How Can Trusting Strangers Fuel An Economy?

Transcript

GUY RAZ, HOST:

If someone were to ask you for three words to sum up your reputation...

RACHEL BOTSMAN: (Laughter).

RAZ: ...What would you say?

BOTSMAN: (Laughter) I didn't see the question coming.

RAZ: This is Rachel Botsman, and this is the question that she asked the audience when she gave her TED Talk.

BOTSMAN: Is this a serious question?

RAZ: Yeah, yeah.

Rachel writes about how our reputations are a kind of currency.

BOTSMAN: I think they would say loyal, committed and passionate.

RAZ: Those are great words.

BOTSMAN: Thank you.

RAZ: That's your reputation.

BOTSMAN: Well, that's what I'd like people to think, yes.

RAZ: And what people think of you drives what Rachel and others call the trust economy.

BOTSMAN: People call it the sharing economy. They call it the collaborative economy, collaborative consumption - whatever you call it, trust is the social glue.

RAZ: I mean, think about it. We exchange money without banks.

BOTSMAN: You see things like Lending Club, Funding Circle, TransferWise...

RAZ: We accept rides from strangers.

BOTSMAN: Whether it's lifts, I call Uber and ridesharing...

RAZ: We stay in other people's homes, people we've never met.

BOTSMAN: From Couchsurfing to Airbnb all the way to the high-end of onefinestay, which is - I think properties now over a million dollars.

RAZ: And all of those services run on trust. Here's how Rachel described it in her TED Talk.

(SOUNDBITE OF TED TALK)

BOTSMAN: Now, what's happening here is people are realizing the power of technology to unlock the idling capacity and value of all kinds of assets from skills to spaces to material possessions in ways and on a scale never possible before. It's an economy and culture called collaborative consumption, and through it, people are becoming micro-entrepeneurs. They're empowered to make money and save money from their existing assets. With every trade we make, comment we leave, person we'll flag, badge we earn, we leave a reputation trail of how well we can and can't be trusted. And it's not just the breadth but the volume of reputation data out there that is staggering. Just consider this - 5 million nights have been booked on Airbnb in the past six months alone. Thirty million rides have been shared on carpooling.com. This year, $2 billion worth of loans will go through peer-to-peer lending platforms. This adds up to millions of pieces of reputation data on how well we behave or misbehave.

RAZ: Those numbers are way higher today. Rachel actually gave this talk a few years ago. And she thinks part of the reason these services are growing so fast is because there's been a kind of evolution in the way we trust - especially online.

BOTSMAN: We trust people because through digital technologies we think we know them.

RAZ: Yeah.

BOTSMAN: So I'm going to trust this website to put in my name. I'm not going to use a pseudonym.

RAZ: Right.

BOTSMAN: I'm going to trust this website with payment information. I'm now going to trust this platform and put in this highly personal information and then I'm going to often meet that person off-line in the real world. So I generally believe that the way we are forming trust and the way we're trusting people is becoming compressed and accelerated.

RAZ: Coming up in a moment, how the trust economy isn't just changing the way we do business. It's actually making us behave better. Stay with us. I'm Guy Raz, and you're listening to the TED Radio Hour from NPR.

(SOUNDBITE OF MUSIC)

RAZ: It's the TED Radio Hour from NPR. I'm Guy Raz, and on the show today, trust and consequences. And a few minutes ago, we were hearing from Rachel Botsman. She studies a part of the economy based entirely on trusting complete strangers.

(SOUNDBITE OF TED TALK)

BOTSMAN: Meet 46-year-old Chris Mok, who has, I bet, the best job title here of super rabbit. Now, four years ago, Chris lost his job unfortunately as an art buyer at Macy's, and like so many people, he struggled to find a new one during the recession. And then he happened to stumble across a post about TaskRabbit. Now, the way TaskRabbit works is people outsource the tasks that they want doing, name the price they're willing to pay and then vetted rabbits bid to run the errand. Now, the tasks being posted are things that you might expect like help with household chores or doing supermarket runs. But I love that the number one task posted over a hundred times a day is something that many of us have felt the pain of doing - yes, assembling IKEA furniture.

(LAUGHTER)

BOTSMAN: It's brilliant. Now, we may laugh, but Chris here is actually making up to $5,000 a month running errands around his life. And 70 percent of this new labor force were previously unemployed or underemployed. I think TaskRabbit and other examples of collaborative consumption are like lemonade stands on steroids.

RAZ: I really like this idea of that entire economies in some ways are sort of becoming decentralized. Like, this idea that to have economic powers isn't just for powerful corporations, but for anyone, I guess, right, if they're trusted.

BOTSMAN: I mean, this the fundamental point that a lot of the critics miss is that what it does for everyone as it changes the role that you can play in society. You know, you don't have to be a passive consumer. You can be a provider. You can be an entrepreneur. You can be a lender. And that fundamentally is an empowering thing. You know, on peer-to-peer lending - so the default rate on peer-to-peer lending is now dropped below 0.4 percent. And you compare that to a traditional bank, which I think is around 3 to 4 percent. Credit cards around 7 to 8 percent how people default, and so, you know, when you look at the research it's why is that, you know? Why is this system of peer-to-peer lending, and what people say is I - I trust you more than a big bank, but I also feel a sense of accountability to another human being, another individual that I do not feel to a corporation.

(SOUNDBITE OF TED TALK)

BOTSMAN: It's only a matter of time before we have to perform a Facebook or Google-like search and see a complete picture of someone's behaviors in different contexts over time. And this will live in a some kind of reputation dashboard that will paint a picture of your reputation capital. Ultimately, when we get it right, reputation capital could create a massive positive disruption in who has power, trust and influence. A three-digit score - your traditional credit history that only 30 percent of us actually know what it is - will no longer be the determining factor in how much things cost, what we can access and, in many instances, limit what we can do in the world. Indeed, reputation is a currency that I believe will become more powerful than our credit history in the 21st-century.

RAZ: You know, the thing about collaborative consumption and the trust economy that kind of bothers me - I mean, I love it and I want to be part of it, but I kind of feel like it shuts people out as well if they're not willing to sort of give everything up off the bat. Like, Facebook to me is really scary. You know, they have so much information and every click is a data point, and every friend is a data point. And why should I trust that they're going to keep that information safe?

BOTSMAN: Yeah, I mean, this is something I raised in the TED Talk. It's who owns this data.

RAZ: Right.

BOTSMAN: Airbnb has data on how clean I am, whether I dropped the towels on the floor.

RAZ: Wow, so the owner is actually - can actually write about that and then they can compile that information and store it somewhere.

BOTSMAN: They do. Airbnb has all that data.

RAZ: Wow.

BOTSMAN: I mean, I'm not just saying this. Airbnb, I actually - I know the founders. I know that company really well and I trust them, but there's other companies where I'd think about - God, they could sell that data to XYZ. And it would really have implications that I'm not sure I'm comfortable with.

RAZ: But you argue in your TED Talk that despite all these privacy concerns, you still think that there's value in this idea of reputation and trust as currency.

BOTSMAN: Yeah, and, you know, if it makes people stop and think should I be trusted? And do I treat people well and do I behave well? It's difficult to argue that is a bad thing. I think, you know, a lot of trust has been destroyed in the world because we can hide behind things. And I think that's what's both empowering but incredibly frightening to people is the visibility around our behaviors and having to accept the consequences around that.

RAZ: Maybe we'll just all behave better.

BOTSMAN: (Laughter) Maybe. Maybe we'll behave better. Maybe we'll treat people better.

RAZ: Rachel Botsman - she's written a book about this. It's called "What's Mine Is Yours." You can see her entire talk at TED.NPR.org. Transcript provided by NPR, Copyright NPR.