The rise of the sharing economy in a time where trust levels have reached a downfall

16

October

2017

Airbnb, Peerby, Snapcar, Uber, a list that seems to grow day by day. All these companies have something big in common, their business models are based on the principles of trust.  But in a time where suspicion, mistrust and fear overrule faith, hope and believe, how can these companies thrive?

The current decade has shown us that people have lost their trust in companies, governments, NGO’s and other institutions. (The Trust barometer Global report, 2017) The most recent and painful occurrence that marks this era was the decision of the United Kingdom to leave the European Union. While on one side we seem to lose faith in the power of governments and institutions, we have arrived in a worldwide where companies thrive on the fundaments of sharing. One of the companies that absolutely shook the world upside down with a business model based on the principles of the sharing economy is Airbnb. Joe Gebbia Co founder of Airbnb pitched the following idea to his investors:

“We want to build a website where people publicly post pictures of their most intimate spaces, their bedrooms, the bathrooms — the kinds of rooms you usually keep closed when people come over. And then, over the Internet, they’re going to invite complete strangers to come sleep in their homes. It’s going to be huge!” – Joe Gebbia

After his pitch he was disappointed to hear no one was interested. But no wonder the investors were not interested, this was so new, so risky and so not like anything else. Luckily Joe Gebbia did not give up on his idea. Now an average of 425000 people use Airbnb every night worldwide. Airbnb is one of the biggest ‘hotels’ in the world, without physically owning a single hotel. It is currently valued at $31 billion, almost twice the value of the 98-year old Hilton which does own actual real estate. (Overfelt, 2017)

Now the question remains, why does it work? How come people felt this idea was idiotic and ridiculous back in 2008 and are now happy to share their car, drill or even their home?

The key principle according to Joe Gebbia is “The connection beyond transaction”. (Gebbia, 2016). The foundation of the business model is still is based on the economic transaction made, regardless the nature of this trade. And the connection made is more than just a bonus. It means you actually share a part of yourself with this stranger, which in some cases even leads to a real friendship. However, you also bear a responsibility with you since the renter trusts you with his or her personal belongings. The fact that all these business models work so well is that people can step out of their comfort zone but at the same time a safety net is provided by means of a review and reputation system. In all business models the review aspect is at the center of success.

According to a recent study by PWC on the sharing economy, 89% of consumer panelists agreed that the sharing-economy marketplace is based on trust between providers and users, and 69% said they would not trust a sharing-economy company unless recommended by someone they personally trust. (PWC, 2015)

This emphasizes the bridge that people have to build in order to participate and engage in the sharing economy. People need a confirmation that the stranger they are about to do business with is indeed a trustworthy person. Bias is something that we can’t ignore and will always be present. One of the strongest biasness we have is that we tend to trust people based on their similarity only, which is called homophile. However, a good rating and review system can help to counteract as shown by a study from Stanford University. If a person has more than 10 positive reviews, the perception will change and reputation is seen as more important than similarity. (Gebbia, 2016) This shows that their is a way to break through the ceiling of bias.

That the sharing economy is booming is well known, and it has been flourishing by promising new technologies. Especially the ease at which individuals can connect and exchange information and goods is ground-breaking. However, one must not forget that these platforms and business models can only truly thrive when supported by a good, well-established political and societal context.(PWC, 2015) Especially legislation and governance has not proven to be ready for these transformational companies.

Sources

Edelman. 2017. The 2017 Trust Barometer Global Report, I [online]. Available at: https://www.edelman.com/global-results/ (Accessed: 12/10/2017)

Gebbia, Joe. 2016. Ted Talks. How Airbnb designs for trust. [online].https://www.youtube.com/watch?v=16cM-RFid9U (Accessed: 12/10/2017)

 Overfelt. M May 2017. It’s been a trip to $31 billion. Now Airbnb wants to remake the entire industry. [online] Available at: https://www.cnbc.com/2017/05/15/its-been-a-fantastic-voyage-to-31-billion-what-airbnbs-next-big-trip-isnt-booked.html (Accessed 7/10/2017)

Stein, J. January 2015. Sharing Economy: Baby, You Can Drive My Car, and Do My Errands, and Rent My Stuff… [online] available at: http://time.com/3687305/testing-the-sharing-economy/  (Accessed 8/10/2017)

Price Waterhouse Coopers C.  2015.  The Sharing Economy Consumer Intelligence Series. [online] available at: http://www.pwc.com/CISsharing (Accessed 9/10/2017)

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In A Digital World, Are We Losing Sight Of Our Undigitized Past?

3

October

2017

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Today I bring to you an article from Forbes’ contributor Kalev Leetaru regarding the interaction of technology with society, namely the repercussion that the digitalization era has on human society and its implications on the potential loss of past knowledge.

According to the author, the preservation of our history can be divided into two segments: one which encompasses all web archives where our online world is stored and another where museums and traditional archives struggle to preserve our past. Society has in recent decades grown accustomed to have easy and free access to the world’s literature through digital screens, which means that everything that has not yet been digitized might incur the risk of being forever lost to the digital era. This is particularly worrisome when it comes to underrepresented topics, geographies and languages that expand beyond traditional English language content. However, the author points out that the rise of powerful smartphone cameras has promising potential to facilitate vast crowd sourced digitization of this type of materials thus  enabling mass scale access preservation of a large fraction of the world’s books.

Furthermore, copyright issues established since the late 1920’s have been a challenge to the effective digitization of printed knowledge and to its fair use, which still leads to a great effort in order to specifically find this information, thus making scholars and individuals leave the comfort of the digital world and dive into the old-fashioned physical realm.

In my opinion, the digitalization of knowledge should be a priority not only for institutions but also to individuals. With that said, I believe time shouldn’t bound knowledge. If we look back to the beginning of times, we cannot quantify the amount of relevant information that has been forever lost to the ages. For that reason, if today we have the technology to preserve almost all wisdom and know-how that mankind was able to gather – is probably impossible to save every bit of information -, I think that all efforts towards its preservation should be done. Even in the corporate business world, for example, the preservation of knowledge is essential so that past mistakes won’t repeat themselves. As George Santayana so remarkably said, “Progress, far from consisting in change, depends on retentiveness… when experience is not retained … infancy is perpetual. Those who cannot remember the past are condemned to repeat it.”

So, what is your opinion? As asked in the article, “as we race towards our digital future will we lose touch with and ultimately forget our history”? What do you think will be the implications for the business world?

Forbes.com. (2017). Forbes Welcome. [online] Available at: https://www.forbes.com/sites/kalevleetaru/2017/09/29/in-a-digital-world-are-we-losing-sight-of-our-undigitized-past/#5fb7f9e0cd01 [Accessed 3 Oct. 2017]

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Would you fully trust a machine to invest your savings?

26

September

2017

4.71/5 (78)

shutterstock_317361941_artificial_intelligence

“The most important general-purpose technology of our era is artificial intelligence, particularly machine learning (ML) — that is, the machine’s ability to keep improving its performance without humans having to explain exactly how to accomplish all the tasks it’s given. Within just the past few years machine learning has become far more effective and widely available. We can now build systems that learn how to perform tasks on their own.” – Brynjolfsson and McAfee (2017)

Personally, I am also fascinated by ML. Developments such as learning machines to beat the world’s best chess players, learning machines how to drive by themselves and learning machines to cook proper meals made me fantasize AI’s about possibilities.

If machines can be educated to become that smart, are they also able to invest money in the stock market? I am pretty certain they can, but can they earn better returns in contrast to professional managers? If they can, will they replace hedge fund managers in the future? In this blog post, I will evaluate how AI can be used in investments.

Tremendous amounts of research have been conducted in the area of investments. Some believe in technical analysis, some believe in company fundamentals and others analyse macro-environments. Analysing all this data requires great cognitive capabilities. Too great, even for the most cognitively gifted humans. This is where AI and ML can step in.

Machine learning involves deep-learning. Which makes machines able to handle enormous amounts of big data. Humans are simply unable to process such large amounts of data. Consequently, machines can use and handle significantly more data than a human investor can.

However, does this really mean that AI can outperform a human investor? The stock market is characterised by human greed, stupidity and emotion (Johnson, 2017). Therefore, using all available data in the world is no guarantee for good investment returns.

Then, is there no way for AI to be of use in investing? I think there is. The power of AI lies with the ability to learn everything and processing vast amounts of data (Dassori, 2017). AI in investments is a relatively new technique, and innovations can always provide a slight advantage over the competition. Professional investment firms also see this benefit, and invest rapidly in AI innovations.

In my opinion, having a machine advise you in trading, explaining you the rationale behind possible investments and help you to evaluate the effects of macro-economic events on your investments can be of serious aid. Nevertheless, for now, you should be in charge.

One last thought to take into consideration.. Even if robots that have been taught to invest can earn significantly higher risk adjusted returns compared against professional human investors, an ethical dilemma remains: would you fully trust a machine to invest your savings?

 

References

  1. Brynjolfsson, E. & McAfee, A, 2017. “The business of Artificial Intelligence”.
  2. Dassori, 2017. “Artificial intelligence for investing” Retrieved from: https://blogs.cfainstitute.org/investor/2017/05/31/artificial-intelligence-for-investing/
  3. Johnson, M, 2017. “When it comes to investing, human stupidity beats AI”. The Financial Times. Retrieved from: https://www.ft.com/content/244d8d60-1df9-11e7-b7d3-163f5a7f229c

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Google Maps will now help you find a parking space

11

September

2017

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When you head away on your travels, it is always recommended to hire a car to find the best locations and get away from the tourists. But, hiring a car and driving around a new city can be time-consuming and stressful when you look for a location to park your car.

I am not sure about everyone else, but we have a tendency to over-rely on incredible Google Maps and/or Waze when travelling as both apps will direct you to your destination, usually offering the quickest method available, whilst you focus on your driving.

The latest Google Maps will now find parking spots along the way to your ultimate destination. It’s as simple as selecting “Find Parking” and, whilst you drive, Google will offer you various parking options and you can pick or choose, depending on how close you are to your final point.

Google is now becoming a major contender when it comes to location-based solutions. While having Waze, Google Maps, Urban Engines, and together with its autonomous driving technology (which will probably be available in the upcoming years) it seems like they have the ability to disrupt the Automotive industry. However, the Mobility-as-a-service market is still not profitable.

Uber and Google are still not making money by offering mobility services such as Waze, Maps, or ride-hailing services. Yet, they do disrupt a whole industry which used to be very strong for over four decades.

Uber is a like a “Mack Truck just rolling down the street gaining speed,” said Magid Advisors President Mike Vorhaus on CNBC’s “Fast Money” this week. “So I do think we’re eventually going to see this in the numbers of auto sales.”

These tech giants understood that when cars will become electric and autonomous (and probably cheaper as well), there will be a huge gap in the middle to provide mobility services packages. Same as the Smartphone revolution. The automotive manufactures know that there is a big “storm” coming ahead and are making the right changes to become competitor in this field. But there is a question which still stands – How can companies like Toyota, BMW, Mercedes-Benz and General Motors, who are experts when it comes to metal and oil, will compete in the unknown territory of IT against Google, Uber and others tech giants?
After disrupting the Internet,Mobile, Music, Video, Gaming, Navigation, Mapping, Operating systems and many other industries – Google is planning to do it again to the Automotive industry.

 

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AIVD reading your Whatsapp messages?

10

October

2016

5/5 (10)

This year Whatsapp decided to use end-to-end encryption for all whatsapp messages in following of their concurrent Telegram. This to protect the privacy of all users and ensure the users that their private messages keep private.

This week Rob Bertholee, the CEO of the AIVD (Dutch national security agency) spoke out in an interview that the AIVD wants the power to crack the encryption of Whatsapp. According to the AIVD the increasing use of information-encryption leads to problems regarding to the prevention of terrorism. The ideal situation for the AIVD would be to have an oversight of the whole criminal network, provided by their phone network history.

But of course this raises again the security versus privacy discussion. How much privacy is your safety worth? Should the AIVD have insights in everyone’s personal messages to protect the country?

History doesn’t prove that spying is the right solution. Before Whatsapp decided to encrypt their messages, people made use of PGP (Pretty Good Privacy) telephones. The government got the rights to crack these and since then they use them as prove in court for criminal cases. This should make the process more easy, but has so far disappointing results. A lot of criminals use aliases to stay anonymous and if they handled secure, the messages weren’t retraceble.

I would like to plead that privacy is not dead (yet) and that analyizing personal messages isn’t the right solution to protect citizens. Privacy is crucial for self-identity and autonomy. (Focault, 1977) (Wolf, R. D., & Heyman, R. ;2015).

“Privacy is the claim of individuals, groups, or institutions to determine for themselves when, how, and to what extent information about them is communicated to others” (Westin, 1968).

Also if the AIVD gets access to the messages, it is not sure how they’ll analyze the messages. Which false-positive ratio would be acceptable? And for what extend of time can they store the information? Another raising question is how they can ensure the security. Once there is a crack, the security of the messages is much harder to maintain.

What do you think? Would you let the AIVD read your messages? Does privacy still excist and if so, where do we draw the line?

 

 

http://nos.nl/artikel/2132835-aivd-plan-om-versleuteling-whatsapp-te-omzeilen-veel-te-gevaarlijk.html                  

Wolf, R. D., & Heyman, R. (2015). Privacy and Social Media. The International Encyclopedia of Digital Communication and Society.

Foucault, M. (1977). Discipline and punish: The birth of the prison. Vintage.

Westin, A. F. (1968). Privacy and freedom. Washington and Lee Law Review,25(1), 166.

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Youtube Heroes: Do our work for free!

23

September

2016

5/5 (1)

https://www.youtube.com/watch?v=Wh_1966vaIA

Recently, YouTube has revealed the introduction of YouTube Heroes, a global community of volunteer contributors who help create the best possible YouTube experience for everyone. The idea is to reward certain ‘points’ to users that contribute to the community.  Below are some of the actions will earn the users points:

  • Accurate reports of videos that violate community guidelines
  • Contributing a sentence that gets published as a subtitle
  • Answering a user question on the YouTube help forum with a comment selected as Best answer.

Based on these points, users can reach a certain level, which rewards them with incentives such as the ability to Mass flag abusive content and contact YouTube staff directly.

Although the idea behind it seems rather nice; gamify the monotonous aspects of YouTube, the Heroes introduction video led to a mass outrage on the internet. The video, which was released just 2 days ago, already received a massive 350.000+ dislikes, as opposed to 5.000 likes. On top of that, YouTube disabled to ability to comment on the video, seems like they had a lot of trust in it…

“Talk to Youtube staff directly!” Something their content creators should be able to do. This is absurd.” (Reddit user MisterMagicka)

“Look at the dislikes. Seems like “mass flagging videos” sounds good to no one.” (Reddit user Zach)

These two reactions summarize the main issues of most people. It seems strange, that content creators with over hundreds of thousands subscribers struggle to contact YouTube staff directly when facing issues related to privacy and content stealing, while if you add some subtitles and mass report some videos, you’ll receive the privilege to contact them. Instead, these loyal content creators receive automated responses, which in most cases won’t help a thing.

“I can’t wait to flag all the videos that go against my beliefs and opinion.” (Reddit user MasterChrono)

As do all websites with user created content, there are a lot of the so called internet ‘trolls’ on YouTube. These trolls purposely report videos that meet al user guidelines, just because they do not like the content or creator. Rewarding the Heroes with the ability to Mass flag content, will not only make it easier for these trolls to report videos, it will also draw the attention of more trolls.

Incentivizing people to moderate your community without having to pay real moderators and creators seems like a nice idea. But the Heroes incentive makes users do all the boring and non-sexy jobs:  Adding subtitles > Translator, Moderate content > Moderator, Test new features before release > Beta tester. Normally, these jobs are paid functions in an organization, done by real employees, but at the so called ‘highest’ hero level, you basically become a Beta Tester without any form of compensation…

All in all, I think the idea of crowdsourcing captioning and subtitles is a great idea. I just don’t think the levelling system and incentives to report are not.

What do you think about YouTube Heroes? Comment below!

 

References:

https://www.youtube.com/watch?v=Wh_1966vaIA

https://www.reddit.com/r/videos/comments/53wffb/youtube_introduces_a_new_program_that_rewards/d7x1721

https://www.reddit.com/r/videos/comments/53wffb/youtube_introduces_a_new_program_that_rewards/d7wv5yk

https://www.reddit.com/r/videos/comments/53wffb/youtube_introduces_a_new_program_that_rewards/d7wveyu

https://www.reddit.com/r/videos/comments/53wffb/youtube_introduces_a_new_program_that_rewards/

https://www.youtube.com/watch?v=SrlGOAjK6Dg

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