allows you the flexibility to opt out of it and then switch into something else as your business changes. The other aspect of it, on the flip side of it, is going to mean that your customers are in some ways easier to acquire, maybe, but also more fickle because they're going to expect to experiment. your re-acquisition costs will be non-trivial, and that's kind of a pain if you're a marketer, but also maybe an opportunity.

So I think that's kind of kind of prepared questions. Maybe you can do a Q&A or something like that. Hey, so I guess a question for all of you, whoever has encountered this the most. So as you've kind of developed the sharing ecosystem, somebody owns the asset. And sometimes that asset is owned by a bank or financial institutions. sometimes zoned by somebody else. And also, there's a whole ecosystem that goes around the asset in terms of insurance, etc. Have you guys encountered how that plays into the equation currently

and how you think that's going to evolve to help support sharing, becoming even bigger? I'd say absolutely. I think there's a whole kind of second supportive economy that's supporting a lot of the businesses that we've started. And kind of like an analogy, you know, we work very close with Jeff Jordan, and he tells us a lot about the early days at eBay. And, you know, there's a whole economy that started just around eBay to support sellers, right? Like whole businesses formed just to support the whole eBay economy. I think you see the same thing with our industries as well, whether that's insurance, whether that's services.

A couple of things that we've had to figure out is, like, educating insurance companies about what this even is. a lot of them gave us blank stairs when we first sat down with them. But now we've actually innovated on insurance policies and programs. So through voids and others, there's now sharing economy insurances, not only for homes but for cars and other things out there that didn't exist even two years ago. So I think this is just starting to emerge all these other kind of tertiary services that support the businesses that we've started. Yeah.

Okay. I'd almost take the exact opposite approach, right? And when we look for insurance, it feels like we're dealing with behestrian. that have operated the same way for 50 years. And so I think that's like an industry that could be ripe for disruption. I mean, obviously they're in it because they're making a profit. What really prevents us from using a platform like Tilt or any kind of crowdfunding and provide insurance for fixed assets out there, right?

I mean, we need some pretty good statistics to make sure we're making the right bets, but it doesn't necessarily have to come from a single enterprise entity. I mean, that's the way the world looks today, but it doesn't necessarily mean that that's, you know, where we're headed in the future. And so, um, a lot of times the services are hidden, right? Only a very select portion of the population or even the business population is actually exposed to those challenges. And so while it may not be, uh, that frequently occurring, there's a tremendous amount of revenue tied to it. So I think as a result, the opportunities is, is relatively large.

From my perspective, um, it's a great question. I think insurance is one of those kind of, in my opinion pain of ownership. So if you look at the 130 million families in this country that own more than two cars, every single one of those fleet managers has pain of ownership just the same as the GE capital or whoever has the large fleets up there. Insurance is one piece of that. Removing that pain of ownership is really what unlocks the sharing of this type of asset. And so being able to innovate and create new companies that can help us do that on a fractional, from a fractional perspective is essential. Luckily for us, you know, Zipcar and Lyft and other companies,

similar in similar spaces have started to unlock that. And then for me personally, one of the reasons we are in the fleet space is because generally speaking, that insurance policy is already established for the users that are on the ground today using those assets. Now when we start talking about pushing those vehicles into other use cases, then it becomes an entirely different discussion where that pain of ownership comes back. and we need a better solution. We don't have it today.

But removing that pain of ownership, I think, across our industries is really key to unlocking the sharing economy. I would also maybe add to me slightly generalize it. So insurance is kind of about dealing with rare error modes. And the more samples you have, the more you can kind of deal in. To some extent, you have to just sort of blunder forward, then find this rare error case, and then put a patch in after that, hopefully not after too much bad PR. And the reason, though, that I think we're pretty confident that the sharing economy in general will be able to handle this is that, you know, if there's one thing that the Internet does extremely well, it's a very profitable private reputation review ranking system. So, for example, Google rankings, Apple's Apples App Store, Gmail spam filtering, PayPal and eBay fraud protection, Amazon reviews, these things already happening in the cloud, massive-scale marketplaces where all the checks and balances, rare error cases have been set up.

and you've got millions of people interacting and kind of sometimes trading, sometimes sending mails back and forth, but basically sending packets back and forth. And what we're doing is we're taking that cloud infrastructure and bring into the physical world. And now rather than packets, it's actually cars and houses and other kinds of things that are now moving back and forth. And certainly there are new challenges here, but the fundamental informational things are things that, you know, good software companies have figured out. Building on that, the first lift experience I ever had,

I was going back to the office in San Francisco and yeah I have to admit I was a little bit hesitant at first which is kind of strange coming from the sharing economy but it's my first time doing something I was like okay this is different in the front seat and fist bumping like and the woman pretty quickly I learned that she was also a host on Airbnb how cool is that so I pull up the app and I'm like I find her listing

I pull up her profile and she has 54 Airbnb reviews from guests from all around the world and I'm sitting there next to her and suddenly any kind of anxiety that I had completely melted away. Right. And it was like the reputation of her as a host transferred to make me feel comfortable now in her car driving me around San Francisco.

Yeah, and it's interesting. We've actually seen a lot of pitches for companies that are abstracting out that reputation from Airbnb, Lyft, TaskRabbit, etc., into kind of like a new report card, you know, like a portable reputation score. So other questions.

I saw some other hands. You're next. So this is a question for Joe. But the other panelists can feel free to chime in. So it seems like looking forward at the demand, there's an opportunity for you to actually give advice for where there potentially is demand in a property that is not well-suited for Airbnb

and even as a future purchaser that you could provide data to say if you configured your house or did this type of remodel, you could generate this amount of income and help supplement just like the person did with the tree house paying their mortgage. I think there's stories down in for the Masters that people have really nice homes and they rent it for a week during the Masters and pay for their mortgage. So do you see that as an emerging data service that you guys will help stimulate people to convert to Airbnb properties where they have demand in their area?

I do. I kind of see it like the Congress has the Burger Index. I kind of see it like our bed index, right? It's like you can look around the world and see where there's supply and demand. It's like it's a great, it's a great classic marketplace, right? You can actually see where the supply and demand starts to tip for things like the masters in Augusta, Georgia, or certainly the Olympics, certainly the World Cup, which we just saw in Brazil, where one out of every five people in Brazil was staying in someone's home on Airbnb. It's actually great for cities, too, in the sense that like it allows them to expand to,

take on these types of big events like the Olympics, for example, without having to invest all the infrastructure, and pouring more concrete to build more rooms for people asleep. So there's a whole level that we're just starting to get in terms of pricing data and helping coach hosts on like, what's the right price at what time of the year. Yeah, and this is related, I think, to also a broader trend, which is basically with software we can start to invert the demand function, right? Like you get data on other purchases, aggregate them together and not just here, but also in crowdfunding, for example. People, entrepreneurs, can now be told what is profitable before they build it.

T-spring also, which you just saw does it as well. The product is materialized, it's abstract in the cloud, before enough people buy it, and then it's materialized physically. So that's kind of interesting. You had a question. When we look at the shared economy generally, most of the companies that have emerged

and been successful in that space are typically startups that are displacing traditional business. So Joe, you with Airbnb, obviously, and Travis with Uber and the taxi industry, so and so forth. In terms of a mindset shift that needs to happen in traditional companies like, say, Exxon, City, or even an institution like Harvard, what should they be thinking about what kind of mindset shift do they need to kind of be going through in order for their more traditional businesses to start to understand what the shared economy both means for them

and how they can kind of start to enter that space potentially. Some of them are trying to adapt through leveraging their brand. Harvard is a great example. They're really leveraging companies like Moog or other online portals and leveraging the Harvard brand to really push that quality education out to more people, which I think is super powerful. So if they're smart, they're going to leverage what they've built already and try to push their brand out there. I mean, at the end of the day, you're teaching a physics problem.

It's the same physics problem. But if you have a world-renowned physicist teaching that problem, solving that problem, it's a much more powerful solution. It'll be difficult for them to adapt, though. Some will be able to do it, but it'll be like newspapers which have the whole printing presses and stuff, and then you've got a BuzzFeed that's coming in with a totally different cost structure. Okay, looks like that's all we got. So thanks very much, everybody.