Airbnb wants to give the homeowners who power its service the opportunity to own a piece of its business. That’s why, as Axios reports, the $31-billion-valued company has written to the SEC to ask if its rules around security ownership can be revised.
Specifically, Airbnb is seeking a change to the SEC’s Rule 701 — which governs ownership of equity in companies — to allow a new kind of shareholder class for workers who participate in gig economy companies and their services. Uber, for one, has met with the SEC to propose a similar allowance but Airbnb’s argument is laid out in a letter that you can read here (thanks to Axios.)
“As a sharing economy marketplace, Airbnb succeeds when these hosts succeed,” the company wrote in one passage. “We believe that enabling private companies to grant hosts and other sharing economy participants equity in the company from an earlier stage would further align incentives between such companies and their sharing economy participants to the benefit of both.”
Airbnb is said to be planning to go public potentially as soon as next year.
While it isn’t clear how earning equity might work for an Airbnb host — or an Uber or Lyft driver, for that matter — further amendment of rules would be required. Currently, SEC regulations require that any private company with over 2,000 shareholders or 500 or more who are not U.S. accredited investors, must be registered.
That’s clearly a problem for Airbnb which has grown to more than five million listings since its foundation in 2008. It remains to be seen how many of those homeowners could own equity even were the rules amended to allow it. More generally, though, gig economy startups won’t pursue the equity options for contractors if doing so then triggers mandatory SEC reporting whilst they are private entities.