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Something interesting is happening! Web 2.0 and its wave of innovation and life changing tools is spreading faster than ever. Airbnb is the largest accommodation provider and it owns no real estate. What does it mean? Airbnb enjoys marketplace-like network effects in which the value of the network increases as both suppliers and consumers join:Every time a new supplier joins, selection increases for the traveling consumer, making it more likely to attract consumer demand.Every time a traveling consumer searches, it potentially benefits the property owner/manager, making it more likely to attract suppliers.”That’s a flywheel that, properly spun up, starts to accelerate partially from its own momentum.”Scale also increases bargaining power for Airbnb (rate-setting) and widens their competitive moat. It also enjoys greater accuracy of data as the data velocity increases, giving it strategic insight and greater chance for extracting economic rents.In other words, the value of this Company is not related to its asset, but to its ability of creating a marketplace without physical borders in which the value is generated by both sellers and buyers from the moment they access it. The same trend can be seen for a lot of other sectors such as transport, information, retailing and telecommunications. This drastic change which is occurring today is part of the systemic effect of web 2.0 and its main players: that consequence is either of a generalized nature or occurs at a site distant from the business itself. Digitally connected consumers live in a situation of instant gratification where the likes of Airbnb have made easier everything. We rely on the effortless one-click experiences online for many aspects of our lives. If an organization is not making your customers’ lives more comfortable, it will cease to be relevant to them.Many businesses are simply not flexible enough to cope with a rapid and disruptive innovation. Airbnb is facing a sharp increase in data amount and the frequent implementation of new products and payment methods. Thus, its main goal is related to its focus on a new information system: the new system must give enough flexibility to support more products and more inflows and outflows of information and money.Additionally, one needs to focus on the impact of Airbnb on its housing markets as it is one of the greatest threat of its systemic effect. New York city, San Francisco, Melbourne and Amsterdam are only some of the major cities which have to deal with the pros and cons of Airbnb.Airbnb has been accused of indirectly provoking the increase of property prices and of disrupting communities, thus emphasizing the ongoing gentrifying tendencies. Moreover, neighborhood business that takes into account the relationship with residents are replaced by businesses that only focus on tourists.Today, it is incredibly popular and profitable, to rent out a flat or room on one of the short-stay rental platforms, of which Airbnb is the absolute leader. For instance, the Dutch Bank statedin a report that “Airbnb drives up real estate prices, because people are prepared to pay more for a flat when they can make extra money by renting it out.” This side of Airbnb’s systemic effect is considerable. When so many flats are rented out to visitors, it has an effect on the availability of real estate, thus provoking a great shortage in the housing market of Amsterdam and a lot of other cities.One solution took the name of Fairbnb: “tourists can be redirected to areas where they would not disrupt the neighborhood. Hosts would be registered with the council and the community would be involved in the management of the area rentals.” At the very least, cities will be pushing for a stronger partnership with Airbnb. However, since Airbnb seems keener to protect its users’ privacy than to pander with local governments’ concerns, the effectiveness is questionable.

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