The Curionomist Podcasts | A Chat with AirBnB’s Mike Orgill

UPDATE: Here’s an article that interviews Mike, along with AirBnB’s India chief, on why millennials are looking for authentic experiences, and also on how AirBnB is dealing with regulatory barriers as well as the rise of opposition from hotel associations.

http://www.thehindubusinessline.com/companies/travellers-looking-for-authentic-experiences-are-creating-momentum/article9728822.ece

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My first experience with AirBnB was on a trip to Europe last year – couldn’t have afforded France if not for it, and got insider tips, driving cheats, and great eats because of it.  A year later, it was great to catch up with a top AirBnB official and chat about the platform. Mike Orgill, head of Public Policy for AirBnB Asia-Pacific, was in town for the Sri Lanka Economic Summit 2016 and we did this podcast on the sidelines of the event. We talked about AirBnB and its role in global travel, the public policy tensions the platform has to contend with, whether the sharing economy has led to the emergence of ‘crowd regulation’, and how AirBnB is growing in Sri Lanka. I last met him when he visited Colombo in his previous role at Google and it was a pleasure catching up with him again.

(Skip to the podcast here)

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ChariTea

ChariTea, a tea infused lemonade drink, served to us at a meeting at Social Impact Lab, Berlin. Even for a tea purist like me, this was deliciously refreshing. How can srilanka break out of the commodity price sensitive low value added tea rut and in to the rapidly growing flavoured tea and tea-mixed beverage market in Europe and elsewhere? It’ll have to have a “good” cause as well, to latch on to the increasingly ‘conscious consumer’

The Microeconomics of Uber’s ‘Surge Pricing’

It’s New Years’ Eve. You’ve had a blast and you’ve partied till the wee hours of the new year. But then the time comes to figure out how to get home. You’re probably going to order a taxi. Along with hundreds of others. For the first time on NYE in Colombo, you might be checking for taxi availability on the apps of the new sharing economy services – PickMe, Uber, and Hire1. But if you opened the Uber app during around 1am to 4.30am, you’d probably see a screen like this one below. Ouch. Prices are going to be higher than normal – ‘surge pricing’ is in force. (Customers in Miami saw prices surge up to 9.9 times on NYE!)

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Sri Lanka is not alone in this. Uber has seen this spike in cities around the world. This graphic from Uber shows what the typical spike in demand looks like on NYE globally, based on five years of data.

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I found Uber’s ‘surge pricing’ really intriguing from a microeconomics point of view and thought about exploring it a little further, including wondering “how can I model it on demand and supply curves?”.

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Robotic Cleaning Help

These robotic vacuum cleaners seem to be growing in popularity, particularly in East and South East Asia. Spotted these displayed in the electronics and home section of a mall in Bangkok. The most popular seem to be the Samsung and the LG ones, pictured here. 

  
Dyson, the legendary vacuum manufacturer, is reportedly coming up with its own robotic cleaner – 360 Eye – at $1,200 a pop. 

Robotic cleaners, like other home automation devices, are now a growing segment of the consumer tech market.How long before you sit on the couch and watch a robotic vacuum clean around the house?

Conspicuous Chinese Consumers

A recent visit to France was quite revealing in the context of something I had written last year. While at IPS, I authored the Policy Perspectives chapter of the annual State of the Economy (SOE) report a couple of times and in last year’s edition on ‘Rising Asia‘ I had written about consumption in Asia and by Asians. In it, I highlighted that,

The rise in wealth and affluence in Asia is startling, but not surprising given the rapid growth seen there. Industry estimates suggest that Chinese consumers lap up 10% of worldwide luxury sales and East Asian shoppers account for between one-fourth and half of all purchases at designer stores in Europe.

 

During the recent France visit, I saw this in action and it was both revealing and a bit overwhelming.  Chinese tourists were everywhere. Hundreds and hundreds of them. And they were shopping in designer and luxury stores – handbags, shoes, pens, chocolates, watches – like there was no tomorrow.

 

Out of curiosity (rather than to actually shop!) I spent a lot of time observing the stores. In every designer store in Paris, at least one in every three people was Chinese. Despite much being said about India’s rising consumption, middle class, and brand consciousness there were hardly any Indians, let alone South Asians.

 

At nearly every Louis Vuitton, Chanel, Burberry, Longchamps, Coach, Chloe, Mont Blanc store there were long queues to get in to the store. And in these queues I could count at least 7 in every 10 were Chinese and another 2 from other East and South East Asian origin. There would be security and a ‘velvet rope’ outside the store to let in a limited number of people at any one time. Some LV stores have introduced a policy of limiting the number of purchases per tourist (blatantly aimed at Chinese tourist shoppers!). So it’s not unusual to see Chinese women offering money to locals or to others – like my wife and I, who were looking around but not buying – to buy stuff for them. Nearly all of them were buying designer handbags, and particularly the items that had the logo (“LV” “Coach”) displayed very conspicuously.

 

What was also quite revealing was that at some of the higher-end malls like Carousel Louvre, almost all the designer outlets have several Chinese staff – a clever move by these stores given that the majority of shoppers were from China. I saw this in Geneva, Switzerland as well, particularly in the watch and chocolate stores.

 

For these Chinese (and East Asian in general) consumers, it is increasingly about aspiring to the Western lifestyle, which they can increasingly well afford. It is also that they were keen to purchase items that would conspicuously showcase the designer brand, and through it, conspicuously showcase their affluence. But I think it’s also about their search for authenticity – there’s such a huge influx of counterfeit goods in Chinese markets that they are desperate to buy the ‘real thing’ and at source – for instance, buying a Longchamps bag from a Longchamps store in its city of origin, Paris.

 

Chinese staff and shoppers at a designer store, Carousel Louvre mall, Paris. September 2015. Image by author.

Shoppers queue outside Louis Vuitton store, Galeries Lafayette, Paris. September 2015. Image by author.

Chinese shoppers at Chloe store, Carousel Louvre mall, Paris. October 2015. Image by author.

Chinese sales assistant at Coach store, Galeries Lafayette, Paris. September 2015. Image by author.

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Queues outside Chanel store, Galeries Lafayette, Paris. October 2015. Image by author.

 

Improving Jeep Driver Behaviour at Yala National Park: Four Ideas from Regulatory Economics, Big Data and Behavioural Science

63e724042e7e3f79425fb9a3b3ba51e8_LBy now, we have all heard about the sad hit-and-run killing of a female leopard in Yala last week. It is yet another instance of reckless driving by safari jeep drivers inside the national park, and another nail in the coffin of a wonderful park that is increasingly becoming too crowded to enjoy. In 2012, BBC’s correspondent in Sri Lanka Charles Haviland experienced this first hand, and pointed to “anarchic behaviour by tourists and drivers” in his BBC article ‘Speeding and danger in Sri Lanka’s safari parks’. In June this year, the authorities announced a blocking of cell phone coverage inside the park, to prevent drivers from speeding around the park after being tipped off about whereabouts of leopards and other wildlife by other drivers.

Having being a regular visitor to Yala, I now avoid it, and prefer to go to the less crowded Wilpattu National Park instead, where drivers seem to be better behaved and the park is less congested. The scenes of the dead Yala female leopard were very saddening and I couldn’t help but wonder why not enough is being done about it. Explanations include “oh the jeep drivers are a mafia, none can control them; “they are all linked to powerful politicians so nothing can be changed”; “it’s too late now…”, and so on. To be sure, money is not a problem to introducing new measures. Yala is a very busy, but also a very rich park; it earned over Rs. 274 million in park entrance fees alone in 2013.

Here are some ideas on what can be done to tackle the problem, by influencing jeep driver incentives and thus, their behaviour. Ideas 1 and 2 draw from regulatory economics principles, 3 from big data, and 4 from behavioural science.

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Clinical Look, Clever Tactic

I’m posting this as I walk around the duty-free shops at Dubai airport, killing time during a long layover.

Have you noticed how sales assistants at cosmetic and skincare product stores like Clinique or Kiehl’s in airport duty-free wear white coats that are identical to those worn in laboratories (and also by pharmacists)? It’s a very clever strategy of subliminal messaging by these brands. IMG_2960What it probably aims to do is to tap into our subconscience and form an impression in the mind that “these products have been carefully researched in a lab, clinically tested and have medical backing” . It’s not really misleading because these brands do go through a lot of rigorous R&D and clinically-tailoring products to different skin types and problems. Yet to have the sales reps wear the white gowns is a stretch. Surely none of them would be experts in the science of the products, but experts at explaining the benefits to potential customers. But a clever strategy nevertheless…

Do you feel more confident and trusting of these products and their promise when you see the person advising and selling you the product wearing the white lab/clinical coats?

The Curionomist Podcasts | #3: Tea and Hoppers – Fixed Prices, Perverse Incentives

In my latest podcast, I talk about tea and hoppers; two of my favourite food items, and indeed of most Sri Lankans. But the government now dictates how much shops can charge me for these – and its a pretty fantastic, lower price than ever before – milk tea at Rs 25, plain tea at Rs. 10, and plain hoppers at Rs. 10. As a consumer, I should be pretty happy right? “Not if it’s causing unintended consequences!”, the economist inside me is saying.

In this article titled ‘The Problems of Price Controls‘, The Cato Institute – a prominent libertarian think tank in the US, asserts that,

“price controls reduce quality, create black markets, and stimulate costly rationing”.

We are seeing this play out right here in Sri Lanka. Last month, we saw one of the most intrusive and bizarre examples of administered prices (or price controls) being introduced by a government in recent times. This was on tea, and hoppers, served anywhere in the country, to be enforced by the Consumer Affairs Authority. What this has done is cause perverse incentives among those making and selling these items. Using poorer quality ingredients, shaving off quantity, skimping on the add-ons. Government-imposed fixed prices not only completely violates basic economic freedoms enjoyed by firms – like the freedom (and ability) to use price to signal quality or differentiation – but it is also notoriously difficult for a government to enforce fully and fairly. We must do more to make policymakers and bureaucrats understand that badly thought out public policies cause perverse incentives by economic agents, and this helps nobody. Listen to the podcast by clicking play below, or visit it on Soundcloud Image courtesy http://www.adventure365.me