Free Market

More Disruption, More Fear and Protectionism

This morning, a committee at the Utah Legislature heard a presentation from Neighbor, a local company that brands itself as the “Airbnb of storage.” What was more interesting, predictably, was the parade of concerned bureaucrats and industry players that followed.

Neighbor’s service allows you to find and use free space in other people’s homes or on their property. For example, you can store your boat on somebody else’s RV pad, or put some moving boxes in another person’s basement for a few months as you prepare to relocate.

It’s a handy option and part of the broader sharing economy. And as our supporters know, disruptive services like Neighbor—Tesla, Uber/Lyft, Zenefits, Turo, Airbnb/VRBO, and more—inevitably encounter opposition both from regulators and from entrenched competitors.

Both were present in today’s committee hearing.

For example, the state fire marshal listed a lengthy set of concerns with peer-to-peer rentals, among them:

  • difficulty for firefighters to access the building or its roof if their path is impeded by, say, a boat on the side of the house;
  • difficulty searching a home during a fire if a room is full of items;
  • storage which may block one’s exit during a fire—e.g. in hallways in an unfinished basement where hallways would typically have been located;
  • difficulty in a fire investigation to determine who owns what property;
  • excessive storage under unprotected lightweight construction; and
  • storage of potentially explosive materials.

Sure, these might be a concern—but they’re just as much a concern for any homeowner as they are for Neighbor users. Every single one of those concerns apply to you and me, and yet we don’t see firefighters suggesting that property owners should be restricted and inspected to ensure all these fears are resolved.

Later in the presentation, the Senior Vice President from the Self Storage Association, who flew out from Virginia to testify, rattled off a number of reasons why they—the existing industry—oppose Neighbor and would like to see it presumably regulated or shut down.

It was as predictable as it was entertaining, watching yet one more industry representative try and use the political process to help shield themselves from competition. This person suggested legislators focus on Neighbor hosts, specifically their tax obligations, zoning compliance, fire concerns brought up by the fire marshal, business registration, and insurance and liability.

We prefer to see the legislature take a “wait and watch” model, allowing this company to establish itself, refine its processes, and resolve concerns as they may arise. The market—especially for insurance issues—can address many of these problems, and speculative fearmongering should not be the basis of public policy.

Instead, Utah should have a free market, and innovative and disruptive companies should have the ability to establish themselves and thrive, rather than immediately bombarding them with the same arcane or inapplicable regulations larger industry competitors must abide by—regulations that are often supported by those companies to deter smaller competitors who struggle to comply, or regulations that apply to a different business model than the startup competitor’s.

Utah’s culture very much supports innovative disruption and the sharing economy. We are becoming increasingly accustomed to the flexibility and customization these services provide us. Let’s support, rather than suppress, companies like Neighbor in order to increase peer-to-peer exchanges and help Utah’s market become more free.