The Myth of the Open Plan Office

Is there anyone who still believes that open plan office layouts increase productivity? Article after article, study after study has made it clear that the massive distraction they create outweighs any benefits from “collaboration” or “spontaneous interaction.” It’s almost a running joke at this point in the tech world:

And yet some of the smartest companies in the world keep building them, over the objections of their own employees. What’s going on?

The obvious answer is cost: office space is expensive, so companies are always trying to reduce the space per employee, and the collaboration/creativity/community stuff is just spin. But even that story only takes you so far, because at some point the lower productivity hurts the company as much as (or more than!) the employee. It’s crazy for a big tech company to save $10k/year on rent by seating a $300k/year programmer on a trading desk where they need to wear headphones all day.

So on some level, there must be people at the top who still believe the myth. In his recent book Deep Work, Cal Newport dissects two of the post-war stories of highly productive collaboration that have driven it: Building 20 at MIT, and Bell Labs in New Jersey.

Neither building offered anything resembling a modern open office plan. They were instead constructed using the standard layout of private offices connected to shared hallways. Their creative mojo had more to do with the fact that these offices shared a small number of long connecting spaces — forcing researchers to interact whenever they needed to travel from one location to another.

Originally, open plan offices were about surveillance as much as cost:

The first modern office was the Larkin Administration Building, which opened in 1906 in New York. Designed by Frank Lloyd Wright, it was based on an open-plan factory, with a giant atrium and very few walls.

“He was interested in creating big cathedral spaces for aesthetic reasons,” says Jeremy Myerson, professor of design at the Royal College of Art.

“But actually it was very useful for managers because no walls meant they could supervise workers in this open space and keep an eye on them. It was all about control.”

Every time I’m in a WeWork or similar coworking office, they seem to be getting more and more subdivided: they’re discovering that members will almost always pay a premium for a tiny glass-walled interior closet compared to a seat in an open bullpen. Which shows you that the closer the decision making is to the actual occupants, the higher the premium becomes on privacy. And if you visit even the newest and best-amenitized corporate open plan offices, you’ll find huge waiting lists for the conference rooms, people running in and out to take phone calls, and those giant headphones everywhere. (A friend at one of these told me their colleagues were starting to replace their Bose noise-cancelling headphones with the industrial ones worn by lumberjacks.)

So many of the changes in the typical office over the last few decades are about trading easy-to-measure cost reductions for diffuse, hard-to-measure costs in time and attention; think of the way that software has eliminated so much admin staffing by making everyone into their own assistant, spending hours logging expenses, contacts and meetings on a dozen different websites. Each of these trade-offs individually is so small and hard to measure (sometimes there are real efficiency gains involved) that you can see why they keep happening, even if they’re collectively a mistake. But this one is just too big to be explained that way.

This is especially true at those big tech companies with more cash than they know what to do with. In these cases an open plan office may be a kind of costly signaling device (like a peacock’s tail) or a way to keep employees distracted from the fine print on their stock options. But more likely it’s just another irrational management trend in an industry that prides itself on rationality. Hopefully we’re finally getting close to a tipping point.

The Problem with Prediction Markets

Prediction markets — websites where you can bet on politics — are rising in prominence. This election season, their “odds” are often quoted in news stories alongside poll averages.

Of course, these odds aren’t worth much if there aren’t many people betting, and there aren’t. This article by Philip Wallach is an excellent survey of the landscape, and as he points out, the US election has 50 times more betting volume at Betfair (a UK sports book) than at PredictIt, the largest current prediction market.

Social scientists have been infatuated with the idea of prediction markets for decades, but gambling is first and foremost a habit, and the problem with these markets is that there’s not enough to bet on to get people in the habit of coming back. The political world simply doesn’t offer frequent enough events that enough people care about.

These two variables — frequency and interest — can explain the popularity of sports betting and day trading, which are the two most widespread forms of gambling that prediction markets could emulate. You probably care a lot about how your favorite team or fantasy players perform, and they play often; meanwhile you may not care as much where the price of gold or Apple stock is in an hour, but the feedback is even more frequent (and traders are highly vulnerable to conspiracy theories about market manipulation, because they want to care).

Meanwhile, you may care who wins the election, but if it’s weeks or months away, what’s going to keep you coming back to the site? Suppose you came to PredictIt in June convinced that Clinton would win, saw that she was “trading” at 66% (1/2 or -200) odds, and bet $100 — so you’d win about $50 if she won the election. Now you come back during her post-convention poll bounce and she’s at 75%; what do you do? You could cash out with a $15 profit, but then what? You could have made $50. Or you could add to your bet at worse odds. Neither is particularly tempting. My guess is you’ll do nothing, and pretty soon you’ll stop visiting the site as frequently.

One way to describe that problem is that the site is trying to get you to think about sports-like betting in a financial market-like framework. But even compared to sports, the idea of waiting months for your bet to settle is frustrating. Most of the betting on sports happens much closer to the event. (According to this chart, 50% of the money bet on an average soccer match is wagered within the preceding two days.)

PredictIt has gotten a lot of things right in terms of basic market structure and fees that previous prediction markets like Intrade got wrong, but I’m not sure how they can solve this basic problem.

One solution would be to mix in political contracts with sports, like they do at Betfair, or with financial markets, as Intrade tried to do at one point. (“Will the Dow close above x?”) But regulators in the US are not about to allow either of those things. Even these political markets require an exemption from the CFTC to operate.

What they’re doing instead at PredictIt is creating lots of arbitrary questions to bet on, so there’s always something new and always something settling soon — like the exact poll average on some random date:


There’s not much trading volume on these questions, because, not to put too fine a point on it, no one cares about them. All you’ve got are the would-be bookies trading with each other.

Let’s go back to our Clinton example for a moment. If you were a perfect rational actor in an economics textbook, you’d go in both times with your exact estimate of her odds of winning, having mentally updated it for events like the convention, and judge the expected value or rate of return of your bet vs. alternative uses of your capital given what the market’s offering, so you’d wind up transacting more frequently before the event itself. You’d also think about the arbitrage opportunities created by closely related markets (will Clinton win, will the Democratic candidate win, will a female candidate win). But very few people really think that way, and for many it’s stressful and unpleasant to be forced to do so.

I’m reminded of another site called Stickk, also started by social scientists, where you can make “commitment contracts” with yourself to quit a bad habit, and attach monetary penalties: for example, you might commit to quit smoking by year end or pay the site $500. Tyler Cowen was skeptical:

I’ve long predicted this won’t work; one group of potential customers doesn’t really want to change, the other group is unwilling to give up control.  It’s not exaggerating to say that human nature is on the line here, and that if I am wrong this is probably the most important idea you will ever encounter.

Prediction markets are running into an analagous problem, and it’s a very tough problem. Even if the novelty of the idea gets people to try it, how do you get them to keep coming back?

Remember those two key factors: interest and frequency. If you wanted to play to interest, you’d let people bet on more non-political subjects. For some of these there are too many people with advance information (Oscar winners, reality show outcomes, who will die on Game of Thrones) and the market could end up spoiling the surprise. For others, like the outcome of high profile trials, there may be considerations of taste or privacy. But from a moral perspective, it’s probably a lot better than focusing on frequency, like lotteries or casinos, and trying to get people hooked on betting on the weather or traffic or some other quasi-random pattern.

I fear that those of us who want to see prediction markets succeed (and I do) have not been focused enough on the core problem: we’re asking people to bet on a subject that 90% of us only care about (in the US) every four years, if even then. Without changing that underlying proposition, I suspect that the current interest in prediction markets, under the klieg lights of a particularly insane election season, is as high as it will ever be.

Graphing Calculators and Competition

This two-year old Washington Post article describes an odd situation that seems to persist today: Texas Instruments is still selling their TI-84 graphing calculator for about $100, though it likely costs only $15-20 to manufacture and they haven’t updated the hardware in over a decade. Phones and tablets can now do all the same things, of course, but they’re not allowed on tests, and I guess you don’t want everyone’s phone out in class either.

At a time when startups are targeting every non-tech business for “disruption,” why has a tech product like this managed to hold on to such a lucrative monopoly? The article describes a cycle in which teachers require the TI models they’re familiar with, parents have to buy them whatever the price, and TI puts a bit of those excess profits back into teacher training and support to make sure they’re still the standard.

No question that’s a big advantage, but it doesn’t sound insurmountable. The competing model mentioned in the article, from Casio, is $80 and running a distant second in sales; they claim they can’t crack that “TI ecosystem,” but my guess is the price difference just isn’t big enough. Shouldn’t someone be able to do this for $40 or $50? Or create a $10 app that locks your phone/tablet in a way that can be monitored or later audited, to eliminate distractions or cheating? (Remember, the TI calculators aren’t perfect in that regard either, since they have persistent memory that can be used for games or cheat sheets, and even the firmware can apparently be overwritten.)

It also reminded me of the RPN calculators made by HP that are still used somewhat in finance, science and engineering. If you’re going to rip someone off, a bond trader is obviously a less sympathetic target than a ninth-grader, but in any case they seem to have maintained the same inflated pricing outside the K-12 education ecosystem.

My first thought was “this is perfect for a big crowdfunding campaign.” A graphing calculator seems like exactly the kind of old-timey hardware device that a small team could design and produce without any proprietary technology, and there’s a social/education angle to the story that should help the campaign spread online. But a quick search on Kickstarter and Indiegogo shows no such projects, and after a little more thought, it’s easy to see why not. Crowdsourced products are infamous for shipping late, and a calculator that doesn’t show up at the beginning of the semester is useless. At the same time, you couldn’t give yourself too much of a time cushion, since your target audience may not even be thinking about this before back-to-school season. And these customers — adolescents and their parents — will be hard to reach anyway, since they straddle the current demographic for Kickstarter and the social networks where the campaigns are promoted.

Why not a venture-backed device startup? It’s probably not a big enough opportunity. According to the article, about 1.6 million calculators are sold per year, and that number has been slowly shrinking as more and more classrooms get school-issued iPads or other new alternatives. It’s still a great business for TI when they’ve got 90% of the market at $100 apiece, but if even if you took half their market share at, say, a $40 price point, your margins would be much lower, you’d need to spend a ton on marketing and support to get there, and when you do, no one’s going to put a tech multiple on a shrinking business.

What about a more developed secondary market? The article doesn’t say what, if anything, TI has done to suppress sales of used models. They’re all over eBay, with almost 10,000 sold in the last couple months (though this may be the seasonal back-to-school peak). That’s still not much compared to 1.6 million total units, though. Here’s one online storefront that sells them refurbished for $83, and another for $84. Again, not the level of discount that would indicate real competition.

Does this represent a gap in the funding market, an opportunity for a bootstrapped lifestyle business or an investor like IndieVC that isn’t built around big exits? What’s the minimum scale for a project like this to pay off? In any case, I’m sure there are a few other examples of obsolete hardware that’s still making 50%+ profit margins, but this seems like a particularly egregious one.

Restaurant Rankings vs. Ratings

This idea seems so obvious to me that I’m sure someone has tried it, but I can’t find any good examples. In a nutshell, it’s an app for user ratings of restaurants that’s based on ranking them in categories, rather than rating them individually on a star or point scale.

So for example, you might have your personal lists of the best burgers, the best Italian food, the best steak, the best vegetarian restaurants, etc. You’d only rank categories where you’ve tried at least two restaurants, of course, and when you try a new one you could add it to your list. So, for example, my list for burgers in NYC might start as follows:

  1. Paul’s
  2. J.G. Melon
  3. Donovan’s
  4. Molly’s
  5. DuMont

Actually, what I’d really have is a ranking of the best burgers I’ve had anywhere, and we could still filter them down to NYC if necessary. But you get the idea.

Now, once we’ve got enough users, we can start aggregating those rankings to present a single ranked list in each category. And this has some major advantages over existing ratings sites:

  • It’s closer to how people already think about restaurants. Everyone has running debates with their friends about their top five burgers, BBQ, or whatever else. Everyone asks “is it better than ___?” No one asks “is it three stars or three and a half?” But sites like Yelp and TripAdvisor ask their users to convert those relative opinions into absolute ones, only to aggregate them back into relative lists (“10 Best Mexican Restaurants in Los Angeles”) — and a lot of useful information is lost in that process.
  • Relative ratings are more useful than absolute ones in this context, because they remove a lot of ambiguity. Is a three-star rating for a Mexican restaurant in New York really the same as a three-star rating for one in California, where the standard for Mexican food is higher? It probably depends on the user. But this way anyone who’s had Mexican food in both places is ranking every restaurant on the same list. (In fact, if you wanted to convert the relative rankings back into star ratings, you’d be more accurate than if users just entered star ratings to begin with — but again, why would you?)
  • It’s faster, more fun and more social than ratings — which means you’d get a different and broader pool of reviewers. Rankings feel like much more of a “curation” experience, more of an expression of your individual identity or tastes. And they still allow for a certain “power user” dynamic without allowing them to be quite as dominant.
  • It doesn’t emphasize rants and raves. Think about how many reviews on Yelp are motivated more by anger or affection for the establishment than any pure desire to inform or help the reader. It means that even with the power users, you only get their input on the best and worst restaurants — these reviews are not a very sensitive instrument for distinguishing one three-star restaurant from another.

This would also be a relatively easy project to get off the ground; you could start with a hundred restaurants in 5-10 categories in a single big city, and a relatively small user base. Even a couple hundred frequent restaurant-goers would provide meaningful data. Then you publish those lists on your site, spend a little money on advertising/promotion and see if anyone cares about them.

I think a lot of people would. There’s a certain appeal to the crowdsourcing and mystery-shopping aspects — which the old Zagat guides really tapped into — but the information would also be more reliable and actionable than anything else available. If a new Szechuan restaurant (my current obsession) opened in New York, I’d honestly be more interested in where it landed in this app’s ranking after a month or two — even if that meant only 5-10 people had visited and ranked it — than in a review in the NY Times or on some food blog.

The algorithm would take a little work, but it also doesn’t have to be as complicated with a small user base in a single city as it would be later — I imagine that cross-city comparisons and aging of reviews would both add some complexity down the road. But that would be a nice problem to have.

Is there a business model? The (alleged) Yelp approach of extorting restaurants to buy overpriced advertising so you’ll remove/underweight their bad reviews doesn’t really work. It would be pretty unpleasant for a restaurant to be ranked last in their category, but unless you’re actively trying to exploit that, you’d probably be showing just the top ten anyway in the aggregate lists — who cares about last place vs. next-to-last?

Could you charge users instead, making this an exclusive/insider thing where you need an existing user’s invitation to join, and pay a small monthly fee to participate? Maybe you could still display your own lists to non-members, but you couldn’t show them the aggregate rankings. (You might waive the fee for any month where someone ranks at least x new restaurants, though you don’t want to give people an incentive to lie and rank a restaurant they haven’t actually visited.)

If you wanted a larger user base, another option is for your ratings to be a loss leader for reservations (looks like Opentable has an affiliate program) or some other commission product, as they are at TripAdvisor and most online travel portals. Even as a completely free service that just plugs into major ad networks, you’d probably at least pay the bills while building up a valuable database.

Now, what else would it work for besides restaurants? It’s hard to think of anything, and maybe that’s why no one has tried this. The startup machine is very good at applying cookie-cutter business models to different categories (so for example, I’m sure there have been a few “Rotten Tomatoes for restaurants” attempts) but ratings are an area where no two categories really work the same way, and most of the other obvious ones have less of a clear advantage for rankings over ratings. There are too many variables on which to rate a hotel, and it would be hard to categorize them. Same with music, books and movies. And with consumer products, most people don’t try enough different ones to rank them; could you tell me your top five printers, cars or vacuum cleaners with the same confidence as your top five pizza places? Better to rely on professional reviews there.

By contrast, there’s one clear variable on which to rate restaurants — quality of the food — and 90% of them fall neatly into a type of cuisine. You don’t need 100% coverage either; if you leave out some fusion or vague “New American” restaurants because they don’t fit into a clear category, so what? There are still a million other review sites that are all over them. And while it’s true that people rate restaurants on other things like service, atmosphere, delivery time, etc, that’s often just as much of a bug as a feature, because sensitivity to these things varies widely and it corrupts the ratings. You could still have people enter text comments on these rankings, and excerpt them like Zagat reviews for the master lists — but they would be more like the brief comments on Instagram posts or FourSquare check-ins, and less like the long, performative stories that seem to rise to the top among Yelp reviews.

The main point is that people care about rankings much more viscerally than ratings. It’s why clickbait sites publish so many arbitrary ranked lists; they know they’ll get lots of comments and shares just from people arguing with them. And I guarantee you some NYC readers have not even made it this far because they were so disgusted by my top five burger choices above. But unlike most exercises in list-making, with restaurants there’s a lot of useful, structured information embedded there. Why not take advantage of it?

The Airbnb Building

By Jeangagnon (Own work) [CC BY-SA 3.0 (], via Wikimedia Commons

There are really two separate businesses on Airbnb and other hosting platforms. Let’s call them “amateur” and “professional”:

  • Amateur: People renting out homes that they live in themselves at least part of the time (either a spare room while they’re home or the whole place while they’re not home)
  • Professional: People renting out homes that they never occupy themselves, for short periods rather than the standard monthly/annual lease

They service much of the same demand, but on the supply side they’ll be governed by different rules and economics in the long run. Let’s look past the current city-by-city political fights and even Airbnb itself (because these businesses will persist whatever happens to one particular company) and think about how the underlying rules and consumer behavior are likely to shake out.

There are two systems of rules in play here, which we might call public and private. The public rules are municipal laws and regulations. The private rules are a matter of contracts – leases, condo/HOA bylaws, insurance policies – and will start to draw more focus once the public rules have been sorted out.

In large US cities, it’s often the case that both types of hosting are technically illegal, but these laws are rarely and inconsistently enforced. Over the next few years, most large cities will settle on a new set of rules with more enforcement behind them, with San Francisco’s recent Prop F debate as one of the first major rounds in this process. I think a reasonable bet is that it shakes out as follows, with one or two cities passing comprehensive legislation and others copying and tweaking it:

  • “Amateur” hosting will be explicitly allowed, with
    • a limit on rental days per year, probably 30-90
    • new transaction taxes (though less than hotel/tourism taxes)
    • new safety requirements (again not as strict as hotels)
    • some type of public registry for hosts, to enforce the above
  • “Professional” hosting will be more or less disallowed, or at least regulated much more harshly

Now, it’s obvious that Airbnb, or any platform that combines both types of host, has an interest in blurring this distinction. Most of their hosts are amateurs, but a professional is worth far more in commissions, because they run higher occupancies and often list multiple units. So Airbnb does everything they can to highlight the more sympathetic amateurs, while pushing for regulation that’s friendly to the less sympathetic professionals.

Ultimately, most voters and public officials will see the difference, and at that point there’s no real public interest or powerful constituency to stand behind the professionals. And the hotel industry, which lobbies against both businesses, is also smart enough to know that the pros are a far greater threat to them than the amateurs and eventually exploit the same wedge.

We won’t argue about the fate of professional hosts, though. I realize it’s a touchy subject. In any case it’s really a more interesting question for Airbnb investors than the rest of us. If I’m wrong and that business keeps growing, it’s really nothing new, just an update of the European-style “holiday flats” businesses that have been around since long before the internet.

What’s new, and much more of a social change, is the widespread adoption of “amateur” hosting, and what I want to talk about is how those private, contractual problems – the landlord/neighbor problems – will shake out once the regulatory groundwork has been laid.

These problems are particularly annoying for urban apartment dwellers, and will get a lot worse once those public registries are in place. After all, even if your city allows you up to sixty days of short-term sublets, your landlord can still tear up your lease if they catch you – or if you’re a condo or co-op owner, your neighbors can complain (not unreasonably) that they didn’t buy into a hotel and don’t want strangers around, and get the building rules changed.

So here’s my idea: an “Airbnb building” which explicitly allows short-term hosting and manages it through the building itself.

It could work for a rental or condo building. Either way, when you know you’ll be out of town for a night or more, you’d simply tell the doormen or staff, or enter it into a web calendar, and they’d list it on Airbnb for those nights. If someone books it, they’d arrange for the keys, cleaning and so on. And then you split the extra rent – so for a three night booking at $200/night (after Airbnb’s commission), the building would take in $600 and give you $300.

This may sound familiar — it’s more or less how condo hotels and many other vacation properties are managed. Although in those cases the usage is reversed; the owner is typically there only a few weeks a year, and most of the time the unit’s in the rental pool. In our example, the primary resident is still there most of the time.

This approach neatly solves the landlord/neighbor problem, because the landlord’s getting their cut and the neighbors all know what they signed up for. Most people are still not comfortable renting out their homes to strangers, but you’d expect the people who are to self-select into buildings like this as soon as they start to become available. A typical rental building turns over as much as half of its tenant base every year, so it wouldn’t take long to convert all the leases to allow this; with a condo you might have to sell it that way from construction.

There are obvious time efficiencies and economies of scale in having the building management – who already have photos, floorplans, spare keys, and so on – manage the whole process, as opposed to individual hosts.

And as a traveler, I would hugely prefer to stay in a building like this. I wouldn’t have to worry about whether the neighbors and staff know I’m a paid guest, and the level of trust is far higher. Right now I’d probably never stay somewhere without previous positive ratings, but if I was booking with the building rather than an individual, then just a few positive ratings for any units in the building would make me a lot more willing.

Finally, what if your half of the Airbnb rent was passed on as a reduction or partial rebate of your base rent or condo maintenance fees, rather than additional taxable income? That’s how many amateur hosts think of it already, and the tax savings could be substantial.

It doesn’t solve the insurance problems (liability for theft, damages, injury, etc), and I don’t know enough about that business to speculate, but more professional and centralized management certainly can’t hurt in sorting those out.

Why hasn’t Airbnb set up a building like this themselves, as a kind of prototype to show how well their concept can work? Maybe they don’t want large property management companies to get any ideas. After all, they might get tired of paying those high commissions and just start their own website. In a way, Airbnb benefits from having its hosts operate in an uncomfortable gray area with their landlords and neighbors, because it prevents them from working together openly to gain negotiating power with the platform.

I get the feeling that some newer condo buildings with a high proportion of investment buyers are drifting towards my model already, on the professional side; maybe those buyers had initially planned to rent out their units in standard one-year terms, but they’re realizing they can make much more by listing them on a short-term rental platform and tipping the staff enough to look the other way.

But again, this isn’t meant to be an argument for or against Airbnb, HomeAway or any other particular platform. It’s more about starting from the bottom up: what do hosts and guests want, and what systems and structures can address that in the most efficient way? In the end, the companies that adapt themselves to those structures will succeed. The model I’m describing certainly doesn’t work everywhere, but for serviced buildings in large urban markets (which are already a substantial share of inventory on these sites) it seems like a much better approach. I wonder who’ll be the first to try it.

Hospitality Networks: Some New Ideas


Over the last few years I’ve written two widely-read series of posts on hospitality networks: first on the breakdown of as it tried to transition from a nonprofit to a venture-backed startup (1, 2, 3, 4), and then on the general concept, covering a dozen competitors as well as Couchsurfing itself (1, 2, 3, 4, 5).

Long story short: CS appears to be stagnating at best in terms of active members (at least the kind that you’d want), but none of those other networks are getting much traction either. Whether the money finally runs out at CS, or they turn it into a generic ad-driven travel forum in order to stay afloat, the prospects for filling that niche — a large scale, community-oriented, free or low-cost alternative to AirBnB — don’t look great.

In my previous posts I offered various unsolicited advice to CS and other existing networks about which revenue models were likely to be sustainable and preserve the spirit of the original project. In this one, I want to outline some ideas for starting from scratch.

Crowdfunding with a Twist

You’ll probably need at least some financing to build your initial site, and even if you think you don’t, you’ll want to raise some money anyway, because it’s an important indication that people care about your project and you’re not wasting your time. I think it’s common knowledge by now that campaigns on Kickstarter and IndieGogo are just as much about testing and/or promoting a product as they are about actually funding its creation.

And when you’re crowdfunding a social network, this is particularly important, because you want to gather a critical mass of committed users before you launch. So here’s the twist: your campaign should have only a single donation level, with no way to give more. The only “reward” should be an initial membership on the site when it launches. And the campaign should also be all-or-nothing, so that if you don’t reach your target, nobody pays.

So let’s say your target is $25,000 and you set the level at $5. This way both you and your backers know that you’re building a site with 5,000+ initial members and $25,000 in the bank, or nothing at all. That reduces everyone’s chances of pissing away their money and time on a network that never gets anyone’s attention and quickly fizzles out. But how can we reduce those chances further?

Referrals with Teeth

One of the latest would-be CS killers, BackPackClub, planned to be “invite only”; in other words, you’ll need a referral from a current member to join. Of course this is a common way for a startup to try to build buzz and a sense of exclusivity. I mentioned it to a founder of one of the other networks, and he was skeptical; he pointed out that with many invite-only networks, the invites essentially become free to the public after they reach a certain scale, because there are too many of them floating around, and people post online offering their extra invites to strangers.

He’s right, of course. But in these cases, no one’s going to get hurt in the real world because someone was careless with their invites. In the case of a hospitality network, these invitations could have a critical role in improving safety.

So here’s my suggestion for our new hospitality network: you can only join by invitation (starting with that initial group of crowdfunding backers) and if you invite someone and they’re ever removed from the site for any kind of safety violation, you get kicked out too. No appeals, no “investigation” — just clean and simple accountability for the people you recommend. And the best way to make someone think twice about who they invite.

Membership restrictions

If you want to encourage reciprocal hosting, rather than mostly-separate populations of hosts and travelers, you need users who are in a position to host in places that other users want to travel. One of the best ways to ensure this is to launch initially in just a few large cities with a lot of cross-travel, and expand from there. A group of 5,000 members spread evenly around the world would mean a fairly low number of actual host/surfer matches, but 5,000 members all in New York, London and Paris would be much more active.

Another obvious thing to try would be a women’s-only network, or women and families only. Many female CSers essentially use the site this way anyway, for obvious reasons.

Pre-launch profile creation

Let’s go back to the default behavior when you join a brand-new social site: you set up a bare-bones profile and then go look at other people’s profiles to see if it’s worth your time filling out more. Since they’ve mostly done the same thing, you’ll probably conclude that it isn’t. And if enough users have this initial experience, the site is dead before it even has a chance to get off the ground.

So there should be two requirements for you to close on your crowdfunding: in addition to those 5,000 users contributing $5 (or whatever you set those targets to), you should set up a mini-site where they can create a basic profile in advance, and require that at least 80% of them do so.

I realize it won’t be easy to get thousands of people to contribute their money and time to a social network that doesn’t exist yet, but it’s clear from the existing networks that it doesn’t get any easier after you’ve launched. So why not tackle the hardest part up front?

Putting it all together

The main theme of the above suggestions is to focus on critical mass and sustainability, so you can get enough of an initial network effect to keep growing; this has been the fatal problem for most of the other networks so far. But it also addresses the core flaws in the initial concept that I laid out last year:

1. More “surfers” than hosts: far more people are willing to accept a free place to stay than offer it.

2. Geographic imbalances: everyone wants to visit the same big cities and other tourist destinations. So even if every member was willing to host as much as they travel, there would still be far more surfers than hosts in these places.

3. Safety and trust: a network in which strangers stay in each other’s homes will be a magnet for thieves, sexual predators, con artists, and lower-grade creeps of all kinds.

I realize that many fans of the “old” CS will reject my suggestions out of hand, because the ideal of a completely open membership with no monetary charge, however small, was so much a part of the concept to them. I get that. Maybe there are other ways to address these flaws. But they are critical problems that were already eating away at the network before the VCs showed up. It’s fair to cast some of the blame on the founders and investors for their decisions, I certainly did my share of that — but not all of it. For all the posts I’ve read online bemoaning the death of the “old” CS, I’ve seen very, very few other attempts to take these issues seriously. Without that, no one else is likely to get very far.

Hospitality Networks:


In the last four posts we’ve explored the different operating and revenue models of Couchsurfing and its various competitors. Since then I’ve had a chance to talk to some of the founders of the other sites I wrote about, and had some interesting discussions with other readers too. Now it’s time to tackle the big questions we’ve been circling around:

  1. How should Couchsurfing make money?
  2. How can the other existing networks make money?
  3. What could a new network do differently?

That’s probably too much for one post, but let’s start with the first two.

How Should Couchsurfing Make Money?

As I’ve already suggested, I think the best answer for CS is advertising — probably a combination of affiliate programs with online booking sites and some kind of umbrella partnership with a brand sponsor.

Whatever their intentions, this will inevitably lead to optimizing for site content and traffic rather than maximizing real-world hosting and meetups — more of a “Facebook for travellers” than what it was in the past. This is not going to make everyone happy (I worried about it as far back as 2012) but it’s still the best of their three main options.

Coming in second is a “freemium” model in which members can pay a monthly or annual fee for extra features. The problem is that there’s probably only one thing that people will reliably pay for in meaningful numbers, and charging for it would dramatically curtail user growth: namely, the ability to send a “couch request” (to ask someone to host you).

I wrote about how charging just to make it easier to send a request creates the wrong incentives; a complete paywall around this feature may not be as bad, but it would also go straight to the self-interested motive for the majority of new users signing up, and you’d lose them for good as soon as they hit that credit card form.

This would still be a bold move, and might result in smaller-but-stronger network with higher long-term revenue potential — but it’s probably also too much of a risk. The safer path from here is to keep the “premium” features relatively minor, accept that they won’t lure many users into upgrading, and count on advertising for most of the revenue. So it’s not surprising that this is the path the company’s taking.

How Should the Others Make Money?

Couchsurfing’s third option, transaction fees, is by far the worst in my opinion, and the company seems to agree, since it’s the only one they’re not implementing. But the other networks don’t have the scale for a freemium or ad-based approach, so it’s natural that some of them are turning to door number three. Unfortunately, it’s still not likely to work out very well.

Why not? Because as soon as you put a price tag on the transaction, you’re completely changing the mindset for both parties. It doesn’t matter what you call it, and it doesn’t even matter where the money goes. When someone’s paying at the point of booking, you’re no longer competing with Couchsurfing, you’re competing with AirBnB and HomeAway and all the other commercial networks — with much less funding, an inferior website, and a vastly smaller pool of both travellers and hosts.

If there is a real niche for a cheaper AirBnB, it will probably come from starting with the existing AirBnB market and trying to compete to list the cheapest inventory, like shared rooms — not starting with the Couchsurfing ethos and trying to drop the whole range of rental and home swap options on top of it, which is what Trampolinn and Nightswapping seem to be doing.

Of the other sites I discussed, there’s only one that seems to have a credible business model, and that’s Horizon. I recently had the chance to meet one of their co-founders in New York, and we discussed it in some detail.

horizon logo

The basic idea is to find large alumni networks (universities, fraternities, volunteer programs, etc.) and try to match up people within the same network to stay with each other. Users are obviously much more likely to trust (and want to meet) their fellow alumni than complete strangers. And here’s the important part: many of these networks are already collecting voluntary dues or donations from the most engaged of their members, and spending some of that money in trying to reach more of the less engaged members.

So now we’ve finally got a fourth option beyond freemium, ads and transaction fees: a third party with a budget to spend and a real interest in the network’s success. And unlike a paid corporate sponsor, their interest is not just in tapping into an existing large network like CS but helping a new network grow. It’s almost a perfect alignment.

The beta version I’ve tried is based on Facebook groups, which generally command much looser allegiance. (Do you even remember all the Facebook groups you’ve joined?) And it involves making a charitable donation when you’re hosted, with the site taking a commission; as I mentioned above, a transaction fee by any other name is still a transaction fee, so I’m skeptical. But it doesn’t seem like this is representative of what they can do when they sign up one of their real target groups.

Now, they’re obviously considering different revenue models around this concept. One is that the alumni network would use this as a form of fundraising: instead of paying your host to stay, you can make a donation to your dear old alma mater. Another is simply that the members pay a transaction fee, with the organization paying nothing and just delivering the traffic/promotion. But to me those are both non-starters (have I mentioned my feelings on transaction fees?) and in any case they’re getting things backwards: Horizon would be providing a valuable service to these networks, and they should be willing to pay for it at the organization level even without directly tying member stays to donations. It’s hard to imagine anything that strengthens the alumni bond to your school or organization more than hanging out with other alumni, and more engaged members will donate more through other channels. Any alumni group that subsidizes real-world events for their members should be willing to subsidize something like this.

What About the Non-Profits?

To the extent they’re committed to running on donations, I think they’d be better served by shifting them to an annual subscription model than running occasional pledge drives like BeWelcome.

But even before that, the volunteer/non-profit networks face a serious hurdle in maintaining user engagement long enough to reach critical mass. At CS, a new user looking for a host can at least find enough potential hosts that they’re motivated to set up a profile, send some requests …they may drop out when they don’t get any positive replies, but at least they’re visiting a few times over the course of a week or two, and giving the site a fair shake.

A new network with bold plans can benefit from an initial burst of a few thousand members signing up at once — and these are particularly valuable signups because they’re less likely to be selfishly motivated, and more likely to want to host themselves and contribute to the network. But then they visit the site and there’s not much there yet, and they’ll probably only come back once or twice more before forgetting about it and moving on. Meanwhile, the clock is also ticking for the volunteer programmers maintaining the site, who have built out only the most basic features to start, and won’t be as motivated to add more without anyone to use them — which gives users even less reason to come back, and so on in a downward spiral.

(Obviously this is a broader problem with applying the minimum viable product approach to a social network, where your “product” is not the site itself but the user-generated content that fills it up.)

BeWelcome has presumably had that burst of new members twice — once when they were first founded as a reaction against Hospitality Club, and again a few years later, during all the bad press around CS becoming a private company, when angry CS users were looking for an alternative. But even according to their own stats, they have struggled to convert this into the kind of exponential growth that CS once experienced; the total member count keeps increasing, but at a decreasing rate, and the metrics tracking actual site activity have flatlined.

One way to lessen this problem is to focus on a niche group of users who already have a shared sense of group identity that will keep them engaged longer. This is what WarmShowers has done, and what Trustroots is trying to do. But what are the groups that aren’t being tapped into, and what are the other ways to increase initial engagement without limiting yourself to a certain demographic? We’ll focus on that in the next (and final) post.

Hospitality Networks:
Advertising & Sponsorship

One of the revenue models that Couchsurfing is exploring is advertising sales. I wondered how much they could actually make that way, and I assumed their best best would be some kind of partnership with a travel brand rather than just banner ads (as they’re doing now). But I don’t know much about it, so I asked someone who does. Nick Chapin is Head of Publishing at digital agency theAudience, and was previously Head of Strategy at Kameleon.

To be fair to Nick, I wasn’t able to give him much data to go on, since the company wouldn’t give me very much. But I passed on the 1m monthly average users and 200k daily average users that they quoted me, and asked for a ballpark estimate of how much they could make with that kind of traffic. Enter Nick:

It would be interesting to know what Couchsurfing’s regional breakdown really looks like. I say that because it’s hard to sell partnership against a diffuse global demographic, unless they’re high-net-worth luxury consumers. Marketers tend to buy partnership either as a vanity that supports their brand values or as a proxy for a specific audience—and very few brands are shopping for scattered global eyeballs. Or, more accurately, working with media budgets earmarked against a global audience. Most buys are driven by local budgets, with specific regional targeting.

So unless there’s a brand that just really wants to be associated with the proposition, it’s hard to see a partnership with CS selling off the shelf. Given all that, I’d question the suggestion that some kind of site buyout or partnership makes more sense that CPM-benchmarked advertising.

The advantage that Couchsurfing could offer advertisers is the same one Facebook leverages so well: their traffic is entirely comprised of trackable, registered users who have forfeited a lot of personal info—which can be used to target advertising carefully. That means much higher CPM rates.

With CS, you’re also working in a sector (travel) that has some very lucrative digital advertising opportunities: mainly affiliate-based targeted ads. Specifically air travel and hotel bookings. Most of the big travel aggregators pay a chunky referral fee to a host who drives a click-through that results in a sale. A few examples:

While you’d assume that Couchsurfers aren’t the most affluent group, they surely over-index on travel purchase. And, moreover, do so directly in parallel with site visits. Connect with someone in Thailand … book a ticket to Bangkok, right? Further, you’d also assume that many users don’t find the hosting connection they’re looking for on the site and book a hotel instead. Making it a great place to serve up a ready-made alternative to whatever the audience is searching for.

I’ve logged into CS and, as far as I can tell, they’re only running standard Google AdSense banners on the site—about the least sophisticated way to monetize a page. That means that some lucky advertisers are getting a lot of cheap value. They buy Google ads against verticals or keywords, like ‘travel’, and they end up with potentially lucrative eyes on their ads. Some may even be targeting the CS domain. I’ve seen a lot of ads on CS for AirBnB, who presumably have a very robust ad buying program targeting travel sites like these. At the moment they’re getting to Couchsurfers on the cheap.

But of course AirBnB and others would be happy to pay much more if the ad inventory was enriched with even simple CS data. At the moment, if I search for hosts in Italy, I just see generic AirBnB ads. If they could instead show me specific flats I could rent in Milan in the event that I can’t find a host, everyone wins.

Anyway, a targeted ad product seems like the most obvious revenue stream to me: basically set yourself up like a boutique travel-focused Facebook. Dig into your data and model a sexy demographic, integrate some smart targeting tools, and take it to market. Call your audience “global fun seekers” or something sassy like that. Show that, yes, they are under-employed—but they are also predominantly middle-class and over-index in marketable areas. Travel, mobile device use, online STD medication purchases, etc.

Now, off the back of a more developed pure-play advertising proposition like this, there’s probably a partnership model that starts to look appealing too—but let’s push the Facebook parallel a bit before exploring that.

Facebook’s only revenue stream is ads. (They call them ‘promoted posts,’ but a rose by any other name…) And they have been hugely successful at selling them since they switched to a more aggressive targeted model over the past couple of years. Facebook uses your profile information to serve ads deemed relevant to you. They may lose out to Google in terms of pure advertising volume, but their incremental ad prices are much, much higher, because advertisers know exactly whose eyeballs they’re buying.

Now, some preliminary research shows that a Facebook user generates $20-40 annually for the site. So let’s say a Couchsurfer is worth … maybe $5-10 per year with a similar model? So, even if you only really have an active base of one million users, that’s still potentially a nice return.

Above and beyond a smart ad model, I’d also think about partnerships in a similar space. For example, could you do a deal with Kayak or SkyScanner (or even EasyJet) offering targeted ticket promotions as “special Couchsurfing deals”? It’s hard to say how much that could be worth, as it would probably have to be structured as an affiliate business partnership rather than a straight-up sponsorship. But still potentially interesting. There might be a whole pipeline of business around special offers—like a traveler’s Groupon—you could build into the platform. Something that would offer users genuine value, targeted to their travel plans, rather than trying to flog them whatever Google serves up.

Finally, there might be some brands that would buy into sponsoring the site writ large. Like maybe … Puma? Global, youth-focused, target their ads at urban nightlife and active lifestyles. Or more likely a travel brand who wants to tie themselves to the spirit of CS. As an outlier, maybe even a global bank? They like to invest in altruistic concepts to combat their profiteering image, and spend a lot of money targeting young people signing up for new accounts.

It’s a stretch, but it wouldn’t be hard to draw up a shortlist of people worth approaching. From a sponsorship perspective, the CS brand has an appealing ethos to offer—but also some bad publicity, which might keep a lot of brands away.

Any way you slice it, this would take a lot of work to negotiate. But, with the benefit of doubt, I can see potentially selling something like that for … another $500k to $1m per year?

The real problem here, however, is that a potential sponsor would probably want the site to offer a much more robust “content” offering. The era of paying to slap your logo on something is long gone. And, right now, what would a sponsor get? Branding around the edges?

Any brand worth their salt would want to be integrated into the CS community, and work with the site to co-create higher value engagement content (i.e. video), to drive community participation in branded conversation.

Which gets us to a deeper point: to sell CS to brands at any kind of truly sustainable level—and, really, to thrive as a digital platform—Couchsurfing probably needs to evolve as a media offering. If it became a place where an engaged community of registered users consumed, shared, and commented on travel and lifestyle content, there would be a lot more to sell. CS could offer (apologies for the wanky ad buzzword) “native” ad formats, e.g. sponsored articles, films, promotions and even real-world events.

But without that kind of development, there’s precious little to sell. Even the best banners are ultimately cheap. That’s why Facebook has done everything it can to shift its ad offering toward promoted ‘brand content’, and is pushing video so hard.

The bottom line is: digital properties can still sustain themselves (handsomely) through advertising and brand partnerships. But the bar has been set high.

My gut feeling is that there’s a very decent proposition in all this for CS. But let’s not forget that they aren’t the only site struggling to make it. It would take a lot of work and brains to build and sell this as an advertising platform. But with their user base, it would be an enticing challenge to take on…

Hospitality Networks:
How Can They Make Money?

In the first two posts in this series, I’ve reviewed the operating models of Couchsurfing (CS) and some competing networks. Now we’ll talk about how they can make money — and hopefully improve the member experience while doing so, rather than degrading it.

The CEO of CS, Jen Billock, lists three potential revenue models:

  • Freemium / subscription
  • Advertising
  • Transaction fees

That seems like a good list to me. Let’s take them one at a time.

Freemium / subscription

Couchsurfing is already halfway to a freemium model: there’s a way for you to pay them, but it doesn’t get you any premium features. It’s called “verification,” and I left it out in the previous posts when I said Couchsurfing has no revenue model, because I think it’s a bit sleazy and not very sustainable.

Essentially you can pay $20 to get a “verified” check mark on your profile, which is somehow supposed to improve trust and safety. As far as I can tell, all that’s been verified is that you have $20. When I did this in 2009, they also sent a postcard to confirm your address, but I’m not sure that’s even required anymore, according to this recent article:

The Post managed to create a profile with a fake name, paid for the verification with a credit card with a different name and was instantly given a “verified” account that comes with a green tick next to the profile.

Billock refused to answer questions about how this process made a profile superior to one that was not verified.

The most active CS members have always been unhappy about the “verification” process. At the old non-profit CS, which raised several million dollars this way, it was described in part as a voluntary donation, which it was, but in ominous language that made it sound like no one would ever trust you without that little check mark on your profile, which was completely untrue and essentially a way of bullying new members into donating before they understood how the network really worked.

When the site went for-profit, they eliminated the verification option, I assume because it was awkward for an opaque for-profit company to ask for “donations” and they realized it had no other practical purpose. But when they realized they might need the money, they quietly brought it back, with even more awkward language to describe what it actually does.

It sounds like they’re planning to start providing more extra features for that $20, which isn’t a bad idea — but I sure hope they change the name to “premium” or something, because “verified” is misleading and will always raise questions. And it obviously makes people less safe if they rely on it as a sign that someone is safe to host or visit.

So what should these premium features be? We got a taste of what CS was considering when they first looked at this model a couple years ago. It was mainly ways to increase a traveler’s chances of finding a host: better search filters, last-minute requests, and “guaranteed” responses (whatever that means).


On a certain level that makes sense, since it targets the people most likely to pay: those who have just signed up for a particular trip they’re planning, because they’ve heard about CS as a free alternative to a hotel. Many (most?) of these people have a frustrating initial experience, sending out lots of requests and getting very few replies. Which is just when they’ll be most willing to pay to improve their chances, especially if it’s still a lot less than the cost of paid accommodation. And if you believe there’s still a good chance that they won’t find a host and they’ll give up on the site, why not offer big discounts for a longer-term prepayment to get as much of their money as possible? (That kind of discounting is often a red flag, something we’ll come back to when we cover language learning products in a month or two.)

As I wrote in 2013 about all this:

Freemium models work best when the premium features are relatively independent of the basic features. If someone else pays for more space on Dropbox, you don’t get less space in your free account. In the case of CS, the main thing they can offer a premium member is various types of priority over non-premium members. You can dress that up however you want, but in the end you’re not really adding a new service, just pitting your existing users against each other: the premium service degrades the free one. If frequent flyers board the plane first, the rest of the passengers have to wait a bit longer. If premium CS members show up higher in searches, then free members show up lower.

But now I can see a larger problem, which is a backlash from hosts. After all, what you’re really “selling” is access to their homes, or at least to their inboxes. And this plan would skew your incentives against implementing features that make it easier to be a host. For example, suppose you only want to host members with references, or members who have hosted themselves — or suppose you’re a female host who only wants to host other women for safety reasons. Well, the pool of members who are most willing to pay would almost by definition be the ones who are least likely to meet common criteria like that. So giving the host simple settings to exclude requests from those people would make the “premium” features less useful and harder to sell. But if you don’t allow that, these premium features make it less attractive to be a host by lowering the quality/relevance of your average request. Either way it’s a downward spiral.


Right now, CS is the only one of these sites with enough active membership and site traffic for advertising to even be worth talking about. They’ve recently started running banner ads that look like basic Adwords or something similar. But they’re surely considering more lucrative options.

On Monday morning we’ll have a guest post from a digital media executive discussing these options in more detail. But for now I’ll just point out two potential problems with this site as a branding vehicle.

The first is that CS has made repeated public statements that they would never have advertising on the site. The company obviously has no problem shrugging off the small minority of members who care enough to point this out, but a company that’s actually paying to improve their image may be more sensitive to them.


Second, the safety issues on CS have created a much larger image problem. Some say that terrible incidents like this or this will inevitably happen on any large enough network — but others make a good case that the company could be doing a better job of at least responding to them constructively when they do happen. In any case, I would certainly hope that CS wants to improve on this front as an ethical matter (and I’m sure they do) but it’s also a practical one if they ever want a salable “brand.”

At this point those are both CS-specific problems. My broader concern about advertising on a hospitality network is how it would shift the incentives for the team running it. Relying on page views and clicks means you’ll be pulled away from facilitating face-to-face meetings and towards keeping people clicking around the site, with more focus on “content.”

This is probably going to mean some professional content — because if we’re talking about just user-generated content (i.e. message boards) then there’s a lot more competition. Sites like the Lonely Planet Forums, Bootsnall, and many others are already all over that market. For longer-term expats there are region-specific options, like Toytown in Germany, that are just as useful. And as with many “Facebook for ____” ideas, Facebook itself is often perfectly serviceable for this purpose, and all your users are already there.

Online forums are also very hard to sustain without having them fill up with spam or trolling. There are only a few forum sites that have really lasted a long time, and those that do either rely on full-time paid moderators (like Metafilter) or on volunteer mods with discretion on how to run their own little fiefdoms (like Reddit, or the old CS where each city’s message board had its own volunteers running it). Another important tool for many of them is upvoting/downvoting of comments, which can be a little harsh for a community-oriented site.

A hospitality network has to maintain a higher level of trust among its users than a purely online forum, so the burden of moderation is even higher. Scandals like this one are bad enough for Reddit, but can you imagine how much worse they’d be if they happened at a site where strangers were actually arranging to stay with each other in person?

Transaction Fees

The problem with transaction fees is that they’re a slippery slope, however you implement them. If any of the money goes to the host, they’ll start wondering why they shouldn’t list on AirBnB and get a lot more. If it all goes directly to the site, they’ll feel exploited. If it goes to charity and the site takes a fee or commission — a too-cute-by-half idea that many of these projects seem enchanted by — then it’ll never amount to material revenue for the site.

And what about the guest perspective? If you start paying for an accommodation, you’ll begin to have higher expectations. You’ll certainly want your money back if you wind up leaving early. And if it’s more than a few dollars, you’re actually not saving that much over a hostel or cheap hotel — especially in Europe, which has massive chains of super-budget hotels. Nightswapping charges a $10 transaction fee, and more if you haven’t earned enough nights; Kayak has 40 hotels in Paris this weekend for $25-40/night, and Hostelworld has dorm beds as low as $11.


If I were starting a new hospitality network today, I wouldn’t want to rely on any of these approaches. I’d rather start out with a small but mandatory fee just to join the site, and maybe an annual fee to remain a member. I’ll write more about how that could work in a future post. But it’s not very useful advice for any of the existing networks, all of whom have more or less committed to a free and open signup process.

For most of them, I suspect that some kind of advertising or sponsorship will turn out to be the best of these three flawed options. As I mentioned, our next post on Monday will be from a guest writer who can explore this in more detail.

Hospitality Networks:
The Current Field

In my previous post, I described the general concept and business model of Couchsurfing and a few basic problems with it:

  • no sustainable revenue model
  • demand / supply imbalance (more “surfers” than hosts)
  • geographic imbalance (hosts in popular destinations are swamped)
  • safety and trust

In this one I’ll review a number of their current competitors and briefly discuss their scale and how they’re tackling these issues.

Two older networks that we don’t need to spend much time on are Hospitality Club and Global Freeloaders, and one look at their websites will tell you why — the design and functionality have clearly not been updated in a very long time. They seem to be #1 and 2 after CS in terms of total members, with about 800,000 and 100,000 respectively, but that’s mostly because they’ve been around for so long. I’m sure that their ratio of active profiles to stale ones is much lower than for CS or any of the others below, and it’s unclear how actively either one is still being curated.


Then there’s BeWelcome (BW) which seems to be aimed at duplicating the “old” CS as closely as possible. I believe it was originally started as a Hospitality Club alternative, but it gained a lot of traction during the CS meltdown and became the destination of choice for users who were leaving CS in protest.

In terms of transparency, they put CS to shame, with published financials and a public stats page that shows a wide variety of user data and trends. They’re currently at around 75,000 users, and they confirmed for me that about half of these are “active” according to their definition of having logged in within the last year. If we used the more restrictive definitions I applied to CS for my estimates in the previous post — well, I’m sure the ratio is higher at BW, but it’s hard to imagine it’s more than 15-20k active users.

BW runs purely on donations, with a shoestring budget of just a few thousand euros annually. The back end is open source, it’s built and run entirely by volunteers, and decisions about site development and rules are made by consensus.

This consensus system is the single most common criticism I’ve heard of BeWelcome — that it slows things down too much. I would add that the lack of funds is almost certainly also a hindrance. Without taking anything away from volunteers, some things just get done faster when you can pay for them.

But it’s still very impressive what they’ve been able to accomplish while holding themselves to a much higher standard of financial austerity, transparency and ethics than even the old Couchsurfing appears to have done.

If there’s a better candidate than BeWelcome to replace CS in its original form, then I’m not aware of it. But a variety of other projects are tweaking the model in various ways.


Two similar ones are Nightswapping and Trampolinn, which both address the host/surfer imbalance by using a points system: you earn points by hosting people and spend them by being hosted. (Nightswapping calls them “nights.”) This kind of system can also be adapted to deal with the geographic imbalance problem, by assigning a higher point value to accommodations in more popular destinations. Nightswapping also seems to distinguish according to the quality of the accommodation.

Each has a complex revenue model based on transaction fees and other ancillary services. Among other things, they will sell you extra points — just like you can buy extra airline miles if you don’t have enough for your booking.

Right now, these sites feel more like a complex, underpopulated version of AirBnB than an alternative to CS. But it’s still early for both. Nightswapping raised a €2 million funding round in September, at which time they claimed 6,000 active hosts; at year end they reported 2,000 “nights” spent in 2014. Since each accommodation costs multiple “nights” per night (getting a headache yet?), this presumably means only a few hundred stays. Trampolinn reports 22,000 members on their homepage and they tell me they’ve also had a few hundred stays.

If you think of these as AirBnB alternatives rather than CS alternatives, swapping out cash for a virtual currency has at least one potential advantage: the local laws being used to shut down and fine AirBNB hosts may not apply if there’s technically no exchange of money. (I’m not sure I’d bet the farm on that distinction holding up, though.)


Another category is networks that focus on a specific target audience that already has some group identity and mutual trust — ideally a group that already has a built-in propensity for travel. These sites give up one of the best selling points of CS, which is that it helps you meet people outside your normal social network or activities. And they forfeit many potential benefits of scale. But in return, they’re getting a higher initial level of trust and engagement.

The oldest and most successful example of this is WarmShowers, which is essentially CS for long distance cyclists, and seems to have reached about the same scale as BeWelcome. They are also funded by donations, but frame them as a recurring, voluntary “membership fee” — which is a step in the right direction, from my perspective, since it creates a more stable revenue stream and avoids repeated “pledge drives,” which users eventually tune out.

Interestingly, WarmShowers is starting to run into their own growing pains in terms of finances. Their proposed 2015 budget is about $60,000, which is basically a BeWelcome scale budget with another $50,000 tacked on for an “Executive Director / Fundraising Consultant.” Needless to say, some members are not happy.

I’m not sure that’s the first full-time paid job description I’d add, but there’s no question that most non-profits need at least some paid labor to run efficiently once they reach a certain size. A network that rules that out on principle is putting a real ceiling on its potential growth.

trustroots logo

Another that just launched, called Trustroots, is initially aimed at hitchhikers. Like WarmShowers and BeWelcome, it’s both open source and committed to its non-profit status. It sounds like they’re planning a somewhat expanded feature set from BeWelcome, including more Facebook integration, and they hope to eventually raise enough in donations and/or grants to have some paid full-time work on the site.

One that didn’t make it was Startup Stay (2012-2014), whose target audience, ironically, was entrepreneurs. They found that their members were more interested in networking than actually staying with each other, and after pivoting in that direction, merged with another “founder dating” type site called CoFoundersLab.

I’m a beta tester for a new iOS app called Horizon, which uses mutual Facebook friends and group members to connect people. This seems to be less of a meta-platform for group specific networks, and more of a way to build trust by finding whatever friends or groups two members have in common.

There are more sites I could talk about, but I think I’ve covered the bases in terms of the different potential operating models. There’s one in Europe called Roamalot that seems to cover other kinds of “sharing” besides hosting travellers, like borrowing things from other locals.

There also seems to be a good deal of vaporware out there. Less than a month ago I received an email promoting another new hospitality network, with links that have already all gone dead. And even as I was writing this post I discovered this guy announcing yet another project. He wants it to be invitation-only, which is an interesting idea that we’ll come back to in the next post. But it highlights another problem with the pure volunteer-driven model; it’s hard to keep everyone rowing in the same direction. Without anyone gathering a critical mass of either members or funds, there’s nothing to stop this constant splintering.


Let’s recap: more than ten years after Couchsurfing was founded, the total active member base at all these sites is probably less than two million, and almost all of it is still at CS — which brought in venture capitalists and professional management three years ago, an eternity in tech time, and has not yet figured out how to make it work. When you put it that way, things look a little grim.

A cynical (but not unreasonable) observer might say: the true demand for this as a reciprocal service seems to be very low. For whatever reason, we’ve had this trend for the last five years or so when a few million extra people were doing it. But most have been from a younger backpacking/bohemian demographic and it’s been mostly a freeloader phenomenon; they all want to party and have a free place to crash, but not enough of them are really committed to hosting themselves, or donating their money and time, to make the system work.

Eventually the most dedicated and trustworthy hosts will get sick of them, they’ll go back to their hostels, and the “hospitality exchange” world will return to its sustainable level — the old offline networks (like Servas, for example), a few of which have made the jump to the internet (like WarmShowers), maybe one or two new ones like BeWelcome, plus whatever’s left of CS when Silicon Valley gives up on it. They may all do a great job for their community, but none of them will stabilize at more than a hundred thousand or so active members, and they’ll all continue to scrape by on donations and volunteer work.

I’m not that much of a cynic. There’s definitely a ceiling on how large something like this can grow, for a variety of reasons, but I think that limit is closer to 10 million active users than one million or 100,000. And I think there are multiple ways to make it self-financing at that scale. We’ll tackle that in the next entry.