Airbnb and The Myth of the Black Box Technology Company

Every subsection of society has its myths. Social groups need unifying beliefs that often are designed to shield its members from harsh realities. On the political stage we are currently experiencing what bad things can happen when myths (the Tea Party’s beliefs in how government should work) run wild.

The big myth of the tech industry is that there is such a thing as a black box technology company, one that doesn’t have to deal with customers — people — directly. The technology will handle that, says the myth. Everything is self-service. No need to handle stupid questions and annoying phone calls. No need to sell, because people will find you on Google and then just buy.

Tech startup founders (who are often introverts and don’t like to deal with people that much) and VCs love this idea: The perfectly scalable company, designed around algorithms and websites and network effects, not depending on icky personal interaction and unpredictable human behavior. No need to hire a lot of service agents and salespeople, we just need a few super smart engineers. And customers are just data points swimming through the sales funnel.

The poster child for this myth is of course Google. Some people actually still believe that Google makes all its money from a pure self-service model. Funnily enough, Google seems to believe this myth itself and treats customer service — at least for the unwashed masses — as an unnecessary distraction, to be avoided if possible. Even though, according to some sources, at least half of Google’s employees work in sales and service (hidden away in the lesser buildings on campus with strongly reduced perks), Google still projects an image of a pure technology company.

There’s of course nothing wrong with trying to achieve as much self-service as possible. Customer service is expensive. The terrible quality of the service that most companies provide is not due to their evil nature, but to the fact that customers want to pay less and less, which leaves less money for good service.

But the tech industry has an aversion against customer service that goes beyond this economic aspect. The latest case in point is Airbnb’s “Ransackgate”. The apartment of a customer was completely destroyed by a renter that was referred by Airbnb. According to the customer’s description, Airbnb was somewhat slow to react to this terrible situation, and even went into adversarial mode when the customer blogged about her experience. A co-founder explained to the customer that Airbnb was currently raising money and could suffer from this negative publicity, so could she please blog something positive? Now even the respected Paul Graham, one of Airbnb’s investors, suggests online that the customer is probably lying.

This just shows how far removed the tech elite is from the reality of normal people. When your apartment gets destroyed, you’re not happy being treated with the normal standardized customer service process (“Please include your ticket number…”). It’s a destroyed apartment, a traumatic experience, not a browser compatiblity issue.

It’s pretty telling that Airbnb’s young founders and even its senior investors (who really should act as the adult supervision in such cases) don’t recognize why this could be a problem that resonates emotionally with many people and therefore needs the unconditional attention of the company’s leadership. Oh, a customer has a problem? Yuck, it’s emotionally charged. Let’s just wait and it might go away.

Customer service is more than just necessary, it can be a fundamental differentiator in a crowded market. But interestingly, it’s kind of a taboo topic for most investors. A while ago a VC told me that one of this very successful portfolio companies has this fully automated self-service sales process that needs almost no direct customer interaction. I was very surprised because I know the company fairly well, and I know that probably more than half of its employees spend most of their day on the phone with customers, selling to them and then helping them get up and running. You could even say (and another VC confirmed this later) that their personalized sales process and customer service is the secret of their success. But this VC wanted to believe that it’s all about the technology. He really, really wanted to believe in the black box.

As long as tech companies and their investors can’t go beyond their belief in black boxes, they will struggle to reach the mass market and build profitable businesses. You could even think that the awful performance of the VC industry over the past decade was partially caused by this naive view of reality. Everybody is chasing the magic black box, but nobody wants to build businesses that work in the real world.

(Picture: Martin Deutsch)