Airbnb brings sharing economy under the microscope
The home-sharing site learns the hard way that it can't assume San Francisco supervisors won't change their minds -- even after they passed a law legalizing short-term rentals.
The sharing economy is hitting a few roadblocks.
The latest example: Airbnb and San Francisco. Last October, the city became one of the first in the world to legalize short-term rentals, the kind Airbnb promotes on its site.
It took two years for San Francisco to achieve that milestone, as legislators sat through countless meetings and forums before amending citywide zoning laws that now let people rent their homes or rooms for up to 90 days per calendar year.
That law as it stands might not last, however. In reaction to San Francisco's worsening housing crunch, the city's board of supervisors is considering two proposed amendments on Tuesday that could change these rules.
"We need a fair, effective system for regulating short-term rentals," said Conor Johnston, legislative aide for the board's president, London Breed. "It is a complicated topic in a largely new industry."
Airbnb is just one of dozens of companies to describe itself as part of the sharing economy -- the idea of using the Internet to create person-to-person marketplaces. Some services let people swap bicycles, tools and musical instruments. Others, like Airbnb, let people sublet their rooms, or their entire homes when they're not around. While such companies promise convenience or an easy way to make a buck, they can also muddy the issues around insurance, consumer safety and local taxes.
Lawmakers in New York, California and Europe are questioning whether people should be able to offer their apartments to strangers for a few days or weeks, or, with ride-hailing services like Uber and Lyft, to act as impromptu cab drivers. Airbnb has been blamed for exacerbating the already tight housing shortage in San Francisco, while Uber has been accused of waging unfair competition with cabbies.
Airbnb didn't return repeated requests for comment.
"This is relatively a new technology," said San Francisco Supervisor Norman Yee. "It's pretty evident that it's benefited many individuals, but it's also hurt other individuals."
San Francisco law
It was big news last year when San Francisco Mayor Ed Lee signed a bill into law legalizing home-stays through Airbnb. Under the new law, homeowners and renters were allowed to lease their accommodations up to 90 days per calendar year; and those hosts present during home-stays could lease rooms year round. The law also ruled that all Airbnb hosts must sign on to a city registry, collect taxes and carry liability insurance.
But within months of the law's passage, housing advocates and others were saying it didn't do enough to protect renters and landlords and to preserve low-income housing.
By the spring, two separate amendments had been proposed to tighten the law; and last week, Share Better San Francisco turned in nearly 16,000 signatures for a November ballot measure that also aims to curtail the bill.
"Our measure is effectively intended to provide the tools the city says it needs to enforce the law," said Dale Carlson, co-founder of Share Better San Francisco, a coalition of politicians, labor unions, neighborhood groups, housing advocates and others. "There's got to be some limits on [Airbnb] because we're losing too many housing units that are being converted into hotel rooms."
Not everyone agrees, however. "Many residents of San Francisco rely on short-term rental income from extra rooms in their homes," said San Francisco Supervisor Scott Wiener. "Particularly given how expensive it is to live in San Francisco, I won't support any legislation that undermines their ability to earn that income."
It's now up to San Francisco supervisors to agree on how to best modify the law. One of the amendments, introduced by Lee and Supervisor Mark Farrell, would impose a 120-day limit per year on residents renting out their homes, whether the hosts were present or not. It would also create an Office of Short-Term Rental Administration and Enforcement to impose the law.
The other amendment, introduced by Supervisor David Campos, is much stricter. Campos wants to put a 60-day limit on Airbnb rentals per calendar year, while also requiring Airbnb to file quarterly reports. The coalition's November ballot measure is similar to Campos' amendment, but has a 75-day rental cap.
"What we are trying to do is strike the right balance," said Campos. "We support short-term rentals in San Francisco, but what we are trying to prohibit and regulate is the commercial aspect. It's taking valuable housing out of the market."
Big business breeds alternatives
Airbnb, Uber and other sharing-economy companies represent the next wave of big business. Currently Airbnb, valued at $24 billion, and Uber, valued at $41.2 billion, are two of the three highest-valued venture-backed companies in the world.
Consulting firm PricewaterhouseCoopers estimates that global revenue across all sharing-economy companies, which is roughly $15 billion today, will increase to around $335 billion by 2025. But those estimates assume these companies can stick to their current business models, which often rely on independent contractors rather than employees, and tend to skirt insurance and other overhead costs. An increase in regulatory oversight could add to sharing-economy companies' costs and cut their profit.
A handful of Airbnb-like startups have come up with ways to get around some regulations. They can do that because their business models don't rely on money being exchanged -- meaning hosts aren't seen as turning residential apartments into temporary hotels.
Couchsurfing, for example, lets guests crash on people's couches for free. HomeExchange connects people who want to swap homes on designated dates. And Nightswapping lets people host guests in order to gain free stays in other places around the world.
Nightswapping was founded in France in 2012. It now has more than 90,000 members in more than 160 countries. The idea: users can rack up nights by hosting people in their own homes. If users can't host, they can pay between $7 and $49, depending on the property, for a home-stay. The hosts don't get that money, however. Nightswapping keeps it as a cost for running the site.
"The users who use our site never exchange money," said Nightswapping spokesman Joshua Hibbard. "With us, it's just about sharing, no one is making a profit."
San Francisco's board of supervisors is scheduled to vote Tuesday on the amendments to the Airbnb law, but it's possible the vote could be delayed if the supervisors decide to wait and see what voters think of the ballot measure in November.
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After user revolt, Ellen Pao is out as Reddit interim CEO
Pao, a polarizing figure in Silicon Valley after a high-profile gender discrimination suit, stepped down as the leader of the popular social-networking and news site after hundreds of thousands called for her to resign.
Interim Reddit CEO Ellen Pao has stepped down after controversy involving a political firing of a key staffer and debates over free speech on the popular Internet message board.
Pao resigned after reaching a mutual decision with the company's board of directors, Reddit board member Sam Altman said Friday. Steve Huffman, Reddit co-founder and the company's original CEO, takes over immediately, Altman said.
Pao came under scrutiny at the San Francisco-based community forum site after an online petition that began in June called for her resignation. Users accused her of ushering in "a new age of censorship," as the petition collected more than 200,000 signatures. The drive was preceded by the debated removal of five community forums, known as subreddits, as part of the company's newly adopted antiharassment policy, and the sudden firing of a well-respected key administrator.
Pao, 45, said in a post on Reddit on Friday that in her eight months as the company's CEO, she's seen "the good, the bad and the ugly," on the site, mentioning that the good has been "off-the-wall inspiring," and the ugly "made me doubt humanity."
"I just want to remind everyone that I am just another human; I have a family, and I have feelings. Everyone attacked on reddit is just another person like you and me," she said. "When people make something up to attack me or someone else, it spreads, and we eventually will see it. And we will feel bad, not just about what was said.
"Also because it undercuts the authenticity of reddit and shakes our faith in humanity."
Read: Pao's resignation letter from Reddit
Pao's departure comes as Reddit and many of the world's largest social networks, including Facebook and Twitter, attempt to strike the right balance for users between uninhibited speech and a more controlled climate from abusive, racist and pornographic content by introducing new policies. Social networks have spent the past decade working behind the scenes to police their sites.
In an interview with CNET, Altman rejected the suggestion that Reddit is struggling to control its community. Instead, he attributed their outrage to the company's communications.
"I think there are clearly users who are really upset by the lack of attention to moderators...and the communication of the company," said Altman, who has also defended Pao's contributions as interim CEO.
Users who commented on Pao's resignation letter, which was posted on Reddit, agreed. One, posting under the name 1millionbucks, said Pao "interacted with the community more in this post than in her entire tenure as CEO."
Though some were supportive, many others cracked jokes at her expense, often referencing her high-profile lawsuit.
Altman said Pao brought focus to chaos at Reddit and recruited a world-class team of executives and drove growth.
"She brought a face to reddit that changed perceptions, and is a pioneer for women in the tech industry," said Altman, adding that Pao will remain as an adviser to the board through the end of 2015. During an "Ask Me Anything" session later Friday with members, Altman said Pao walked into an incredibly tough situation.
"She made some mistakes, for sure, but I think she did remarkably well in a very tough situation. And Steve is happy to be taking the baton for her here," he said.
Huffman is currently the co-founder of the flight and hotel startup Hipmunk. He founded Reddit in 2005 with his college roommate Alexis Ohanian. Reddit has grown to become one of the most visited sites on the Web. It's been called "the front page of the Internet," for people who are drawn to its free-for-all style where they can share or say nearly whatever they want, whenever they want.
That emphasis has attracted a diverse array of voices who've weighed in on everything from politics to food to sports and everything else imaginable. It's also attracted audiences larger than most countries. Nearly 164 million people visited the site in June, 3 million of whom logged in as members who can post and comment. More than 36 million accounts have registered on its service, according to the company.
Altman said that Reddit members deserve clarity on what its content policy is going to be.
"The team will create guidelines to both preserve the integrity of reddit and to maintain reddit as the place where the most open and honest conversations with the entire world can happen," he said.
Altman also told CNET that to repair its relationship with users, Reddit should begin delivering on product changes that the community has called for, including a mobile app.
Pao joined Reddit as its business and partnerships strategist in April 2013, a year after she filed a gender discrimination lawsuit against prestigious venture capital firm Kleiner Perkins Caufield & Byers. That lawsuit made her a household name in the tech industry while reigniting the debate over Silicon Valley's treatment of women and minorities. Pao sought $16 million on accusations she was fired in 2012 after complaining about pervasive sexism. A San Francisco jury in March rejected her claim, but Pao has intimated she intends to appeal the verdict.
All the while, Pao continued doing her job at Reddit, even being promoted to interim CEO of the site in November 2014.
That changed in early June when Reddit banned five community forums, claiming it violated a new antiharassment policy and had caused some people to shy away from the site. Some users cried foul, arguing the site was straying from its roots as a champion of free speech.
Tensions flared again in July after moderators discovered Reddit had fired Victoria Taylor, the site's popular director of talent and quasi-liaison between the company and volunteer moderators. She had run the popular Ask Me Anything "subreddit," a section that allow Reddit users to engage in real-time Q&A sessions. Celebrities ranging from Bill Gates to Elon Musk and even President Barack Obama have participated in the format.
In response to Taylor's abrupt dismissal, moderators shut access to dozens of subreddits, each of which had tallied millions of subscribers.
Pao eventually apologized. She said Reddit "screwed up," and admitted the company had made "a long history of mistakes" communicating with its community. She said the company vowed to make changes in three key areas: tools, communication and search.
Altman reiterated that in his post on Friday.
"(Moderators), you are what makes reddit great," he said. "The reddit team, now with Steve, wants to do more for you. You deserve better moderation tools and better communication from the (administration)."
Huffman also posted that he was "super excited" to be back.
"It's been a crazy day," he said. "We've got a lot of work to do. Fortunately, I've got five years of ideas stacked up, and I'm looking forward to getting to work."
Update, 3:45 p.m. PT: With comments from Altman and Huffman.
-CNET's Max Taves contributed to this report.
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