The Curionomist Podcasts | #4: A Chat with AirBnB’s Mike Orgill

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)

Growth of AirBnB

The platform now has over 1.7 million homes in 34,000 cities and 191 countries. In fact, they are the first American travel brand to enter Cuba after relations were normalised recently, and they are not in only a handful of countries like North Korea and Syria. On a peak night last August around 1 million people across 180 countries stayed in an AirBnB property. Just this week, the company filed papers in Delaware state to raise US$ 850 million on a US$ 30 billion valuation. This would take AirBnB’s equity raise up to US$ 3.2 billion (yet, still only a fraction of Uber’s US$ 68 million valuation).

Regulatory shift

While staying with AirBnB hosts in different cities, I couldn’t help but think about how regulators must be utterly confused as to how to tackle this growing phenomenon. Unlike in traditional hotel regulation, where a country’s tourism authority would set standards and benchmark properties against it before rating them (1 to 5 stars, for instance), with AirBnB the regulators and ratings are by the community itself. It’s a complete shift in how regulation occurs.

The flat is you-clean, but is it me-clean?

I guess a big difference to contend with is that while community regulation can work – with so many people rating and scoring hosts and travellers on various aspects of the stay – each one of us has different standards – particularly on things like cleanliness. While in a traditional hotel model, a room’s cleanliness would be rated against a benchmark set by a single authority, and that would be applied more or less equally across all other hotels with that start-class regulated by that authority. Think about it – do all your friends have the same level of cleanliness or standards of hygiene that you do?

What do we call it?

With AirBnB there isn’t a single authority or regulator. It is large distributed groups of people. There are tens of thousands of regulators, as it were. It has blurred the lines between the users of a platform and regulators of that platform’s product/service offering. Economists are yet to figure out what to call this. I would suggest one of the following – ‘Distributed Regulation’, ‘Crowd Regulation’, ‘Community Regulation’.

Tourism tensions?

Whatever it is called, the fact remains that AirBnB is coming up against tourism incumbents and also confusing traditional regulators. How do you even begin to regulate something that is just an online platform? Something that simply connect micro-entrepreneurs offering a place to stay, with buyers (travellers). An economic service that is blurring the lines between personal and professional in the provision of commercial hospitality services. How do you even begin to think about taxes? In a speech at a World Economic Forum event, AirBnB co-founder welcomed working with regulators. “As we grow we want to partner with cities. The bigger we get the more regulators say Airbnb are partners to us […] the more people learn about airbnb, the more they love us […] we want to be regulated. To regulate AirBnB is to recognise AirBnB”.

I believe that it is in the interests of tourism agencies, like the Sri Lanka Tourism Development Authority, to take genuine interest, to not attempt to squash it or fumble with regulation of it; rather, to foster it, work with it, and use it to promote more visitors to the country.

Listen to the podcast below (or here).

‘Intrapreneurs’ and human-centred innovation

They call themselves ‘The Berlin Consulting Dudes’, and they are making waves in how German businesses engage with people in the process of innovation. The focus of this Berlin-based startup, Intraprenör, is on helping companies do ‘human-centred innovation’.I was fortunate to catch up with one of the company’s co-founders, Gregor Kalchthaler. He says they have found a small but growing niche. “Old economy businesses want to know how to become new economy businesses. They are struggling to do it alone, and they come to startups like us, to help them think differently”. We both agreed that most businesses looking at innovation tend to focus on the tech angle, but do little on the human or people angle. Given that innovation is not just about devices and tech, but also necessarily must engage people, the human-centered approach is gaining a lot of traction.

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Gregor gave me an example of one of their clients, a budget supermarket chain that was focussing on sustainability and wanted to convey that to its customers. Unlike premium stores who’s customers may understand ‘sustainability’ and value it, a budget store doesn’t have that luxury. So instead of trying to push sustainability down the throats of the customer in a clinical way – the only way they knew how, the company hired Intraprenör. The guys at Intraprenör immediately took a human-centred approach to the challenge. They followed some of the customers of the budget supermarket store, engaged with them, embedded themselves in their daily lives for a few days. They explored their motivations, attitudes, aspirations, behaviour – to understand what makes them tick . They didn’t just call a focus group and ask a set of questions – in the usual market research way. As a result they found a clever and relatable way to explain the fair trade and sustainability approaches of the supermarket chain without using those very words.

They work very closely to build a team in a client company that can become champions for innovation inside the organisation – thus creating “intrapreneurs” within the firm to drive innovation continuously.

I also found Intraprenör’s approach to how they work and organise the business very interesting. Gregor tells me that they recently shifted to a 4-day work week Why? “Most of our clients can’t take decisions after 1pm on Friday, so why would we work? Instead, we give one day to work for our team to work on something for themselves and maybe bring that to the business”. They also don’t have dedicated finance or other support teams. Each founder works on each assignment from end-to end, from drawing up the contracts to invoicing. “That instils a sense of ownership for each client. Each person is very independent from one another.”

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The facility used to be a massive coin factory, and is now a hub for creativity.

As we wrapped up our meeting and I walked out, I was fascinated by the space that Intraprenör occupies. And as it turns out, the space has a remarkable story. The entire building complex used to be a massive coin factory from 1930s to 2003. It was then suddenly abandoned a few years after the Euro was minted here. The visionary Berlin city government decided that they didn’t want to give it to the highest investor but to the best concept. The legendary supporter of the Berlin startup ecosystem, realtor Andreas Kruger (who connected me to Gregor and this meeting) helped push the project, and now, the facility is home to several startups and creative economy businesses.

Which Institutions Have The Most Sci & Eng Researchers in Sri Lanka?

For some innovation eco-system work I have been doing, I came across some startling numbers that give us a sense of the narrow pool of researchers in science and engineering subjects. According to data available on the new Sri Lanka Innovation Dashboard, an initiative by COSTI, University of Moratuwa leads the way as the leading institution with science and engineering researchers, University Peradeniya is a distant second, and the other universities trail behind.

Meanwhile, public R&D institutions (PRIs) like the NERD-Centre (located in the Ekala Industrial Zone) ranks quite high. The Industrial Technology Institute, which is a key focal point for private sector industries seeking S&T solutions to their problems, ranks surprisingly low. Meanwhile, I need to find out by SLINTEC (Sri Lanka Institute of Nanotechnology) doesn’t come up in the top 10, given there success at attracting many nanotech scientists into their PPP-structured outfit.

What I’m probably most surprised about, though, is that there are only 4 universities in this top 10, even though universities probably get much more funding, overall, than these other institutions.

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Innovation as Interaction

In the course of some innovation policy work that I’ve been doing over the past year, I’ve noticed that the public policy conversations around innovation are dominated by a focus on knowledge creation, so stuff like R&D spend, putting money into government labs, research institutes, etc. Thercsm_Casti-interactions_52b6f2d9e5e is much less focus on the interactions between knowledge creators and industry actors/entrepreneurs. For the latter, we need to consider things like firm level adoption of technology, firm level readiness, access to technology from within or outside the country, technology commercialisation, technology transfer/transmission, and the overall ability for the country to be innovative, that goes beyond just knowledge creation and innovation inputs and outputs. This conceptual issue around innovation policy is important to consider, and has implications for how government’s support innovation. We seriously need to shift the debate beyond the narrow focus on knowledge creation alone, and towards fostering dynamic interaction among different players in the innovation eco0system.

Can a robot create IP and own it?

Sounds like a silly question right? But a new paper by WIPO (World Intellectual Property Organisation) on ‘Robotics, innovation and intellectual property’ argues that it is one of the fundamental questions thrown up by the emergence of robotics innovation. As the paper notes,

A question that cannot yet be considered settled law in any nation, but for which IP practitioners around the globe may soon face, is whether IP can be created by a robot, and if so, who owns IP created by a robot?

While there’s a lot of work out there on the Intellectual Property (IP) issues related to biotech, nanotech, pharma, etc., this is probably the first report that looks at robotics innovation and IP. I met one of the co-authors of the paper, Sacha, during a recent visit to WIPO last month, and found him to be an extremely interesting economist looking at innovation – there aren’t many of them around yet.

 In other insights contained in the report, something that jumps out strongly is the extent to which East Asian countries are leading the robotics space. Just look at the Top 10 patent filers in robotics globally – ALL are from East Asia – predominantly China. If you exclude China, still, 8 out of 10 institutions are from East Asia (the other two are German). Strikingly, of those 8, 6 are from South Korea.

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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?

Five Ways to Enrich Sri Lanka’s Tourism Experience

(This article originally appears in the Daily Mirror Business of 10th September)

How can Sri Lanka stand out as a tourism destination? That’s a question that continues to challenge tourism development officials and hospitality industry professionals alike. The country faces a twin challenge of meeting ambitious targets (the latest one of 4 million tourists by 2020) while also attracting higher-end tourists. It’s certainly not a pipe dream. Sri Lanka boasts of a phenomenal diversity of attractions, as well as a ‘compact’ visit – emerald tea fields in the morning and picturesque beaches by afternoon. Yet, while we market this aspect, we may be missing out on small elements of added value at tourism sights that may not seem priorities but could enrich the overall tourism experience and the memory of the visit. This also influences the quality of tourists we attract – moving towards more ‘thoughtful’ tourists. Here are some ideas to consider.

  1. Beyond Guides and Pamphlets

 

In many countries, each attraction contains a myriad of value added features – photography storyboards to tell the history of the attraction, free talks by local experts on site, video documentaries in small auditoriums at visitor centers, etc. These add value to the tourist’s experience and could be important revenue earners as well. For example, the new Sigiriya Visitor Center funded by the Japanese government could include a small auditorium that screens short narrated films on the history of the rock, the frescoes, the engineering behind the fountain networks, etc., at regular intervals throughout the day. Drone footage of the top of rock from the sky can be combined with virtual reality headsets to give tourists a unique perspective on what the rock looks like today versus artists impressions of the palace in its heyday. At other sites in the cultural triangle, videos of computer-generated recreations of the typical life of Sri Lankans at that time can immerse tourists into that era. Architect Ashley De Vos has an interesting video, which, through computer animations, has attempted to recreate the day in the life of monks at the Jethavanarama Monestary. More of these would help tourists immerse themselves into the culture and get a glimpse of historic Sri Lanka, today.

The National Heritage Trust has series of excellent talks on particular aspects of Sri Lankan history and short clips of these that are relevant to the tourist sites can be screened. Photography storyboards that tell stories of archeological discovery and the stories of groundbreaking discoveries by the country’s leading archeologists could add an another dimension to the educational experience of a tourist.

  1. Engaging Tourists in Sustainability

 

Sri Lanka has made strong steps in positioning herself as a ‘greener’ tourism destination. With international travelers becoming ever more climate conscious, which is changing the way they travel and what they choose to do on holiday, Sri Lanka must leverage on this. Being a ‘tourism earth lung’ means everything from making our national carrier operate in a more environmentally friendly way, hotels getting global certifications and awards, and consciousness in how attractions are promoted. But there is more to it. Things that seem small, but can potentially have a strong impact. Take national parks visits for instance. In countries like Alaska, if you go on a park round in Denali National Park each traveler in the vehicle is asked to get involved in the conservation process. The packed-lunch box is made up of different parts – some are cardboard, others are plastic (forks), metal (soda cans), etc. On the last 20 minutes of the journey, on the way to the park exit, the tour guide passes along different bags for each, announces clear yet polite instructions on what to do, and everyone gets involved in separating the items. Its not just good practice, but gives a rewarding feeling to the tourist that he/she did something positive to help the environment and not be a burden. We can introduce this in popular parks like Yala, Wilpattu and Minneriya. Nearby hotels that provide breakfast snack boxes can be asked to teach tourists about recycling their rubbish. This must be accompanied with clearly advertised recycling bins at the park entrance. We have seen how this works effectively in parks such as Horton Plains, where park rangers check each and every bag of people entering the reservation, and confiscate anything made out plastic. A basic tenet of economic is that behavior can be influenced with the right incentives. Strict fines imposed for littering, and rewards like a sticker/badge to impart a ‘feel good factor’, could do the trick.

  1. Better Storytelling

 

Many countries around the world that you visit manage to tell stories of their cities and their cultures in fascinating ways. Not just the usual text that you can read up in a history book – but clever storytelling, that’s memorable. When passing through towns on a bus in a foreign country, the driver guide will make it a point to tell a little story about the area, highlight a small anecdote of interesting trivia, making a long and boring journey informative and memorable. Even the smallest story, that may seem insignificant to a local, can be fascinating to a foreign tourist. Whether it’s historical fact or fanciful folklore, tourists love hearing these stories and it enriches the tourists’ memory of the visit. The trains on popular tourist routes should have a special tourist carriage (where a small premium is charged on the ticket) that is fitted with a PA system where an onboard guide provides a free narration as the journey progresses. This will be especially useful on the picturesque up-country train routes. Whether its pointing to a plant growing on the sides of the tracks and explaining its traditional medicinal and healing properties, or telling the story of the struggle of building the bridges on the hill-country route, or a few fun facts about tea as the train passes tea estates, or even talking about local food delicacies that a certain region is famous for as the train passes that area. These all add value to the tourists experience.

  1. Smarter Souvenirs by SMEs

 

Many visitors who come to Sri Lanka no doubt love to buy traditional crafts from Lakpahana and other craft outlets. But around the world, small entrepreneurs thrive on selling unique, new, and functional country-themed souvenirs. How about iPad and mobile phone covers with Sri Lankan design motifs? Stickers, fridge magnets, key tags and other smaller items with pop art interpretations of traditional Sri Lankan patterns? This can be a great new way of linking in SMEs into the tourism value chain. Interestingly, a new Sri Lankan fashion accessory start-up called ‘Kantala Brands’ has begun bringing a traditional Kandyan-era art form into contemporary fashion. Made with the hana-fibre, the Kantala beach bags, pouches, etc., are woven by artisans whose skills date back to the 1700s. This is an example of bringing heritage items to current relevance. We must also focus on promoting Ceylon Cinnamon to bring it to the same level of recognition as Ceylon Tea, and tourists can play a strong role in that. With the success in registering the ‘Pure Ceylon Cinnamon’ brand, the world is beginning to become curious as to what real cinnamon is (as opposed to Cassia) and where it comes from. Many years ago I recall even seeing a local newspaper in an American town mentioning Ceylon cinnamon as being “a premium must have product in a kitchen’s spice cabinet”. Novel ways of marketing cinnamon, novel products using cinnamon (from barks to oils), gourmet and ‘tester’ cinnamon packs in gift shops at tourist sites are crucial. Tourists who buy these, take it home, use them, gift them to friends and relatives can create thousands of brand impressions for Ceylon Cinnamon globally.

  1. Making Everyone a Guide

Finally, it’s important to have more and more tourism stakeholders genuinely engaged in promoting the country and its unique culture, history, and bio-diversity. But for this all tourism actors need to be armed with more information on everything. For example, Anuradhapura history talk tour guides should know about wildlife in the surrounding areas, and Yala wildlife tour guides should know about history of the southern region. A pilot on a Helitours flight to Jaffna should be able to give a small insight into the North’s unique topography, while flying over the peninsula. In Alaska, for instance, whether it was a city guide or a naturalist, everyone had a very eclectic knowledge of the country – why some rivers are muddy and some are clear (due to glacial silt), nifty pieces of information on the native societies, and so on. So every talk would be memorable and every aspect of the journey would be insightful.

For many tourists, touring and visiting abroad is part of an interest in getting exposed to, and educated about, new and different places, cultures, and societies. Let’s add value to their experience so they really go back home thinking of Sri Lanka as Asia’s miracle island.

This is the 23rd article in the ‘Smart Future’ column that advances ideas on competitiveness, innovation, and economic reforms.

Three Forces Reshaping the Global Economic Order

In the midst of tumultuous global markets, a migrant crisis in Europe on top of their economic weaknesses, and continued bloody conflicts in the Middle East, the global economic order continues to be shaped and reshaped every day. Attending the recent Global Shapers Annual Meeting of the World Economic Forum (WEF) gave a unique insight into the forces shaping the contemporary global economy, with exciting discussions with 450 young leaders from over 150 countries, complemented by the insights of the WEF’s Founder Prof. Klaus Schwab. Three forces, in particular, are likely to influence the future trajectory of the world.

  1. Era of ‘Grand Deals’ Over

There is growing recognition that the global order set up after World War 2 does not function as well as it should anymore. While some may feel it is a cynical view, its becoming increasingly clear that the era of grand global deal-making – whether it is on trade liberalization (evidenced by the stalling of the WTO Doha Round) or cutting CO2 emissions (evidenced by troubles in climate change agreements) – seems to be over. Particularly with regard to trade, we are seeing more and more bilateral, regional, and mega-regional trade deals being forged, in the absence of serious progress on multilateral ones. Mega-regional trade deals like the Trans-Pacific Partnership (TPP) between the US and Asia, the Trans-Atlantic Trade and Investment Partnership (TTIP) between USA and Europe, and the Regional Comprehensive Economic Partnership (RCEP) within Asia, have come to dominate the global trade agenda in recent years.

Simultaneously, we are seeing new global financial institutions emerging, challenging the post-WW2 order of Bretton Woods institutions. The New Development Bank forged by the BRICS economies of Brazil, Russia, India, China and South Africa (nicknamed ‘The BRICS Bank’) and the Asian Infrastructure Investment Bank (AIIB) launched by China and joined by the majority of countries in the West and East, are evidence of the rebalance of economic might and the challenge to the previous global order that governed international finance and development under the World Bank and IMF.

  1. New Industrial Revolution

Another fast-evolving force, which Prof. Schwab especially pointed to, is “the fight between brains and artificial intelligence and the fight between robots and humans”. The WEF, and Schwab in particular, has written widely on this subject. Of course, this issue may seem years away for Sri Lanka, but we cannot ignore the fact that this phenomenon will completely change the structures of global production, as we know it today. This ‘New Machine Age’ or ‘Fourth Industrial Revolution’ will have profound effects on the competitiveness of economies, on the functioning of society, and on the lives of individuals. One major way in which this will affect individuals is through education, or the lack thereof. Without a focus on education that gears people to take advantage of this new economy, we risk this new industrial age being deeply polarizing across skill and income groups, driving new wedges of inequality and injustice in society. All countries – especially developing countries – need to build education systems that foster agility, versatility, and continuous learning.

  1. Globalizing and Polarizing

Another important realization is that, as Prof. Schwab eloquently put it, “we are living in a world that is globalizing as well as polarizing at the same time”. The proliferation of global connections and information, through technology and social media, at the swipe of a screen or the click of a mouse has meant that we are now more globalized than ever before. Facebook and Google allowed friends of Nepali earthquake victims from another continent to check on whether they were safe. A young inventor from anywhere in the world can now raise money for his invention via a crowd-funded platform online. A protestor in a small town can broadcast about police brutality to an audience of millions, instantly. A consumer in a remote town can buy a product from a mall a million miles away. Yet, amidst this globalization has been an alarming polarization of people, across lines of ethnicity, religion, wealth, political ideology and other divides. And increasingly these are becoming more violent than before, and they are having a knock-on effect on the global economy. Global institutions, global agreements, and traditional power structures seem to be struggling to keep up, to mediate and mitigate these.

Future Outlook

Many of the young people participating in the WEF meeting collectively realized that the world we are now living in is completely transforming itself and we are not fully ready. Political power lines are being redrawn. Old economic structures are being deconstructed and reshaped. Technology is both empowering as well as marginalizing. The importance of young people having a seat at decision-making tables is clear, yet the extent of influence is not. The outlook sounds rather challenging, but it should be seen as a call to action, especially for young people who will inherit this new economy. It is also a warning for countries like Sri Lanka to not lose slight of the changes going on rapidly around us, reshaping the world as we know it; even as the domestic agenda often takes up most of our attention.

This is the 22nd article in the ‘Smart Future’ column that advances ideas on competitiveness, innovation, and economic reforms.