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More Bad News at Couchsurfing

by on October 11, 2013

Couchsurfing, the troubled nonprofit-turned-startup that I wrote about earlier this year, has now shed almost half of its employees, including the CEO:

The startup, backed by General Catalyst, Benchmark, Menlo Ventures, Point Nine and Omidyar Network, is now going to focus on mobile — and we have heard that this is where all new hires will happen. The company up to now had raised some $22.6 million, with the last $15 million in August 2012.

As for the layoffs … a spokesperson tells us that the full number is about 40% of staff, with now no more than 20 people working at the company…

A little more unconfirmed detail: part of the layoffs, apparently, have resulted in deep cuts to its engineering team, with the entire engineering team let go “except for a 3 person skeleton support crew,” according to a tipster.

Our tipster — again, this is unconfirmed — says that the reason for the layoffs and other changes is because the company has seen an $800,000 monthly burn rate. But we understand the company has a long cash runway at the moment to figure out ways to turn that around (staff cuts help, too).

This is sad news, and I don’t take any pleasure in having predicted it. I still hope there’s a going concern to be salvaged here. But it’s very difficult to imagine a business model that will provide a material return on that much investment, or even enough cash flow to keep the lights on when the existing money runs out.

Early on, in an attempt to quell user anger at the for-profit conversion, the company seems to have ruled out advertising, selling member data in any form, or charging any kind of fee for existing site functionality. That didn’t leave many options. One that they floated was to solicit donations to charity every time a “surfer” was hosted, and take a small cut of these donations. Cute but a little pushy, and it likely wouldn’t amount to more than pocket change. They also considered a “freemium” model, but there wasn’t much you could add to the basic services that would really be worth paying for:

cs_freemium

Freemium models work best when the premium features are relatively independent of the basic features. If someone else pays for more space on Dropbox, you don’t get less space in your free account. In the case of CS, the main thing they can offer a premium member is various types of priority over non-premium members. You can dress that up however you want, but in the end you’re not really adding a new service, just pitting your existing users against each other: the premium service degrades the free one. If frequent flyers board the plane first, the rest of the passengers have to wait a bit longer. If premium CS members show up higher in searches, then free members show up lower.

In the meantime, they’ve brought back this “verification” gimmick — a way of aggressively hitting you up for a voluntary $25 donation when you join by arbitrarily attaching it to this “trust” marker whereby they send you a postcard to verify that you have a mailing address, and then you get a little check mark icon on your profile. I don’t know how much money that’s bringing in, but it can’t be very much. (And just think about it: if this process actually does have a material impact on member safety and trust, shouldn’t it be mandatory? Isn’t that the last thing you’d want to charge for if you have any regard for your members’ safety?)

So now they’re going to “focus on mobile”? To be honest, I’m not sure what that even means. They’ve already got mobile apps, which could certainly be better, but this is a network that relies on huge amounts of text-heavy user-generated content — forms, member-to-member references, discussion boards — exactly the kind of content that’s difficult to enter and consume on a tiny touchscreen. It’s about the farthest thing possible from apps like Instagram or Shazam that play to the strengths of a mobile platform. It seems more like OKCupid or Quora: it needs a good app, no question, but it also needs a fully-featured, well-functioning website — not the kind that can be run by a “skeleton support crew” while they redirect most of their budget to mobile development.

Anyway, maybe this “mobile” thing is just the latest round of buzzword bingo at a company that’s out of ideas, but I hope there’s something more substantive behind it. And it does suggest the glimmer of a revenue model, which is to simply charge for a mobile app while keeping the website free. That way they’re not technically charging for any functionality, just charging to make it easier from a phone.

I can imagine a lot of travellers setting up an account on the website, sending out some hosting requests, and somewhere in transit, frustrated with trying to load the full site on their crappy mobile browser just to find a host’s phone number or something, being willing to pony up $5 for the app.

(I can’t imagine many new members joining through an app and filling out a decent profile, because that’s just too much data entry for a small-screen environment. So again, they still need a usable website.)

Anyway, this paid mobile app strategy would be kind of sneaky, I guess, but at least it would bring in some additional revenue, and it’s the only thing I can think of that really would. What else is there?

From → Tech

30 Comments
  1. sharondleisk permalink

    As always, a joy to read your articles Peter.

    The new(ish) CS media machine has a long history of .. “oh look bright shiny things over here” to divert the community from focusing on the real issues, and sadly it has been pretty effective. IMHO the mobile app strategy is yet another bright shiny thing. The mobile app, along with many other improvements has been promised since day 1 and never delivered.

    Is it time to start the “Return CS to the community” campaign before it is mothballed or even worse, tacked on to Air bnb or similar.

  2. Niall permalink

    The recent statements are that of a desperate company that it out of ideas. Your suggestion of a free website and a paid mobile app will work only if the website functions, because that is what most hosts (who need to be connected with travellers, after all) will use. But the site as it is is almost unusable, and all but three engineers have been fired. So if future new hires will be concentrated on the mobile app, that means the site will never improve, and that’s just unworkable.

    BeWelcome is the future for hospitality exchange. I don’t believe CS as we know it will still be here this time next year.

  3. Polyglot permalink

    Excellent analysis and free advice to which the company should have listened two years ago. It is just a bit off where it assumes the “verification gimmick” cannot bring in much money. At its highest, in 2011 before CS was turned into a business, “verification” payments amounted to about $2.5 million, which is a sizable amount of money for running a website unless you burn through $800.000 a month…In its first year under new ownership and management it still raised about $ 2 million, but with the service deteriorating and attracting more and more clueless freeloaders the “verification” rate kept dropping and couldn’t keep up with skyrocketing expenses. They messed up. Now their no Airbnb, no Meetup, and no attractive hospitality community either. Anything they would try to reposition themselves to is already done better by someone else. Good for them, and good to know that money doesn’t buy everything yet.

    • Good point about verification. I guess I figured that it was an easier sell back then when it was a true donation to a non-profit, as opposed to now where they can’t use the same language. But it could be bringing in more than I thought.

      • Polyglot permalink

        CS has always been unclear about the real nature of “verification”, and the associated alleged benefits often untrue and the communication about it misleading advertising, The IRS pointed out some of the issues in its denial of 501c3 charity status, qualifying most of the verification revenue as service fees rather than donations. The scheme could perfectly have been broadened as such service fees, but when the venture capitalists came in and had a look at the terms of use, they added a disclaimer that pretty much took the air out of the previous misrepresentation and they didn’t push verification any longer. Once they realized that they could not come up with a better way to make money, CS started to push “verification” again with outrageously false statements and claims made in a video produced (by staff fired only weeks after being hired for that kind of work), and on the “verification” page which new users have to go through when they register. You can go through the process yourself and see how “verification” is pushed on you before you ever use the website, with a tiny “skip this” button at the very bottom preceded by a fair amount of blank space, out of your view unless you scroll. Inside sources report that ousted CEO Tony Espinoza recently tried to run a test to see how many people would pay to use the website when that tiny skip link was removed entirely and how many would give up on registration. What kind of “socially responsible” company would resort to such methods? Ironically, as has been reported, even that test failed and was aborted because they couldn’t get it to work without messing it up with bugs, just as they have done with just about everything they touched.

        It has been more than a month already since the legal issues with the current “verification” claims were notified to CS via their Help Center which has forwarded them to the “legal department” (they have been summarized in this post: http://www.couchsurfing.org/group_read.html?gid=7621&post=14891340). If I was a shareholder or executive of CouchSurfing International Inc. I would not expose my investment or my company to such legal and PR risk, but CS rarely does things the way most others would.

  4. Barbara permalink

    Interesting read indeed.. and i fully agree with the writer

  5. Ross permalink

    And the website has been down all day. Forget mobile vs web…can we go back to a functioning platform again?

  6. You have a lot of good points but I’m not sure I agree with this comment on verification: “Isn’t that the last thing you’d want to charge for if you have any regard for your members’ safety?”

    Let’s say you care a little bit about member safety but you also want to allow people to make their own choices about who they can or can’t stay with. Otherwise, while we’re at it, why not have a blacklist of members who hit on (or hook up with) other members because they aren’t using the site the way it’s intended and are posing a danger to members using the site “legitimately”?

    Also, people have different opinions on what is an acceptable amount of risk (I’d say the average person is more risk-averse than the average Couch Surfer). The implementation of this verification system should be seen as an extra layer of security for people who want it, like maybe women traveling alone, but I can’t imagine anyone is making decisions based solely on a verification check mark.

    And as an aside, Couch Surfing offers free or reduced verification for individuals who can’t afford the $25, especially people living in poorer countries (or at least they did a few years ago). I guess I just think you’re being a little harsh calling it arbitrary and gimmicky without mentioning these points but then again, I’m uninformed on their current system, so you might be absolutely right.

    • Polyglot permalink

      @Cynthia: The “verification” rate is just 7% of all profiles, even when paying less you still need a major credit card and a reliable postal system, and above all, name and address verification doesn’t really “verify” anything reliably (you can easily use someone else’s credit card and give any mailbox address you have access to), doesn’t predict what kind of experience you are going to have with that user and doesn’t guarantee that it will be of any use in case abuse happens, including because you don’t have any way of knowing how long ago that once in a lifetime “verification”.was performed. So more than anything, “verification” gives you a false and dangerous sense of security and achieves the opposite of what it should. I suggest a close read of “3.2 Identity Verification” and “3.3 Our address-verification tool” at https://www.couchsurfing.org/n/terms.

      • “name and address verification doesn’t really “verify” anything reliably (you can easily use someone else’s credit card and give any mailbox address you have access to)

        Sure, but at some point people are going to have to give up some skepticism if they want to, you know, ever meet anyone new. If you want to be safe, you can just stay in your house all day and not sleep on stranger’s couches.

        “doesn’t predict what kind of experience you are going to have with that user”

        I agree with this but the unpredictability of human interactions isn’t (and can’t be) dependent on any one safety model or feature. I wasn’t arguing for their particular verification system but I think the benefits of having an opt-in security measure outweighs not having one.

      • Polyglot permalink

        I guess we agree then that it is a feel-good and fundraising tool rather than an actual safety feature. And if it was accurately presented as such, without all of the unsubstantiated claims, that would be perfectly fine.

      • Tamara permalink

        The point, Cynthia, is that misleading members with claims of the effectiveness of so-called safety features does not allow members to correctly evaluate potential danger and then act with whatever criteria they wish to apply. When you are told that a safety mechanism is in place, that gives you a false sense of security – that you would promptly lose if you had all the facts.

        CS has done things like erase negative references that mention sexual crimes, but members are told that they are seeing honest feedback. CS has also protected employees who were wanted by the police for questioning in sex crimes, organizing campaigns against the victims.

  7. 2 easy steps
    Stop the company
    go back to the old system before!!!

  8. Couchsurfing is still great but there is 10% men being a problem on the site. In Dubai for example, if a woman is raped, she would be jailed for this. It is like in Pakistan where 80% of the women jailed are jailed because having being raped. The same law applies. Every time I try nicely to inform women about this, as I surfed not knowing, and took stupid risks, the men on the site, mostly from Pakistan, always delete my comments. And the thing is the safety team seems to always be on their side, saying no women rights activism. In fact it was so obvious the last letter I received from the safety team from a certain Caytee, that I started to have doubt about this Caytee being a woman and being based in United States. As we all know a lot of companies locate their on line services in India. And in India, a lot of workers are from Pakistan as well. So I thought but would it be possible Caytee would be a Pakistanese man, based in India? And if yes, so is it legal from Couchsurfing to pretend to have a safety team run by women in United States when it is in fact men based in India? Which would explain the lack of banner and information in Dubai and the will to not inform women about their rights.

    • “In Dubai for example, if a woman is raped, she would be jailed for this. It is like in Pakistan where 80% of the women jailed are jailed because having being raped. The same law applies.”

      I think you mean that non-marital sex is a crime, which is different. The law does not single out rape victims, or even women, for punishment since unmarried foreign couples sharing a hotel room have gotten arrested for non-marital sex under Sharia law.

      “Every time I try nicely to inform women about this, as I surfed not knowing, and took stupid risks, the men on the site, mostly from Pakistan, always delete my comments. And the thing is the safety team seems to always be on their side, saying no women rights activism.”

      Well, comments on Couch Surfing message boards should be related to the experiences specific to Couch Surfing and that platform shouldn’t be used to push your political or social position. If I’m surfing in Texas, I don’t want an anti-gun activist hijacking the thread to cite gun victim statistics and tell me how the U.S. needs to change our current gun laws. I just want to know where to go bull riding or where I can find the best bowl of chili.

      “In fact it was so obvious the last letter I received from the safety team from a certain Caytee, that I started to have doubt about this Caytee being a woman and being based in United States.”

      I’ve also emailed Caytee a few times and nothing made me think she was a Pakistani man. She comes across as a native English writer and responds quickly, in the right time zone. Is your doubt based mainly on the belief that an American woman wouldn’t disagree with your view on this topic?

      “Which would explain the lack of banner and information in Dubai and the will to not inform women about their rights.”

      I’m not sure that I agree with you that it’s Couch Surfing’s job to “inform women about our rights” (your statement sounds a little paternalistic but I’ll assume English isn’t your first language). It is my job to inform myself of a country’s laws – so that I won’t break any while I am a guest in that country.

      The bigger issue, though, is this idea that women (but not men) need your well-meaning, but still unsolicited, advice to protect us from the risks we’re taking.

      Up until as recently as last year, I skied without a helmet. I don’t need strangers coming up to me on the chairlift to tell me something I already know (Skiing is dangerous, you should wear a helmet). Imagine if they also said “I’m only trying to nicely inform you of your risks because I want to protect you from bigger, better, faster skiers who may crash into you and you may not understand all the consequences of your actions…”.

      I think everyone traveling alone should learn how to be safer, whether they surf couches, stay in hostels, sleep in train stations or whatever. And I think the Couch Surfing site, as well as lots of travel guides offer these safety tips for their users/readers. But to force special protection on the grounds of women’s greater vulnerabilities only supports the “weaker sex” stereotype that feminists (usually) deplore.

      • Tamara permalink

        You really believe that any organization has no responsibility concerning member safety? CS certainly does not agree with you, because they have a safety department AND they make repeated claims that they have mechanisms in place on CS to increase safety.

        You claim people should take individual responsibility for informing themselves of risks, and then you defend the idea that an organization should actively censor information about risks.

        Yes, of course people, including women, need information about potential risks. Do you sincerely think anyone knows everything about risk by way of magical knowledge? You say it is the responsibility of travellers to be aware of the laws of every country they visit, and yet you say a travel site such as CS should actively censor information about some of the very surprising laws in some places, which are not always generally known? No feminist nor anyone else who has concern about human beings believes information about very real and sometimes hidden dangers should be censored.

        It is revealing that you are arguing that people should not be allowed to help others with information.

      • I didn’t say that organizations never have any responsibility for member safety. I did say that THIS organization was correct in THIS one instance of removing posts they thought were off-topic.

        I can believe in personal responsibility and also defend a website that moderates the comments of its users since those ideas are not incompatible. (The thing about the internet is that you can find information in more than one place).

        I don’t know what “magical knowledge” means.

      • Tamara permalink

        So Cynthia, you are telling us that member safety is “off topic” on the CS website?

  9. Tamara permalink

    You believe that on should be forbidden on the CS website to tell travellers in Dubai that if they report to the police they have been raped, that according to local law, they can be throw into jail for their “crime”?

    You believe that on should be forbidden on the CS website to tell travellers in Pakistan that if they report to the police they have been raped, that according to local law, they can be throw into jail for their “crime”?

  10. Tamara permalink

    Correction

    You believe that it should be forbidden on the CS website to tell travellers in Dubai that if they report to the police they have been raped, that according to local law, they can be throw into jail for their “crime”?

    You believe that it should be forbidden on the CS website to tell travellers in Pakistan that if they report to the police they have been raped, that according to local law, they can be throw into jail for their “crime”?

  11. How did a post about a company running itself into the group turn into a discussion about rape? And the guy (or girl) who started it hasn’t rejoined the conversation and is linked to a WP account that doesn’t exist…

    For the record: Rape is bad. Rapists are bad. We should try to prevent rape.

    @Tamara I’m confused between your praise of the CS safety department and the “mechanisms in place on CS to increase safety” and your comment immediately before that, where you criticized the “effectiveness of the so-called safety features” and claim there’s a conspiracy to silence victims.

    @Peter Why didn’t your post mention anything about the on-the-lamb CS employees who were protecting sex predators? That’s shoddy investigative reporting skills to leave out such important context. What are you, 60 Minutes? SMH.

    • Tamara permalink

      Cynthia, baby steps. You seem to have admitted that some forms of sexual abuse are “bad”. Now the next step would be to admit it is not a bad thing for a corporation to try to prevent some small portion of such sexual abuse connected to its services.

      You say:
      “@Tamara I’m confused between your praise of the CS safety department and the “mechanisms in place on CS to increase safety” and your comment immediately before that, where you criticized the “effectiveness of the so-called safety features” and claim there’s a conspiracy to silence victims.”

      The CS safety “team” is a rather amorphous body, which like top management, has seldom passed more than a few months without major personnel and probable policy changes. I’m not sure what you define as my “praise” of them, but hopefully they do not get everything wrong.

      When I refer to “mechanisms in place”, please understand I am not claiming they work well or at all. I am simply saying that CS says on its website that it has safety measures, and it enumerates several of them. CS claims safety is a priority.

      Perhaps these measures are more to give the illusion of safety on CS and give the illusion CS is adequately responding to safety needs, to prevent bad publicity and create a warm huggy feeling in innocent users.

      CEO Tony Espinoza stated he wanted to be more proactive about sexual abuse facilitated by CS and said he had made changes in that direction. But he was fired and has not yet been replaced months later.

      • I’d have a lot more respect for people who complain about “censorship” they weren’t consistently belligerent, paranoid, and condescending.

  12. I meant to say “running itself into the ground”

  13. Well it really warms me up to see people understanding me. So in fact me and some journalists friends made an enquiry, and the satey team has been given to Concentrix. Concentrix is mostly based in Belfast but as well in India… So my paranoia might have been not so wrong. I received a message from Couchsurfing saying that the safety team being given to Concentrix was just a trial and another one saying the safety team had never been given to Concentrix… Concentrix has many bad reviews from ex employees for the poor management, salaries, etc. So in fact, it is not off topic, because Concentrix was in charge no only of the safety team but of the support team, which explains why there are not so many workers left on Couchsurfing. It has been outsourced to save money. Caytee cannot exist I think because we are 8 millions users.
    About Pakistan now they have changed the rules and do not ask anymore to 4 witness men for a rape otherwhise they jailed the woman. But the Emirates still have it.
    It is not off topic as most of the surfers come from Canada, United States, Australia, and Europe. Mostly young women.
    In Dubai 70% of the population is Indian, and Pakistanese mostly single men.
    I forgot to say that I have a lot of Pakistanese and Indian friends of course. But still, it is not that easy for a Pakistanese man who has not travelled a lot to understand Couchsurfing sometimes.
    It is a big shift with his own culture.

    What we observed is that the American Embassy doess not inform at all about the Emirates law, like being jailed one month if caught drinking without alcool, being jailed for a friendly kiss on a man’s cheek, they are no information, even in Australia when an Australian woman has been jailed.
    Same for Austria no information being given by the Embassy when an Austria woman had to marry her rapist last December and was jailed and after saved by her governement.
    There are no information about those laws being given in all the world if we are right.
    It is a mystery we do not understand.

    If Couchsurfing would be run by honest and decent péople, in a place like Dubai, a banner would have been put, and the Embassadors should be 50% women at least. Now it is nearly 100% men, most of them coming from countries, the organizers as well, from countries where the women’s rights are an issue.

    I have met in Dubai an American Jewish lesbian girl surfing in a conversative Muslim man’s place without having telling him before about the all thing. This guy is wonderful and everything went find, but some young American women travel without knowing anything about the rules in some Muslim countries and it is obvious that in a man’s place they put themselves more in danger than in a hostel.

    In the Emirates, it is in fact not allowed for a woman to surf in a man’s place, so in case of a problem, especially if she had accepted a drink without a licence, she could not go to the police.

    Couchsurfing is an American company, based in United States so to talk about Dubai is not so much off topic. And for Concentrix, it is in fact in your topic.

    Some journalists will write an article, we tried to contact Couchsurfing before but no answer.

    You can contact providenceprod at yahoo. fr if you have something to say about women’s safety.

    It is easy to start a petition at the White house for an American woman, to ask for the transparency of the safety team.

    For myself, I do not see any problem to have an Indian man based in India to answer me for the safety team, or even a Pakistanese or a Yemenite man, I am very open minded and tolerant, but I need to know who he is, and he cannot pretend being a woman based in United States.

    For me it should not be legal. I hope Caytee is a woman based in United States.

    But it should not be legal for her to not be. That is the point.

    I find Bewelcome and Hospitality Club much much safer but the websites are not as much fun.

  14. Cynthia I have no idea why there is a bug and you cannot see my link because I am connected normally I don’t know what to do.

  15. Cynthia I was not off topic when I answered on the wall. A Sweedish young woman asked if she should come to UAE, I answered yes, I even advised her to surf in a man’s place but to be careful as in case of rape the law asks for 4 men to witness the rape or jailed the woman or you have to marry your rapist. So I just told her to be careful to choose well her host. But to be honest with you there are complaints from women with men having a lot of positive references as well. It is not that easy. I had great surf with men with no reference and awful ones with men with a lot of good ones. This is a big problem. As sad as it is, it seems that Couchsurfing UAE will be suspended again by the governement. I tried to warn CS, I tried to tell them to change something, but they just go on, for me Couchsurfing now, it is a plane without a pilot. It is sad but it will crash soon. But a lot of sites like Couchsurfing will be created, and for this we should really thank those first sites. But we need a fun site, as fun as CS is, but with a safety team run by prof women (social workers, etc.) and with much more women embassadors as it is them who are taking the risks right now even if rape between men can happen as well. And I think that the Women’s rights value from the Western world should be represented and of course women being informed.

    The problem I had is that the men on the site answered that it was no true, that Dubai was very safe. But there are 2.5 more murders in UAE than in UK. It is not that safe. So the wrong information was given and mine deleted, and it happened a lot. And I received PM from women complaining and others telling me it was dangerous to speak out on the wall that they were afraid to be kicked out of the country, and a man told me that I could not come back to UAE. But the thing is I am not based in UAE, I have no boss, no career in UAE.

    It is sad because CS UAE will be shut down stupidly for stupid reasons. In country as dangerous for women, CS should put in place a very solid safety team, very solid women embassadors. And it is the exact opposite. But the thing is, about what happened on the wall, some people especially women were shocked and did not accept it. And so that is why CS UAE will shut down. It is sad but if it is the only way to put in place a banner and to have CS women embassadors and the informations being given normally, so it will be.

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