Analysis
The p2p trust challenge: who will succeed, and how?
On 25 March 2013 by Francesca Pick

As the collaborative consumption space begins to scale and the hype around many business models continues, trust between strangers remains a hot topic. After watching this space closely for one year now, Francesca Pick reflects on the state of the online trust landscape.

As Techcrunch reports, Facebook just announced it was hiring the co-founders of Legit, a startup that has been developing an online trust and reputation framework for the sharing economy. Seeing that trust is crucial to the success of p2p marketplaces, Legit and several other startups aimed to build a “credit system for the 21st century” that ties together peer-to-peer marketplaces and fosters trust between users.

Since I did research on trust in p2p marketplaces myself and worked at Legit’s competitor TrustCloud, Facebook’s announcement did not so much surprise, but remind me of one of the main conclusions I had drawn from my research one year back: Facebook has the critical mass and the data to become a central trust and identity system for the web, overnight. It is only a matter of them deciding to do it. As Legit’s co-founders Jeremy Barton and Rob Boyle stated in an open letter on their blog about lessons learned from building their startup,

“Facebook is a core piece of infrastructure for many marketplaces as the source of your offline authenticity and reliability”

Over the past years, Facebook connect has established itself as a way for p2p platforms to verify their users’ identities and access additional information about their friends and interests with one click. With this system already in place, Facebook has a huge competitive advantage over any other company attempting to become the standard for identity and reputation on the Web.

There are even rumors that Facebook is considering launching a Craig’s list-like marketplace and may begin integrating sharing marketplaces such as Airbnb directly into its site, meaning that this scenario could become reality soon. The question is: do we want one company controlling our online identity and becoming the sole gatekeeper of our online reputation? Aren’t there alternatives? Let’s take a look at the status of other startups working on trust systems for the sharing economy.

Finding the right approach to building trust

I remember talking to Legit’s founder Barton for my thesis research one year ago. Inspired by Rachel Botsman’s Ted talk and passionate about empowering the collaborative consumption community, he described his team’s struggle in finding the right business model for their idea.

After several pivots from a consumer facing product to a cross-platform reputation system that allowed p2p marketplaces to share their data within the so-called “legit reputation group”, they finally decided to give up on solving the trust problem on their own. Why? One of the main challenges they name was convincing p2p marketplaces to integrate their system into their platform.

This taps into a discussion that has been going on for a while: should every marketplace build its own reputation system or “outsource” this task? While many marketplaces are building systems tailored to their specific needs (Taskrabbit offers detailed background checks, Lyft has its own screening system for drivers), advocates of using standalone trust systems argue that there are universal trust parameters that are consistent across different sharing verticals. Even though everyone agrees trust between strangers is an issue, they don’t know how to address it.

trust in the sharing economy

TheAlieness GiselaGiardino²³ on Flickr, CC

Legit is not the only startup that failed at building a standalone trust system. A considerable number of startups and projects with an array of different promising approaches to building trust pulled the plug after several months (or have been very quiet recently), among them Scaffold, Briiefly, Peertrust, Project Trust, Truly. Of this first wave of startups, TrustCloud is in fact the only company left.

Last fall a new wave of startups with interesting approaches to the topic emerged: Credport maps your social relationships, Fidbacks summarizes all your ratings in one place (without using social networks at all) and Virtrue offers enterprises and p2p marketplaces verifications for their users. Another innovation outside of the realm of the sharing economy are services offering personal data vaults, distributed systems that let you store and use your data all over the Web. But this space has not only caught the attention of startups, but large companies. La Poste, the French postal service, has launched a service called Identité Numérique that verifies people’s digital identity in real life:

“By associating itself with the collaborative economy movement, the La Poste Group aims to provide its customers and partners with access to this new economy”

says Anthony Deydier head of La Poste innovation marketing.

Will one of these establish itself? While many of these approaches seem promising, I feel like a key ingredient to making these systems catch on among a critical mass is still missing. But if I knew what that ingredient was, I would not be writing this article.

On and offline life, seamlessly connected

While the scale of transactions on p2p marketplaces today is still very small, the topic of online reputation is not. Our lives are being redefined through connectedness as technology permeates our lives. Our online footprints are growing and increasingly impacting our real life decisions: whether we get hired, get a loan or who we buy from (in the words of Om Malik, data darwinism is shaping our societies). The connections between our on and offline existences are becoming seamless – Google Glass is a great example of this.

I’m guessing that in a few years, we will no longer differentiate between on and offline interactions And that’s a game changer, because once this distinction disappears, our understanding of online identity and its relevance must change. It’s then (and already is) a discussion that affects everyone, not just the sharing economy.

Now is the time for us to take charge of how we want identity and privacy to look like in the 21st century. And let’s not opt for the easiest solution, but the best.

I don’t want Facebook and the handful of companies it partners with to be the sole gatekeeper of my online life – do you?


photo credit: FutUndBeidl via photopin cc

Francesca Pick Ouishare.net co-editor (English) and Ouishare Global & Germany Connector. I am passionate about the sharing economy, sustainable business models and finding a way to build trust on the Web. Profile →

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