February 25, 2019 (1246 words)
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Analysing the dubious business model of a real-life startup, Cobo: a 'two-sided marketplace for working out of homes during the day'.
Tags: housing, startups
This post is day 56 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.
One of the things I’m trying to accomplish with this blog - and I guess with my writing in general, especially on tech - is to illuminate the downsides of capitalism, through investigating aspects of it that are usually overlooked. When you’re drowning in the ocean of capitalist realism, the various manifestations of the logic of capital feel like the water that surrounds you: just background noise, hard to isolate as something worthy of criticism.
My goal, then, is precisely this isolation: drawing a border around things that seem natural, in order to call them into question - and, in the process, uncover their relation to larger problems with our socioeconomic order. Sometimes that means looking more closely at companies (and especially tech startups) that seem innocuous, or even good, in order to reveal the darker problems lurking underneath. Beneath the facade of a well-designed website, featuring a tasteful colour palette, stock photos with just the right amount of racial diversity, and pretty headings (#4c5569, Montserrat), there’s often a business model that is flawed in some fundamental way.
My key problem with most tech startups could be boiled down to this: as mostly apolitical organisations that are limited to the realm of the market by design, they are constrained to operating within the current political terrain. And creating a successful startup in the present neoliberal environment requires absorbing a particular market logic, one in which the prerogative of the corporation’s need to grow comes ahead of the interests of the human beings who are actually affected by the startup’s growth. The result is that there are major hidden costs, costs that are never fully captured within the reductive model by which startups navigate.
When the startup is small, it’s easy to overlook any potential negative externalities. But even when the company gets big, and the spillover effects become apparent, those who have absorbed the dominant economic ideology won’t even see the negative externalities as such. The CEO of a gig economy company probably sincerely believes that they’re doing a good thing for the world - they’re creating jobs, for goodness sake! Providing people with income! That the workers feel overworked, underpaid, and helpless in the face of an algorithm that slowly supercedes their own agency is presumably not seen as a problem; it’s just the way things are. If these workers - who, let’s not forget, are the entire reason the company makes any money - wanted control over their lives, they should have learned to code, or had the foresight to be born to a rich family.
All this to say that even tiny startups with mostly benign-sounding business models can be worthy of criticism. Today’s seed-stage startups can sprout into next decade’s tech giants, after all. And the principles that drive their messaging can be emblematic of deeper, and more troubling, tendencies within capitalism.
A few days ago, I was shown an ad for Cobo, a new San Francisco-based startup that seems to be positioning itself as Airbnb, but for finding a place to work:
Cobo, “a trusted marketplace for people to find and list home-based coworking opportunities” - i.e., paying a stranger to hang out at their house and paying a tax to some random SF tech startup for the privilege.
Now, there are actually quite a few startups that aim to solve the problem of finding a place to work. Cobo’s business model is different in that it actually mimics the Airbnb model of renting out your home.
That means it’s not directly competing with WeWork, which is the dominant player in the coworking space, as the latter has been actually buying up real estate to turn into tech startup-friendly coworking spaces. (WeWork, recently buoyed up to a valuation of $42 billion, has way too much money on its hands, mostly courtesy of Softbank’s astronomical slush fund reserved for throwing at unnecessary tech companies. They even tried to buy Redstone Labor Temple in San Francisco; I’m sure someone at WeWork cackled at the idea of this historic epicentre of labour organising in SF being literally subsumed by capital.)
It’s also a slightly different model from Breather, a Montreal-based startup that has raised over $100 million to connect unused meeting room inventory (in hotels, offices, etc) to the self-important professionals who need them. Unlike WeWork or Breather, both of which feel very corporate and profit-driven at this point, and similar to Airbnb, Cobo can claim to be genuinely about connecting people - about building community. They’re helping people pay rent, while helping freelancers and remote workers to find cheap and comfortable places to work where they’re around other people.
I’m really confused about what it means to “connect people and spaces, people and people”, and how they’re helping local businesses to “thrive”.
You’ve probably guessed that this is the part where I explain why their business model is bad, actually. Not necessarily through any fault of the founders - one minor theme that’s emerged in my blog posts is that you can’t fully blame the founders who launch startups like this, as they’re working within the constraints of a larger system (i.e., startup culture) that imposes certain constraints even as it provides opportunities. There’s a reason most startups concentrate on finding local maxima within the present neoliberal hellscape - what VC is going to fund a startup that challenges the deep-rooted tenets of the very economic system that makes their profession possible, even if that system is itself a constraint on achieving the startup’s original goal? And if you’re trying to do something ambitious that needs money these days, how are you going to get the money and credibility you need without branding it as a tech startup?
No.
Ultimately, the problems that Cobo is trying to solve all stem from fundamental issues with our economic system - issues that cannot be solved through a tech startup, even one that appropriates radical political terms like “revolutionary”. Housing could be distributed in a much more efficient way, without overreliance on a market mechanism that leaves some with a fleet of McMansions in five different cities, while others must rent their place out to random freelancers in order to afford rent (not to mention those who literally don’t even have a home). Meanwhile, public spaces could be vastly expanded, and designed to accommodate people who want to work around other people without having to spend tons of money on coffee.
The people who build and fund apps like this are doing so because it’s easy, in the current environment. They’re doing the rational thing. Challenging neoliberalism is hard, whereas playing by its rules is rewarding - that’s kind of the whole point of a hegemonic system.
That doesn’t make it right, though. Startups that seek to profit from the inefficiencies of the status quo, rather than abolishing those inefficiencies at the root, are little more than parasites, gorging on the shitty system we live under. (I probably overuse the term “monetising the rot”, but it’s such an apt term here.)
And even if you don’t blame individuals within the system for the state of the system, it doesn’t mean that the system is good. It does, however, mean that we shouldn’t expect those individuals to save us.