New East Digital Archive

Peer-to-peer: will the sharing economy movement win friends in Russia?

Peer-to-peer: will the sharing economy movement win friends in Russia?

Cars, apartments, expertise — sharing these things on a peer-to-peer basis is now big business in the west. But is Russia ready for the likes of Uber and Airbnb?

30 October 2014
Illustration Jonathan Jones

“Woman urgently needed. Will pay to test husband’s fidelity.” It sounds like the plot of a cheesy Hollywood rom-com, but this was the desperate plea of a woman named Natalie, posted on YouDo, a Russian website for outsourcing everyday chores such as cleaning and computer repairs. The task, unusual compared to most of the odd jobs posted on the website, was taken on by a woman named Yekaterina in exchange for 500 roubles ($12). Although it’s unclear whether Natalie’s husband fell for the honey trap, Natalie was satisfied by Yekaterina’s work. “Well done! It was all so quick and efficient! Would recommend!” she wrote in her post-task review.

YouDo, launched by Alex Gidirim and Denis Kutergin in April 2012, is the Russian equivalent of TaskRabbit, a peer-to-peer, online marketplace that allows users in the US and UK to outsource any errand whether it’s assembling IKEA furniture or picking up a Big Mac from McDonald’s. YouDo operates in much the same way. Users post a task in one of 14 categories, everything from courier services to cleaning to legal assistance, and wait for “doers” to respond with a bid and estimate of how long it will take them to complete it. An eBay-style review system disincentivises undesirable behaviour while helping to foster trust among users. For now, YouDo takes a cut of 15% on all transactions although this is set to change to a graduated fee. Since its launch, the website has gained around 22,000 verified doers who carry out roughly 1,200 tasks a day. Compare this to TaskRabbit. While the company now has over 1 million “taskers” as they’re known, in 2011, three years after its launch, it had only 1,500. Testament to YouDo’s potential is the $1m raised from Russian private equity fund Flint Capital in 2013.

For the cash-rich and time-poor Muscovite — virtually all YouDo’s users are based in Moscow — the start-up offers the perfect solution. “The idea behind this is that you can have a few extra hours in the day for peanuts,” says Gidirim. “You can take your children to the cinema instead of spending time buying food for and feeding your dog.” While courier services are the most popular followed by cleaning and computer repairs, there’s the occasional offbeat request, such as that posted by Natalie. In January 2013, a task was created for someone to travel to New York to bring a suitcase of clothes to Moscow. All expenses would be paid along with an extra 300 roubles ($7). Others include a request to borrow a cat for a housewarming party, to take care of some pet snails, to cut a pumpkin into the shape of Crimea and to remove a stale turd from the front doorstep of an apartment block.

For doers, YouDo provides flexible working hours and the potential to earn a relatively good income. According to Gidirim, the majority of doers earn between 30,000 and 50,000 roubles a month ($738 to $1,229) but those working full time can earn up to $7,000 each month. Not bad given the average Moscow salary is little more than $1,200 a month. Like elsewhere in the world, the rise in popularity of sharing economy services such as YouDo is driven by financial necessity. In Russia’s case, the rouble is near a record low, foreign investment is on the wane and in September, inflation hit a three-year high of 8%. While western sanctions are partly to blame, so too are plummeting world oil prices, which account for half of all Russian exports. But, says Gidirim, money is not the only motivator. “Some people have quite enough money but they enjoy the social interactions that YouDo offers,” he says. “People use YouDo for different reasons but what connects them all is the freedom of being able to choose how to spend their time.”

“Russians, especially in Moscow, are used to paying and saving money is not a priority. We still like to be flash and it’ll take time before people realise that that’s not the purpose of living”

Unlike in Europe or the US, where the term “sharing economy” has become a buzzword, with companies such as Uber and Airbnb taking up endless column inches, such collaborative enterprises are still nascent in Russia — and not always successfully executed. “People and the media don’t talk about the sharing economy in Russia,” says Gidirim. “Russians, especially in Moscow, are used to paying and saving money is not a priority. We still like to be flash and it’ll take time before people realise that that’s not the purpose of living. A Russian will never tell his friends that he saves money. No one will understand. The answer will be, do you have problems? Don’t you have money? Are you sure you’re OK?”

One reason is the value placed on ownership that followed the collapse of the Soviet Union, which was by contrast marked by decades of shortages and communal living. “We lived in a “sharing economy” for so long, that now we desperately want to be owners,” says Karen Kazaryan, chief analyst at the Russian Association for Electronic Communications. “Owning a car is a status symbol but not in the way that you probably think. You have to go back to the Soviet Union when quite a lot of people had the money to buy cars but couldn’t because there weren’t enough. So a car became not just a symbol of wealth but of connections. It’s the same with flats. After living in communal flats, getting even a small and cheap one that was yours seemed like a miracle. So to be willing to share it with a stranger, well, people think, why would we do that?” Another hangover from the Soviet Union is the lack of trust between strangers, adds Kazaryan, essential for so many of the sharing economy services.

“The money I get from my guests is purely symbolic”

As a result, services such as Airbnb in Russia, which launched in 2012, have several idiosyncrasies. Search for places to stay in Moscow and you’ll notice clusters of apartments all owned by the same “person” — rental businesses posing (not very succesfully) as private landlords. Another feature is the rationale for renting a spare room, which is often less about earning extra cash and more about socialising. “I’m a traveller myself. I like to have new experiences…but most important for me is to meet new people. Every person is like a new world for me,” says Sergey Kirillov, a Moscow lawyer who rents his spare room on Airbnb. “The money I get from my guests is purely symbolic. I believe that sharing your apartment even for a night is like sharing a small part of your life with someone else and that it more important than money.” Although Airbnb does not disclose statistics about revenue or bookings, according to Mikhail Konoplev, managing director for Russia, CIS and Baltic states at Airbnb, there are currently more than 2,500 listings for Moscow and roughly the same for St Petersburg. While small when compared to New York’s 32,000 listings, it is higher than other eastern European cities such as Warsaw, which has 1,300.

As for taxis, Uber, the private “driver-for-hire” service based in San Francisco, has experienced its fair share of challenges in Russia. Although there has been a shift towards booking licensed taxis in cities such as Moscow, many Russians are still just as content to hop into a “gypsy cab”. These illegal “taxis” are simply flagged down and the fee negotiated. Also, by the time Uber arrived in Russia in 2013, other taxi apps such as GetTaxi and, which work along similar lines, had already cornered the market. Now Uber faces a fresh challenge. This September, Alexander Starovoitov, the deputy chairman of the State Duma’s Committee on Transport, wrote to President Vladimir Putin, exhorting him to ban Uber in order to protect the existing taxi market — especially important given the firm’s American provenance.

“In Krasnoyarsk they have a saying: because nature is so harsh, you have to help your neighbour”

BlaBlaCar, a long-distance car-sharing company of French origin that launched in Russia in early 2014, has been more successful. In its first quarter, more than 250,000 new members signed up, making it the most successful launch in the history of the company. Today, there are on average 3,200 trips departing from and travelling to Moscow compared to 3,500 in Berlin, 3,000 in Paris and 2,000 in London. Each fare has a cap to ensure the service is fair and transparent for both parties. “Russia is a vast country where driving is expensive and drivers are keen to share the costs of journeys,” says Aleksey Lazorenko, regional manager of BlaBlaCar in Russia and Ukraine. “For passengers BlaBlaCar is an affordable solution…and it is much faster and more comfortable than the average train. So the potential for BlaBlaCar in Russia is huge but we didn’t expect it to grow so quickly.”

Like other sharing economy services, most of BlaBlaCar’s activity originates in the capital: the most popular rideshares are from Moscow to St Petersburg and Moscow to Nizhny Novgorod. Airbnb is similarly concentrated in Moscow and St Petersburg with little activity elsewhere. “I don’t expect that even in three years people will be renting out their houses in villages,” says Konoplev. “It’s just impossible because internet penetration is still very low, around 50%.” For Kazaryan, the concentration of sharing economy services in these two cities is “hurting the market”. “I think it could be easier to kickstart the sharing economy in cities like Krasnoyarsk and Vladivostok,” he says. “People in these cities are different because the barriers of trust are lower. In such places they have a saying: because nature is so harsh, you have to help your neighbour. This sort of mentality is very much the culture in these regions which is why I believe that any sharing economy services could be a natural fit for them. They just don’t know it yet.”

Read more

Peer-to-peer: will the sharing economy movement win friends in Russia?

Hit and miss: the pick of Moscow’s Airbnb rental listings

Peer-to-peer: will the sharing economy movement win friends in Russia?

Paranormal activity: Russian psychics see online popularity boost in tough times

Peer-to-peer: will the sharing economy movement win friends in Russia?

Space odyssey: 10 of the most unusual creatures sent into space

Peer-to-peer: will the sharing economy movement win friends in Russia?

Chemical compound: inside a Soviet science town