Hate in the sharing economy: "Any new business is always threatening to someone"

By Sarah Lacy , written on March 15, 2013

From The News Desk

I've read way too many articles on the sharing economy that contain the words "Everybody wins!"

That's not precisely true. Sure when you make money off of the idle car sitting in your driveway while a neighbor gets to use only the amount of car he wants, the two of you win, as does the platform connecting you. But there are entire legacy industries that lose and, man, do they hate the sharing economy. They really, really hate it.

I have a friend who has slogged away at his startup for years and recently started a second life as an Airbnb landlord. The latter is what's really paying for his lifestyle. His stories about running these various properties around San Francisco and how they compare to his life as an entrepreneur are pretty funny, so I thought it'd make a good feature for our monthlong section on the sharing economy. To be clear: This friend has never met a microphone, soapbox, or camera he didn't like. But he outright refused to be interviewed, terrified of the San Francisco Tenants Union and its hatred of Airbnb.

We're going to dig more into this in a future story, but it occurred to me there is one guy who should be the guru on dealing with all this hate: Patrick Llewellyn the CEO of 99designs.

99designs is the sponsor of our month-long look at the Sharing Economy, and we've never included a sponsor in the actual editorial of one of these sections. But in this case, there is no better authority. (For more on how we do sponsored content, go here.)

99designs -- a marketplace for basic graphic design work -- was one of the earliest pioneers of the sharing economy, starting five years ago in Australia. It immediately delighted and pissed off graphic designers around the world and has ever since. Llewellyn has actually been told by (other) bloggers that they put 99designs in headlines simply because there is enough hate to guarantee high page views on a slow news day.

I have a hunch we're going to start getting some more vocal backlash as these platforms start to become more prominent, so here's some advice from Llewellyn on how to deal with the hate.

Sarah Lacy: We've been talking about this for years. Is 99designs on the other side of this yet?

Patrick Llewellyn: I still feel like it's going on, but it's waning a little bit. Whenever someone posts an article, it still pops up, demonstrating time and time again that we're still a good news story, I guess.

The designers who actually operate on our platform love us. We're about to celebrate two big milestones in the next few weeks. We're about to cross over $50 million in payouts to our designers, and also complete our 200,000th contest. That's a lot of income we've helped generate for freelancers.

We are getting better at understanding the power of this business we created. I was just in Spain, where there's 25 percent unemployment. I'm really excited that we may play a part in helping alleviate that. There is a mass exodus of young Spaniards leaving for Paris and Berlin, and our platforms and others are giving them a chance to stay home and still make money.

Do you get sick of having to justify why you aren't evil, why you aren't commoditizing graphic design?

For sure, but we also wear it like a badge of honor. We have to continue to strive to do the best we can and hope people will understand the message. It's the classic thing when you have any small group that hates you, when you meet them on the street or at a dinner party and have a rational conversation, generally they see your point of view.

We are trying to get better as well. We are working on connecting designers to clients in new ways all the time and continue to invest in some new products.

But we'll probably always be having that conversation. Talk to Shutterstock. They've gone public and are a huge success and there are still photographers who think they are destroying photography.

What I've never understood is that since the Internet is disrupting every industry, why do designers think they should be immune? A lot of middlemen and excess income in journalism, music, software, travel and even venture capital are getting squeezed out as these industries become more efficient via the Internet. Why wouldn't this happen to design? Is there something about the design community that makes it particularly indignant? 

Freelancers love us because we make it easier for them to find work and get paid. But there are a lot of designers in businesses where they don't have to be the ones who go out and get the work. They have business development guys for that. So the designers who sat in offices being creative didn't have to worry about the business side of it. The fact is our model is easy to pick apart, because it's about these contests where designers submit concepts and the best is chosen. So the argument is there is work that isn't getting paid for. But that's just the nature of business development in this industry.

Over half a million dollars in contests will close in the next seven days on our site. If you want to work, it's there. It just means designers spending some time on the pitch, and may not win the business.

We've all seen "Mad Men." Don't designers at agencies have to do work all the time for a pitch that may not result in paid work? 

Yeah, but the end designers are still getting paid for their work because they earn salaries, so they may not think about the fact that the agency isn't getting paid for the work.

Either way, we've grown to a point  where we feel like we're making a difference to a bunch of designers. If they weren't getting value, they wouldn't participate.

It's tough, but we keep working at it. It's important to listen and if we hear valid complaints, we try to improve and make our system fairer. The truth is a market place is more efficient. The people on our platform are benefiting from a market driven economy. We've found the work. We've collected the money. If they win the work, they get paid. These are things that don't easily happen in a normal freelance economy. The people on the system feel having us do that for them is worth it.

I try to be positive in talking to these young entrepreneurs and the media -- particularly in Europe where I just came from because there's not a lot of good news right now. Small business is what will help those economies pull out of the quagmire. Governments can't afford to employe enough people. We need more platforms that help people be more entrepreneurial.

Were you ever worried the detractors could tank the company? 

No, it's not ever gotten enough mainstream firepower. The overriding feedback from people who used the platform were so delighted with the service -- it was overwhelming. We also weren't a very splashy company. It wasn't until the Accel round that we started to get more mainstream press. Until recently we weren't spending money on marketing, we were just building from our little base in Australia. We had critical mass by the time the criticism raised tis head. There were enough people who liked us that came to our defense. 75 percent of our business comes from word of mouth. If people using the platform didn't like us, that wouldn't be the case. Negative snark in a comment thread aint gonna change that.

We also invest in a big customer support team to make sure people are getting a good outcome. That's the most important thing.

So listen to people with a legitimate beef and try to make sure actual customers are happy -- any other advice on dealing with hate? I mean, for other platforms out there, not for me. I'm used to it.

(Laughs) Yeah, I should be asking your advice on it. How do you deal with it? Because we do still find it hurtful on some level.

No matter how much you talk about thick skin, getting attacked always hurts to me too. My only solution is just not reading all of it. Because a lot of times, people are determined to hate you, and you're just not going to change people's minds. 

Yeah, I try not to read all of it. Sometimes it's like, "Wow, it's you again!" I can recognize the 10 guys who have a Google Alert set for me, and they leave the same comment every time. If it was new commenters I'd never seen before, that would be a concern. But when you see it from the same people who've never experienced you and arbitrarily hate on you... what can you do about that?

If a designer is telling us something, we listen. If it's just something negative from someone who has never experienced us, then you have to recognize its an uneducated opinion. But I still find it tough, as much as we bathe in the glory of all our happy customers.

The ultimate thing for us is that this community and this business model was started by designers in a designer comment thread. We can't even take credit for any evil genius in coming up with this. We were just helping facilitate naturally occurring behavior in a forum of designers.

Do you think you got more hate because you were early to this sharing economy trend?

I think it would have happened no matter what. I've talked to plenty of companies who've copied or iterated on our model in other countries and they all say they get it from their communities. Designers are just vocal.

The stock photography guys got it worse. People would yell at them at conferences, and some almost feared for their lives. We haven't quite had that level of hate.

The core thing is to believe in yourself and your organization and listen to the people who are important and not the people who aren't. Any new business is always threatening someone. When you see you are stirring those types of emotions you know you are onto something. On some level, if it's that game changing, it's worth doing.

[Illustration by Hallie Bateman]