Couchsurfing.com (CS) is a social network whose members host each other when travelling, show their visitors around, and organize various meetups and social events. One way to describe it is a free, community-oriented version of AirBnB, though CS came first.
Several years ago, the site went through a somewhat dodgy conversion from volunteer-built non-profit to for-profit startup, taking in $22 million in venture capital funding. It’s been a rocky road, and it’s spawned or rejuvenated a wave of smaller sites who are trying to replace it.
None of these has really achieved much scale yet, and despite its problems, CS still has over 90% of the active user base for this kind of network. But they also have at least 90% of the total payroll and overhead, so their lack of a revenue model is ominous. They’re already on their third CEO since the transition, and last year they fired almost half of their staff; if they burn through the rest of their cash and can’t raise more, it’s unclear what will happen to the site and its member database.
The alternative is to find a sustainable way to generate revenue from this kind of community without eroding its core values, and that’s mainly what I’ll be writing about here. But there are a few other basic problems with the “free hospitality network” concept that we also need to think about. Even if this is your first exposure to the idea, they may have already occurred to you:
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.
These are fairly obvious points, and they’re all readily observable problems with CS, so it’s odd how many online commentators have tiptoed around them. The first two especially have received almost no attention, and as far as I can tell, CS has never done anything to address those imbalances. How much they’ve done to address the safety issue is a controversial subject, but it clearly hasn’t been enough.
So what we’re looking for is an operating model that addresses these issues while generating some revenue. It doesn’t necessarily have to be a for-profit business, of course — it could be a self-sustaining non-profit, like a club or membership organization. And even if it is a business, it may not be a venture capital-sized opportunity. There are lots of viable network or marketplace type services that just don’t work at that scale.
What’s the scale of CS today? Well, they’ve got ten million members worldwide, but many of those profiles are stale. From my recent correspondence with the company and a little sampling with their search filters, I’d estimate that their current active member count is between 500,000 and 2 million, depending on your definition of “active.”
The company tells me they counted 24 million hosted nights in 2014, and that’s probably about ten million “stays,” assuming an average length of 2-3 nights. Which suggests that the average active member is very active, hosting at least five times a year — and maybe more, given that some of them are “surfers” who don’t host at all.
At the other end of the spectrum you’ve got AirBnB, which was founded five years later and is currently running at a pace of 37 million nights booked annually — not that different in scale, actually. But they raised their last round of financing at a $10 billion valuation, and are reportedly raising the next one at $20 billion less than a year later.
You already know the difference, of course: at AirBnB, those nights are financial transactions on which they take a commission. But why can’t CS do the same? On one level, you might think that a guest willing to pay $10 to AirBnB and another $90 to the host would rather pay $10 to CS and nothing to the host, right? But as social psychologists know, when you introduce a little bit of money into a transaction, you change the nature of it completely. The host starts to feel exploited and the guest starts to feel entitled. There’s still an element of generosity and mutual trust, but the context is very different.
The investors in CS, as well as the founders of the more startup-oriented competing projects, are trying to find a middle ground between the legacy CS model and the AirBnB model, one that can be a successful business without turning the hosting process into an overtly commercial transaction, and reach some demographics that AirBnB doesn’t.
Some of the others have no interest in a startup track or maximizing revenue and user count — they just want to create a sustainable community in a transparent, non-profit framework.
And some may be trying to have their cake and eat it too, combining the member goodwill and positive publicity of the second approach with the potential payoff of the first.
But on some level they’re all facing the same initial problem: how can you generate enough recurring revenue to at least keep the lights on? And ideally this would be done in a way that doesn’t just re-create the “old” CS, but actually improves on it by tackling some of those unresolved supply/demand imbalances and safety issues.
In the next post, I’ll walk through a dozen competing projects and try to estimate their current scale and progress toward these goals. After that, we can start to focus on what’s working, what isn’t, and what to try next — both for the existing networks and any potential new ones.