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Is the Sharing Economy Set Up to Help or Turn a Profit When Disaster Strikes?

BY Rebecca Chao | Friday, August 15 2014

Faces of Airbnb hosts who offered free housing during Hurricane Sandy (screenshot)

In the middle of the night on July 31, multiple explosions caused by a gas leak ripped through Kaohsiung City in Taiwan, killing 30, injuring over 300 others and displacing over 12,000. Shortly after, Airbnb created a link under its new disaster response site allowing hosts to offer free lodging without having to pay the company service fees. A number of rooms are now listed for free in the Kaohsiung area.

The idea to use Airbnb for free housing came from New York City hosts who asked the company to enable them to list their apartments for free during Hurricane Sandy in 2012. Over 1,400 voluntarily turned their homes into temporary shelters after Airbnb reconfigured its site, created a Sandy relief page to help facilitate the process and waived its commission. The site was also used during other major disasters worldwide: during the flooding in the Balkans, after two strong earthquakes hit the Greek island of Kefalonia and after Typhoon Haiyan ravaged the Philippines.

But not all those who use these sharing economy platforms were so eager to lend a free hand during Sandy. At least one Airbnb host raised prices and Uber took advantage of increased transportation needs by turning on price surging. At the moment, a number of peer-to-peer companies like TaskRabbit and car-sharing service Getaround are formalizing their efforts to respond to disasters but these business models seem inherently more vulnerable to price gouging during emergencies because they cannot control whether individual hosts or users will share or exploit.

To Share

Unlike Airbnb and Uber, there were no reports of price gouging with TaskRabbit during Sandy. Its site was being used for repair and clean up; around 75 taskers worked on recovery projects with 40 percent helping small businesses get back on their feet.

“Help me put up sandbags, help me get gasoline to my apartment,” Task Rabbit's Senior Director of Marketing Jamie Viggiano said to techPresident, listing some of the common requests made via TaskRabbit during Hurricane Sandy. “It was those type of things that we want to build into the site and make the posting process more seamless.” Viggiano notes that much of the work in 2012 was paid, even though the company waived its commission, but for the new disaster relief site they are building called the TaskRabbit Needs for First Responders Program set to go live at the end of August, it would allow Taskers to volunteer their services for free during times of emergency. In 2012, TaskRabbit provided the American Red Cross with a few TaskRabbit volunteers to assist in debris removal and clean-up but they felt the site was not set up to instantly respond to emergency workers’ needs. So far, they have had 30 different NGOs from around the country express interest in working with the TaskRabbit First Responder Program.

A screenshot of what TaskRabbit's disaster relief portal may look like when released at the end of August

TaskRabbit currently has over 30,000 taskers across 19 cities who have the option to join the TaskRabbit Needs for First Responders Program. The company attended a Demo Day at the end of July for the White House Innovation for Disaster Response and Recovery Initiative, which was created after Hurricane Sandy. The event was organized by The White House Office of Science and Technology Policy (OSTP) and FEMA, drawing together hundreds of representatives from both the public and private sectors to showcase how data and technology could improve disaster response.

At Demo Day, TaskRabbit showcased the template for its new site, which they created with the needs of emergency first responders in mind. “Once we get the request in from people on the front lines like FEMA or local responders, they can post a task in a specific category, like a handyman for yard work or debris clean up,” explained Viggiano. TaskRabbit also hopes to see its site being used to help small businesses with disaster relief. “What we were seeing happen is that businesses were posting relatively frequently too after Hurricane Sandy,” said Viggiano. “One had a broken awning and asked for help. Some businesses needed replacement for employees who were stuck in Long Island.”

Brian Forde, Senior Advisor to the U.S. Chief Technology Officer for Mobile and Data Innovation in OSTP and who recently spoke at our Personal Democracy Forum, explained in an e-mail to techPresident that the administration observes FEMA’s “Whole Community” approach to disaster relief, which advocates for public and private partnerships for effective disaster response and recovery.

“I believe Sandy marked a turning point in how we as a nation will respond to large-scale disasters in the years ahead,” Forde wrote in Mashable. “In unprecedented fashion, tech companies, voluntary and faith-based organizations and federal agencies, including the White House, worked together to build tools and cut through administrative red tape. The process made one thing very clear: Tech expertise and crowdsourced data are revolutionizing disaster response and recovery.”

Getaround, a car sharing company based in San Francisco, did not have a Sandy story to tell but its Public Policy and Business Development Manager Padden Murphy told techPresident that the company is "very mission driven," having been developed at Singular University from a student assignment aimed at taking cars off the road; so Getaround was quick to say yes when Forde reached out to them and asked them if and how Getaround could contribute to the White House disaster relief initiative.

"What the value of Getaround would be is pretty simple," said Murphy. "Getting folks out of harms way, getting supplies and goods to people who need them, providing cars to people who lost a vehicle during a disaster." Its web portal aims to educate people in a "hyper localized way" about how to respond in times of disaster, said Murphy. It will also allow Getaround to communicate with car owners through SMS and push notifications, encouraging them to lower the prices of their cars, if not offer them for free, and incentivize them to do so by waiving Getaround's commission, said Murphy.

While Getaround's disaster relief portal has been built and is ready to go live at any time, it has not yet been tested in an actual event as with Airbnb and TaskRabbit. "As we near the typical storm season, when something occurs it would probably be helpful that we actually send someone to survey and send someone on the ground and not just make assumptions," said Murphy.

He also noted that Getaround and all web or mobile-based apps are highly dependent on Internet and phone connectivity. "If at the end of the day we lose cell phone connectivity then the ability of most of our systems starts to break down," said Murphy. "That’s something where there are few ways it can be overcome. But I'm sure the White House is reaching out to major providers and working with them as well to develop contingency plans to minimize impact."

Getaround's emergency support page (credit: Getaround)

Airbnb also sent a rep to the White House Demo Day. It is now partnering with the city governments of San Francisco and Portland to pre-identify volunteer hosts and train them on how to respond during an emergency. Airbnb will also use their mobile and web platforms to notify users of hazardous incidents.

During Sandy, Airbnb partnered with New York City’s Housing and Urban Development (HUD) to offer free housing. Fred Tombar, Senior Advisor to the Secretary of Housing & Urban Development (HUD) for Disaster Programs, noted in a post co-written with Forde that while HUD was working on expanding options for low-income families in New York, they were unable to fulfill the need of all those displaced by the storm. A number of web-based companies besides Airbnb also offered to help.

Walk Score, a website the helps people find housing based on proximity to their work or child’s school, launched a Sandy-specific site to help those affected look for new homes. Angie’s List, a membership-based platform that offers ratings and reviews of contractors, offered a free year-long membership to those whose homes had been destroyed or damaged by the hurricane.

Or Not to Share

Notably, Airbnb has a controversial status in New York City where as techPresident's Sam Roudman previously pointed out, its presence is said to have raised rental prices. It had also battled for months with New York Attorney General Eric Schneiderman over releasing its data.

After Sandy hit the east coast, Schneiderman warned in a statement that raising prices on necessary items like transportation, housing, water and food during emergencies is illegal. “While most vendors understand that customers are also neighbors, and would never think of taking advantage of others during such disruptive times, these circumstances always require an extra sense of vigilance and preparation,” he wrote.

Yet Airbnb was accused in one instance by Bloomberg Business Week reporter Sam Grobart of price gouging. He wrote:

The last place, another West Side two-bedroom, was the one that got me all Bruce Banner, though. When I contacted the owner to set up the rental, he informed me that the price had gone up—to the tune of twice what was listed on the site. This was on Wednesday, well in the midst of the general chaos that Sandy had wrought. I told him I wasn’t really interested in the place if its price was twice what was listed and we parted ways. Price gouging? Probably.

Airbnb allows users to flag inappropriate listings and it responded to Grobart's complaint, explaining it had no control of individual hosts but at the time, was encouraging them to offer free or discounted prices and made special note of those who did so.

Traditionally, when businesses engage in illegal price hikes, it's easy to just slap on a fine. When the Holiday Inn Express in Brooklyn overcharged by $15,000 during Sandy it later had to pay $25,000 in fines. But Airbnb doesn't actually own the properties it lists on its website so does it get fined or do individual hosts?

Uber also allowed prices for its livery cabs to shoot up with demand when the city's public transport system got submerged by the super storm. Uber received a wave of criticism when it tweeted on its New York account: “surge pricing will be enabled — we want to provide you w/ a reliable service. stay safe, & dry!”

One Twitter user shot back:

In response to the outrage, Uber allowed for standard pricing during Hurricane Sandy -- but only for one day. In a blog post on its website, Uber’s Senior Community Manager Edward Casabian claimed the company had lost $100,000 that one day it offered regular fares because it had to pay its cab drivers twice the regular wage to work during the storm. He claimed price surging was the only way to incentivize cab drivers to work during less than ideal conditions and that it was doing the community a service by ensuring this sort of transportation was available to those in need. According to documents leaked to Gawker, Uber made an estimated $213 million in revenue in 2013 and is currently valued at $18.2 billion. Uber did finally wave its own 20 percent cut during Sandy, allowing taxi drivers to claim 100 percent of the fare.

But just last month, Schneiderman had the final say on Uber's behavior during Sandy by announcing that the company had to abide by the city's price gouging laws, which would cap fares during emergencies to "the normal range of prices it charged in the preceding sixty days," he announced in a press release.

Companies built upon a peer-to-peer model certainly do encourage neighborliness during times of need but it seems that the irony with the sharing economy is that it doesn't always want to share.

Correction (August 15, 2014): The original article quoted Getaround's Padden Murphy as saying that the White House is reaching out to major providers regarding connectivity during a disaster. The quote has been corrected to reflect that Getaround was only suggesting the White House could reach out to major providers and not that it was doing so.

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