America is at a turning point—and not just in terms of the political race unfolding this year.
Businesses are beginning to flex their muscles in new ways, outsmarting the government and positioning themselves as the defenders of the middle class and pioneers of the sharing economy. While lobbyists have long partnered with enterprise organizations to help push corporate agendas, not until technology’s rapid growth have these businesses been able to mobilize their users in such convincing ways.
Now, corporations like Uber and Airbnb not only provide their customers with new sources of income and money-saving options; they also give them a voice and protect their rights. And much of the middle class who has felt muffled during intense political conversations suddenly find themselves with allies who have deep pockets.
Brands like Uber and Airbnb, each of which carry valuations in the billions, have aligned themselves with the underdogs: Middle class Americans. What happens next is anyone’s guess.
Hitting the Campaign Trail with Uber and Airbnb
This past month, Airbnb raised roughly $8 million dollars to stamp out Proposition F—a law proposed in San Francisco that would cut the number of nights people could rent out rooms in their homes. Airbnb’s orchestrated political effort raised nearly eight times the amount of cash raised by the proposition’s backers.
According to Chris Lehane, a former Washington political advisor to Bill Clinton and Al Gore who now serves as Airbnb’s head of global policy and public affairs, much of the $8 million raised was spent mobilizing the company’s hosts and users. He positioned this effort as a victory for the middle class, as reported in The New York Times.
“Cities recognize where the world is going, right, they understand that you’re either going to go forward or you’re going to go backward,” Lehane said. “They understand that in a time of economic inequality, this is a question of whose side are you on: Do you want to be on the side of the middle class, or do you want to be opposed to the middle class?”
Over the past few years, tech giants like Airbnb and Uber have established themselves in thousands of communities before local regulators have figured out laws by which these organizations should operate. By the time community officials developed regulations for these businesses, the organizations had already amassed a market of passionate users more than willing to unionize and combat swaths of potential laws. And, upon defeating these propositions, these tech companies aren’t shy about flexing their muscles and firing back at lawmakers.
In the case of Proposition F in San Francisco, Airbnb held a news conference after the law was shut down, which also served as a stage on which Lehane issued warnings to other cities considering similar regulations. During the conference, Lehane announced Airbnb expects that it will have 100 “clubs” of home-sharers across the United States by the end of 2016. These “clubs” won’t be official unions, but they will mobilize whenever necessary to protect their rights and way of living. Airbnb is valued at $24 billion—higher than the hotel giant Marriott International—and it operates within 34,000 cities worldwide.
Uber, which also comes up against tough restrictions in metro areas, has followed a similar approach of aligning itself with the middle class and partnering with bold lobbyists in the nation. The business, which is valued at more than $50 billion, operates in more than 300 cities. David Plouffe, a former advisor to President Obama, serves as the company’s senior advisor and is a member of its board.
This past year, New York Mayor Bill de Blasio backed a proposal that would cap the number of Uber drivers on the road in Manhattan. The business fought back by altering its smartphone app with a new “de Blasio” feature that showed customers and drivers how hard it would be to hail a car under those new restrictions. As part of this campaign, Uber organized riders to send approximately 17,000 emails to City Hall, staged demonstrations across the city, ran TV attack ads featuring drivers, and unleashed an army of lobbyists.
Similar to Airbnb’s messaging, Uber’s Plouffe says, “Platforms like Uber are boosting the incomes of millions of American families. They’re helping people who are struggling to pay the bills, earn a little extra spending money, or transitioning between jobs.”
The saviors of the middle class: Both Airbnb and Uber are issuing convincing narratives to the public. What’s more, their political prowess and promises show no signs of slowing down anytime soon. Since 2012, Airbnb has spent approximately $226,000 on lobbying in the city of Los Angeles.
“A lot of it is paying for people’s time, it’s paying for people’s connections, it’s paying for people’s expertise in knowing who to talk to, how to talk to them, and when to approach them,” Jessica Levinson, the president of the LA City of Ethics Commission, told Southern California Public Radio.
While Airbnb and Uber have earned the unwavering respect of the middle class, not everyone is convinced the sharing model is good for the public.
Will this Be a Never-Ending Fight?
After the Proposition F flop, newly-elected Board of Supervisors member Aaron Peskin promised the Airbnb issue wouldn’t go away in San Francisco.
“I think Airbnb would be well served to negotiate a workable, enforceable compromise to curb the most egregious excesses that result in the loss of permanent, affordable rental housing stock,” he said. “Or this is likely to be a perennial issue at the ballot.”
However, Peskin may be on the losing side of this debate, especially as businesses like Airbnb get better at organizing around political efforts aimed at its services across the nation. In fact, these very attacks may actually help unite Airbnb users more than anything else.
According to Arun Sundararajan, an NYU business professor, “Uber creates a form of work for hundreds of thousands of people. Airbnb’s hundreds of thousands are leading better lives because they can supplement their income with their Airbnb revenues.”
Currently, Airbnb charges its hosts 3 percent per booking. Uber takes between 20 and 30 percent from a driver’s earnings. Because this additional income helps change the way people live their lives, Uber and Airbnb’s value becomes tangible among their customers.
Edward Walker, a UCLA sociology professor, says this is the reason why the companies’ lobbying efforts are so powerful. He says about Uber and Airbnb’s mobilized user base: “They’re not only real people, but real people who have an economic interest. In a classic political sense, groups with a more vested interest will be more passionate.”
This also minimizes the amount of money both companies need to raise for political action. With a few tweaks to their messaging, a few updates to their technology platforms, their army of supporters will immediately rise and defend what they’ve earned. That leaves the large profits each organization rakes in annually for greater investment in technology, people, and expansion.
DraftKings and FanDuel Are Following Suit
It’d be foolish to say that technology companies are gaining insurmountable political power on the basis of two examples, and until recently we had only two to explore. Enter: DraftKings and FanDuel.
This past week, New York’s chief legal officer declared that both fantasy sports site were fostering illegal gambling schemes and banned the two companies from accepting new players from the state. The two organizations fired back, signaling that neither would go down without a fight, Ad Age reports.
DraftKings, which recently raised $300 million in funding from investors like Fox Sports, Major League Baseball, the National Hockey League, the Madison Square Garden company, and more, issued a statement: “There is a process by which hasty and uninformed opinions can be challenged in a court of law, which would allow DraftKings to not have to cease operations in the state. We will pursue this fight to the fullest.”
FanDuel, which raised $275 million from investors such as private equity firm KKR & Co. LP, Google Capital, and venture arms of Time Warner Inc. and Comcast Corporation, countered the ruling by saying that its service was “a game of skills” while also “vowing to fight back with everything in [its] arsenal.”
First, let’s just take a second to review the companies that have invested in DraftKings and FanDuel: almost every major sports league in the country, Google, and massive media companies. In addition, FanDuel and DraftKings have put more than $260 million into the national TV ad market since January 2015, according to iSpot.tv. These companies have the monetary backing of some of the most powerful, most profitable businesses in the United States. They have excessive amounts of money, and access to mass media outlets. When it comes to war between State Government and a multi-billion dollar entertainment industry, who do you think will win?
And following in Uber and Airbnb’s footsteps, both technology organizations have begun to mobilize their hundreds of thousands of users in New York State, asking them to send emails to the city official and voicing their support for the games. More, FanDuel recently hired Steptoe & Johnson and has spent $20,000 on lobbying according to its October filing. DraftKings has hired Morgan, Lewis & Bockius and reported spending $10,000 on lobbying this past quarter.
Again, these organizations are spending minimally on lobbying politicians, while mobilizing their users to affect change in law.
Like the Uber and Airbnb cases, FanDuel and DraftKings have given Americans new ways to supplement their annual income, and the only thing people love more than new conveniences is the taste of easy money.
What Can We Learn from the Sharing Economy?
The Content Standard isn’t a political publication, and we also don’t normally talk about valuations or investments. So what makes these brands’ stories so interesting?
Today, we live in a world where new technologies rise so rapidly, effect change in our society, and win over customers’ loyalty by providing them with a service, community, and revenue. This style of business doesn’t seem to be going anywhere, either.
More sharing services are cropping up all over the country. In Boston alone, services like Bridj and Belle bring new conveniences to locals, and they’re likely to face their own unique challenges as they grow. What can businesses outside of this industry learn?
There is power in mobilizing your customers by focusing on their needs, desires, and lifestyle requirements. Then, take what you learn about your most loyal customers, and integrate that feedback into your product or service. By pivoting your offering to further support your audience, you can develop the level of loyalty being shown to organizations like Uber, Airbnb, DraftKings, and FanDuel.
As the saying goes, Uber is the biggest car company and it doesn’t own any cars. Airbnb is the biggest hospitality company and it doesn’t own any property. DraftKings and FanDuel are the biggest sports gaming sites, and they don’t broadcast any live events.
What about your company? How can you conjure up this same level of loyalty with the product, service, or brand you offer to customers?
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The post Tech Giants as Lobbyists: Politics Meets the Sharing Economy appeared first on The Content Standard by Skyword.
About the AuthorMore Content by Ted Karczewski