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Brad Stone: We should watch Uber and Airbnb closely

The author of new book The Upstarts on how the new breed of tech startups changed the rules of the game

At the start of the book you note that the dictionary definition of an upstart is either a newly successful person or someone who does not show proper respect to the established way of doing things
I wanted to frame the defining question of the book for the reader. Are these brilliant entrepreneurs who have built tremendous businesses through sheer creativity and ingenuity? Or are they renegades that grew in large part through contempt for the status quo? Theres an ambivalence that surrounds companies like Uber and Airbnb, and I think this question over their identity and the dual meanings of the word upstart gets to the heart of it. My own squishy answer, of course, is that they are a little bit of both.

Youve written about Silicon Valley for more than 20 years have we reached peak Valley yet?
In terms of the business impact, I dont think so. Theres a new set of transformative technologies such as machine learning, AI and virtual reality that will spawn another set of big tech franchises. But in terms of cultural impact, perhaps we are at peak Valley. For decades, technology entrepreneurship has been revered, and people like Steve Jobs and Elon Musk were heroes. Now we have to contend with lost jobs due to automation, the effects of digital addiction and simple fatigue with all this constant change. So perhaps our feelings toward Silicon Valley are about to get a lot more complicated.

You met some of the individuals who had similar startup ideas to Uber and Airbnb but didnt become billionaires. Have these people been able to move on and were they reluctant to be featured?
I call these companies the non-starters. They had the same ideas but were too early, or too nice, or too idealistic. They all shared a strain of wistful regret; it is difficult to see someone else execute the same idea and win unimaginable success and riches. The best story was the founder of a company called Seamless Wheels a pre-Uber limo service who abandoned the business after getting a death threat on his voice mail, probably from a limo fleet owner.

Whats the best call Travis Kalanick has ever made?
Surrendering in China in an expensive battle with local rival, Didi Chuxing. Last year Uber lost $2bn trying to win that market; Kalanick couldnt bring himself to sacrifice his dream of building a truly global network. But the rules of competition in China will always favour the local champion and Didi, it turned out, had the same access to capital as Uber. By stepping away from the fight, Uber not only saved its balance sheet from more destruction but negotiated an impressive 17% stake in its rival.

And the best call Brian Chesky has made?
Branding the Airbnb user base as a community. For years before Airbnb, people posted their homes and spare rooms on the internet (via sites like Craigslist and Couchsurfing.com). Chesky and his colleagues drummed up an evangelical spirit to their endeavour and held meet-ups and, in later years, global conferences of hosts. It got Airbnb users to feel part of something larger and strengthened their ties to the company, even when it meant that they were violating provincial laws.

In most territories these firms operate outside of laws and regulations around minimum wages, health and safety, and tax collection has exploiting these loopholes been key to their success?
Absolutely just as Amazons navigation of its sales tax obligations was key to its success over its first decade. With tough interpretation of taxi and zoning regulations, neither Uber nor Airbnb would have gotten started. By the time many cities recognized their existence, both were fairly large and had the political support of their customers.

Black
Black cab and licensed taxi drivers protest the introduction of Uber in London, June 2014. Photograph: Gareth Fuller/PA

After publication of your book about Jeff Bezos and Amazon, Bezoss wife gave the book a one-star review on Amazon Were you surprised?
I can still remember the moment I saw it my coffee cup froze midair in my hand, my mouth configured itself into an expression conveying shock and confusion. Jeffs wife had never made such a public statement before related to the depiction of Amazon. And she was alleging serious mistakes in the book yet listed only one relatively trivial one. I think it might be the most prominent product review in the grand history of Amazon! Of course in the long run, perversely, it did nothing but boost the books prominence and turbo-charge sales.

Did you witness much sharing in the sharing economy?
Certainly some hosts on Airbnb are opening up their spare bedrooms to meet new people; and some drivers use Uber to carpool with strangers for the companionship. But the most productive members of each community are professional operators, making available their homes or cars as a way to earn or supplement a living. Its not the sharing economy at all, though that phrase has been useful for the companies to bolster their image.

Which sectors have been able to embrace upstarts disruption with any success?
The auto industry. Upstarts like Tesla have achieved enormous success but havent slowed down the car companies 2015 was their best year ever. The auto giants are all researching autonomous vehicles alongside the likes of Google and Uber and they could conceivably get there first. The real estate market has also remained fairly impervious to disruption, as well as (to everyones consternation) the airline industry. Perhaps an industrys immunity is related to the size of each individual transaction.

You state that the founders of Airbnb and Uber are very different from Bill Gates, Larry Page and Mark Zuckerberg How?
For all their strengths, Gates, Page and Zuckerberg are not charismatic communicators or storytellers. They generally avoided the press and focused their attentions inward. Chesky and Kalanick couldnt get away with that. Early on, they faced regulatory fights that their predecessors never encountered until much later. This took skills like mustering political coalitions, enlisting the support of customers and testifying publicly. They had to be politicians, as well as innovators and managers.

Are the fortunes and efficiencies created by these companies worth the price paid by the disrupted?
I think so as long as they follow on their promises. Uber has pledged to reduce or eliminate traffic in major cities within five years and to treat drivers more equitably. Airbnb thinks it can create a new industry where people are paid to provide authentic travel experiences. It has also set out to eradicate racial bias from its platform. Lets watch these companies closely and make sure they achieve their goals, instead of replacing one set of distant, dominant companies with another.

Read more: https://www.theguardian.com/books/2017/jan/29/brad-stone-not-sharing-economy-upstarts-book-interview-airbnb-uber


John McCain says US has no strategy to deal with Russian cyber warfare

In audio obtained by the Guardian, McCain says it is the one aspect of our confrontation where adversaries are ahead

John McCain warned that the Trump administration is unprepared to deal with Russian attempts to influence elections in France and European countries in the coming months.

In audio obtained by the Guardian of the 2008 presidential nominee speaking at the congressional retreat in Philadelphia, the Arizona senator said we dont have a policy and we dont have a strategy for Russian cyber warfare. He said it is the one aspect of our confrontation where I believe our adversaries are ahead of us, adding it is a hell of a lot of easier to offense in cyber than defense.

France is holding its first round of presidential elections in April and far right nationalist Marine Le Pen is leading in opinion polls. Le Pens party, the National Front, is currently facing scrutiny over its ties to Russian banks and she has insisted that Russias occupation of Crimea was legitimate. The 2014 invasion of Crimea drew international condemnation and led to international sanctions against Russia.

McCain, who stated matter of factly that we do know the Russians were trying to influence the outcome of our election, also warned that he didnt know what Trumps policy was towards Russia. The hawkish McCain described Putin as a KGB criminal and suggested Ronald Reagans approach to Russia of peace through strength was the appropriate template today.

McCain broadly took a pessimistic view of foreign affairs in 2017. I could make a coherent, cogent argument that the world is more dangerous than any time in the last 70 years, said MCain, who chairs the Senate armed services committee. There are pressures on the new world order that was established in 1947 and 1948, the likes of which we have never seen.

He told attendees he believed President Trump will probably be tested by one or more of these forces around the world, whether it be North Koreans, Iranians, the Chinese or the Russians and expressed his hope that all of his colleagues will support a response which is proportionate and will also tell Vladimir Putin, the ayatollahs and the Chinese that there is a new team in town.

McCain though was full of praise for many of Trumps cabinet picks. He told colleagues the national security team that president Trump has assembled is as strong or better than any Ive ever seen. He had particular praise for newly confirmed secretary of defense James Mattis. Im not sure if one person can have a profound effect but if anyone can have a profound effect it is General Mattis, said McCain.

He also seemed to welcome Mike Flynn, Trumps controversial selection for national security adviser. What a nice change from Susan Rice to General Flynn, McCain said of the transition from Obamas adviser to Trumps selection.

McCain is notably not close to Trump. The president mocked the Arizona senator in 2015 for being a prisoner of war, saying hes a war hero because he was captured? I like people who werent captured, and McCain only backed Trump after the real estate developer became the GOP nominee.

However, he has been enthusiastic about many of Trumps cabinet choices in foreign policy and offered the White House crucial support in advancing the nomination of state department nominee Rex Tillerson.

Read more: https://www.theguardian.com/us-news/2017/jan/27/john-mccain-says-us-has-no-strategy-to-deal-with-russian-cyber-warfare


Donald Trump mistakes Ivanka from Brighton for his daughter

President-elect mistakenly retweets praise for a Brighton council worker with the same first name as his daughter, leading to Twitter storm

A woman from Brighton is waking up to chaos on Twitter after having been singled out by Donald Trump as his daughter.

The president-elect quoted a praiseworthy tweet directed to him by Lawrence Goodstein, a Twitter user in Seekonk in Massachusetts, that described his daughter Ivanka as a woman with real character and class late on Monday.

But Goodstein had mistakenly put @Ivanka, not @IvankaTrump not a significant mistake in light of Goodsteins 160-odd followers; of far greater consequence circulated by Trump to his 20.1m.

So Trumps shout-out was instead directed to Ivanka Majic, a council worker from Brighton, England, with just over 2,800 followers.

Donald J. Trump (@realDonaldTrump)

@drgoodspine: @realDonaldTrump @Ivanka Trump is great, a woman with real character and class.”

January 17, 2017

Ivanka Majic from Brighton, England, is a wonderful woman. Youre right, replied Mark Pygas, a writer for Distractify, to Trump and Goodstein. RIP her mentions though.

I mean, shes probably trying to sleep and her phone is going off the hook but its a hell of a story. (According to a subsequent screenshot tweeted by Pygas, Goodstein blocked him for pointing out the error and made his account private.)

Mark Pygas (@MarkPygas)

@realDonaldTrump @drgoodspine @ivanka Ivanka Majic from Brighton, England, is a wonderful woman. You’re right. RIP her mentions though. pic.twitter.com/FH4f2KMOQU

January 17, 2017

Trump had not deleted his tweet nor acknowledged his mistake at time of writing, though Goodstein made his account private.

It had been retweeted 2,800 times and favourited 15,000 times, with more than 4,600 replies the vast majority of them including Majic.

The Guardian has attempted to contact Majic, believed to be employed as a researcher at the Brighton and Hove City Council.

Her profile suggests she is not as active a user of Twitter as the president-elect, with just six tweets most of them retweets in the past week.

Her last activity on Twitter was a retweet encouraging votes in Brightons upcoming restaurant competition and another publicising another residents appeal for return of her lost house keys.

On Saturday Majic had tweeted a link to a news story in The Argus about Brightons thriving food scene: Made the local paper. Fame at last!

Ivanka Majic (@ivanka)

Made the local paper. Fame at last! https://t.co/qs9M61IlEc @bravofoodawards @XDBPhotography @edofcopy @prykey24 @EatBrighton

January 13, 2017

Meanwhile, Ivanka Trump seemed oblivious to the compliment paid to her by the Twitter user Goodstein and co-signed by her father, sharing a photo of #datenight with her 2.74m followers.

Ivanka Trump (@IvankaTrump)

bright lights, big city #datenight pic.twitter.com/XclaOxvus4

January 17, 2017

Ivanka Trump had been the subject of a special report that broadcast on CNN on Monday night that her father had expressed concerns about.

At 9:00 P.M. @CNN, of all places, is doing a Special Report on my daughter, Ivanka. Considering it is CNN, cant imagine it will be great!

Donald J. Trump (@realDonaldTrump)

At 9:00 P.M. @CNN, of all places, is doing a Special Report on my daughter, Ivanka. Considering it is CNN, can’t imagine it will be great!

January 17, 2017

As president, Donald Trump will have the option of taking over the official @POTUS handle or maintaining his own, @realDonaldTrump. With 20.1m followers hanging on his every missive compared to @POTUSs 13.5m, Trump himself has given no indication he will make the switch.

Sean Spicer, the incoming White House press secretary, told CNN earlier in January that Trump would probably be tweeting from both, or whatever he chooses.

Last week BuzzFeed News publicised concerns that Trumps shockingly insecure personal Twitter account had no known special security protections and was open to being exploited with potentially devastating impacts for the stock market and geopolitical stability.

It would not be the first time Trumps account has been hacked before: in 2013, when he was best-known as a real estate tycoon and host of The Apprentice, someone reportedly gained access to his account to tweet Lil Wayne lyrics (These hoes think they classy, well thats the class Im skippen, from the remix of will.i.am and Britney Spears Scream & Shout).

My Twitter has been seriously hacked— and we are looking for the perpetrators, said Trump at the time.

Donald J. Trump (@realDonaldTrump)

My Twitter has been seriously hacked— and we are looking for the perpetrators.

February 21, 2013

Read more: https://www.theguardian.com/uk-news/2017/jan/17/donald-trump-mistakes-ivanka-from-brighton-for-his-daughter


How a failed attempt to get porn off the internet protects Airbnb from the law

The story of Airbnbs current battle with San Francisco over regulation actually begins with a senator who prayed to control the pollution of internet porn

Airbnb, like pornography, is a business based on selling a fantasy. Porn offers the simulacrum of a sexual encounter; Airbnb, that of being a local in a city not ones own. Theres less fuss, less muss, and a much reduced chance of STDs and irritated neighbors.

At least, theres less fuss for the visitors. Cities around the world, however, are waking up to the headache of hosting transient populations in previously residential neighborhoods, and attempting to crack down.

But while local politicians in Reykjavk, Berlin and Barcelona are taking a stand against Airbnb, their counterparts in the United States have struggled to come up with regulations that have teeth.

On Monday, Airbnb sued San Francisco in federal court, seeking to prevent the city from enacting a strict new law that would put the $26.5bn company on the hook for ensuring that its listings comply with local regulations.

Suing its hometown is a tricky move for a company that has attempted to brand itself with the sense of belonging, but legal experts tend to agree that Airbnb is in the right: Airbnb is protected from much local regulation by a twenty-year-old federal law that was originally intended to purge the internet of porn.

How Section 230 changed the internet

In the summer of 1995 back when it took at least an hour to download a decent nude photo from the internet, let alone a video senator James Exon of Nebraska took to the floor of the US Senate to deliver a prayer over the virtual but virtueless reality of internet pornography.

Almighty God, Lord of all life, we praise You for the advancements in computerized communications that we enjoy in our time, he intoned, before beseeching God to guide the Senate in regulating indecency out of the internet, or as he put it, consider ways of controlling the pollution of computer communications.

Exons prayer was answered with the passage of the Communications Decency Act of 1996, a much-maligned law that was decried by free speech advocates, dismissed as a departing Senators half-baked notions by the New York Times editorial board, and swiftly struck down by the supreme court.

Twenty years later, what remains of Exons quixotic quest for a godly cyberspace is Section 230 of the Communications Decency Act, a last minute addition to the legislation that nevertheless has become the linchpin of the modern, open internet.

Section 230 holds that providers of interactive computer services cannot be held liable for the content that users post on their sites. That means that Yelp cannot be held liable for users leaving negative reviews of your business and eBay cannot be held liable if you bid on an autographed baseball that ends up being counterfeit: the platforms are held to be neutral intermediaries and their tantalizingly deep pockets are out of reach.

Senator Ron Wyden told the Guardian that he and Chris Cox, then a Republican congressman from Orange County, California, wrote Section 230 to allow the internet to grow and flourish, and prevent lawsuits from crushing new platforms for commerce, education and speech.

At the time, I certainly thought it would be useful and create jobs in the digital economy, but did not imagine its impact as a cornerstone of internet law allowing for the existence of social media and numerous other types of online businesses, he added.

Indeed, internet advocates credit Section 230 with enabling the web we have today, in all its diversity.

What does the internet look like in a non-Section 230 world? asked Eric Goldman, a professor at Santa Clara University School of Law. It looks like online classified ads. Think how much better our lives are because we have online marketplaces instead.

Attempts to crack down on Airbnb

The internet may be governed by federal law, but the acceptable uses of an apartment or house (or any structure or piece of land) are very much the province of local governments, many of which either ban or curtail short-term rentals.

Almost all short-term rentals in San Francisco were illegal until 2014, unless the host obtained a permit to run an old-fashioned bed and breakfast. Even after the city legalized short-term rentals if hosts registered with the city and followed certain rules less than a quarter of the approximately 7,000 Airbnb hosts signed up. New York state law forbids renting an entire unit in an apartment building for fewer than 30 days, which means a significant percentage of short-term rentals in one of Airbnbs largest markets are illegal as well.

As cities attempt to crack down on the bad actors, Airbnb is an obvious target. The company knows who is renting units, and when, and could much more easily discover and punish anyone breaking local rules than government workers can.

Its just shameful that when Airbnb knows that cities are struggling to maintain their stock of affordable housing and keep tenants in housing, that they refuse to work with cities and states to have their platform not be used for illegal rentals, said New York state assembly member Linda Rosenthal.

Airbnb
Airbnb is not the first online platform to earn money off potentially illegal activity, to the consternation of local officials. Photograph: John Macdougall/AFP/Getty Images

The fact that Airbnb has the capacity to act on behalf of the government does not mean it should do so, however, argued Lee Tien, a senior staff attorney with the Electronic Frontier Foundation.

Weve always had intermediaries. Long before the internet came along, there was the phone company, and that was the place that cops and regulators would go to find out who was doing what, Tien said.

Imagine if the phone company were actually legally liable for everything that phone users said. The protection of intermediaries is very important to protecting any kind of privacy that we have.

Airbnb is not the first online platform to earn money off potentially illegal activity, to the consternation of local officials. Several states have tried to crackdown on online sex work advertisements and online ticket scalping, only to run into Section 230.

StubHub has been sued a gazillion times and there are a whole lot of people saying they are facilitating the circumvention of anti-scalping laws, Tien said. I suspect that the percentage of transactions on StubHub that violate some states anti-scalping law are pretty high, but that doesnt matter because of Section 230.

The Communications Decency Act doesnt render all business laws moot simply because a business happens to operate on the internet, said Matt Dorsey, press secretary for the San Francisco city attorney, which will defend the citys law at a hearing on 1 August.

Regulators versus the online marketplace

While San Francisco prepares to defend its bill in court, other cities are wading into the legal morass as well. The Los Angeles city council is considering regulations that also attempt to put Airbnb on the hook for ensuring the legality of its users listings.

If San Franciscos law is thrown out by a judge, other cities may head back to the drawing board and try a new approach.

Thats typical for local regulators confronting a new online marketplace, Tien said. First, they go after the platform, then after they realize the limitations imposed by Section 230, they move onto another strategy.

Im hoping that were moving into the second phase, he said, into areas that will not run afoul of the values that 230 is trying to protect.

Read more: https://www.theguardian.com/technology/2016/jun/29/airbnb-lawsuit-san-francisco-regulation-internet-porn


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