When marketing executives at “values-led” companies try to cultivate communities around ethical consumerism, it creates a new class of problems. Much like religious cults, cult brands manipulate their customers’ emotional and psychological needs and encourage them to construct their identities and lives around the brand. The collapse of the ideal would be felt as a personal catastrophe for its community, so the brand becomes practically immune to criticism.
Excerpted from a long and stimulating essay by “Mr. Teacup”.
A must-read for all sharing economy advocates with crucial background information on the creation of the Peers advocacy organisation:
“What role does marketing play in the construction of communities around a business? For a new breed of advertisers like Chuck Brymer, CEO of leading agency DDB Worldwide, the answer is a great deal. Brymer believes that with the rise of the internet, advertising is moving away from the traditional propaganda model of influenced rooted in broadcast media, and becoming a dialogue with consumers and among consumers. Generating buzz, facilitating interactions among consumers, reaching influencers and turning them into brand ambassadors becomes key to successful marketing. Their Twitter bio says it all: “Connecting people with people, not just people with brands.“ In the end, says Brymer, the Chief Marketing Officer role will evolve into Chief Community Officer.
Aligning with this philosophy is a book published in 2004 titled The Culting of Brands: Turn Your Customers Into True Believers. It was written by a former advertising executive who studied how real cults recruit and maintain members hoping to teach the tricks to marketers to inspire the same kind of fierce loyalty, religious devotion and vibrant community around their brands. The book is a manual for achieving corporate goals by exploiting consumers’ emotions and need for belonging, meaning and purpose.
It achieved only modest reach, but the book is important to understanding sharing economy marketing strategies because the author is Douglas Atkin. Since 2013, Atkin has been Global Head of Community and Mobilization at Airbnb, and Co-Founder and Board Chairman at Peers. Already in 2009, Atkin began to apply his cult-branding techniques to the political problems facing his clients, co-founding Purpose, a consultancy which uses the viral tools of digital marketing to launch social and political movements on behalf of paying clients.
If we want to understand the ideas and strategy behind Airbnb’s and Peers’ marketing, there’s no better place to start than by reading the book written by the mastermind behind it all. And it is vital that we do understand it, because Atkin’s method is a dangerous new tool that can be used by elites to undermine democracy and manufacture public support for their interests.
The book begins in a defense posture. Atkin, well aware that his premise is highly contentious and potentially unethical, asks “Aren’t cults manipulative, evil organizations intent on exploiting the gullible? Should they be a source of insight for commercial gain?”
His book aims to show that brands satisfy important human desires in the same way that cults and religions do, meeting needs of belonging, making meaning and making sense of the world. But he sidesteps the ethical question in troubling ways. His position is that cults are a good thing. They’re normal and people join for good reasons, and that we should suspend our prejudice. The popular stereotype of cults as manipulative, dangerous and even suicidal is true to a certain extent, says Atkin, but that’s only because only the dangerous ones get all the press. All religions began as cults, and contrary to popular belief, most cult members are normal, psychologically healthy, intelligent well-educated and socially adjusted individuals.
This is the full extent of Atkin’s confrontation with the ethics of applying cult techniques, breezing past the most troubling aspects of the thesis in less than two pages. His point, such that it is, is well-taken. Mainstream society unfairly stigmatizes former and current cult members, treating them as damaged goods. But the truth of this insight obscures a subtle deflection of our concerns about cults. We worry about authoritarian tendencies, manipulation and exploitation by the cult leader, his ability to persuade his members to act against their best interests. Atkin reframes this as a prejudice against cult members, waving away legitimate ethical concerns as if they are all simply narrow-mindedness about how unorthodox people choose to live their lives.
We don’t need to claim that all cults are bad to ask if it is wise to use them as a model for corporate marketing. Cults may be harmless in many cases, but when they aren’t, the results can be catastrophic. They seem to be uniquely vulnerable to corrupt and exploitative people who put themselves in leadership positions.
Atkin is fascinated by why people join cults and what inspires their intense loyalty. “Why do they throw time, money, sometimes their careers, the regard of their peers, and even their families on the cult of belonging?” He interviews a fanatical Apple fan who often couldn’t afford lunch but always upgraded to their latest computer model because he wanted to support the company.
In the popular imagination, cult members are believed to be mindless conformists, but Atkins says nothing could be further from the truth. The real key to creating a cult (and a cult brand) begins with individuals who feel a sense of alienation. The feeling that they don’t fit in with society leads them to seek alternatives, a place that they can truly call home, until they stumble upon a welcoming group that understands them, supports them and celebrates their difference instead of rejecting it. This sets the stage for the cult member’s self-actualization. Interviewing cult members and brand devotees alike, Atkin found they express the same feeling of becoming more coherent and whole as individuals, true to who they really are and more in touch with themselves.
Cults will flatter you. They will make you feel special and individual in a way that you are unlikely to have felt before. They will celebrate the very things that make you feel different from everyone else; the members will get to know you deep down, and they will love you for what they find you. And you will love them.
So the key to attracting cult-like devotion is healing potential recruits’ sense of alienation. Although cults are often perceived to be taking from their members while giving little in return, cult members do receive something of value from the cult, meeting some of their deepest desires to become their authentic selves.
Having determined what motivates cult members, Atkin delivers a strategy for brand managers. To attract people who feel different, cult brands also have to be different. It’s a four step process.
First, determine your brand’s sense of difference. The motorcycle brand Harley Davidson cultivates an image of individualism, rebelliousness, adventure and a willingness to throw off the constraints of conventional suburban life. The brand’s official guidelines state: “Harley Truth#1: Harley is not for everyone.”
Second, declare your difference, the belief system that set you apart. “Framing a clear system of ideas that depart from cultural norms provides the sharpest delineation between the organization and the rest of the world. And it provides a beacon for the disenfranchised,” says Atkin. At the same time, cult members must feel a sense of ownership over the ideology, it can’t just come from the top down.
Third, demarcate the cult from the status quo by creating symbols, rituals, jargon, texts, clothing—a tangible way for cult members to live their difference, to mark themselves as apart from the mainstream. For Harley Davidson, there is the uniform of the riders, the leather jacker; slang; the brand’s and Hell’s Angels logos; and so on. For Atkin, this is the same as Hare Krishnas who avoid eating meat and chant mantras, or Mormons who have exclusive access to parts of their temple and wear spiritual garments underneath their clothes.
The final step is demonize the other. For Steve Jobs and the Apple cult, it was Microsoft and IBM. For Richard Branson’s Virgin Airlines, it was British Airways and American Airlines.
But according to Atkin, establishing a cult brand’s beliefs and sensibility are not enough. People don’t really buy into the ideology anyway. As much as brand managers think that projecting a compelling system of values to consumers, human interaction is what really gets people in the door and makes them stick around. One cult brand, JetBlue, obsesses over every interaction that customers have with gate agents, check-in personnel, telephone agents and flight attendants, ensuring that the brand values of bringing humanity, caring and fun back into air travel are reinforced at every point of contact.
Atkin cites academic studies that support his point of view. Sociologists who study the Unification Church discovered that most people were brought into the church by forming relationships with individuals in the church. New recruits first buy into those relationships—the ideology comes later. Research into the Mormon church confirms this pattern, showing that individuals with more in-group ties to individual church members become more devoted to the church and its belief system.”
2. The political manipulation by sharing economy players
“The various startups, investment funds, media outlets and nonprofit advocacy organizations shout from the rooftops that their new, improved version of communitarian capitalism will heal what ails us. Although they couch the message in terms designed to appeal to political progressives, there’s nothing about the services themselves that prevents them from being attached to a completely different set of values. For example, John Stossel, a noted libertarian and TV host on Fox News, has championed Airbnb’s fight against what he believes is big government regulation keeping the little guy down.
The conservative news sites Human Events published a column praising the sharing economy for relieving the burden of following employment laws:
it’s an end-run around the increasingly expensive, heavily mandated and regulated business of hiring employees. As the burden on labor increases, creative fee-for-service arrangements become appealing alternatives to expensive, traditional “jobs.” It’s the next logical step after the large-scale transition of the American workforce to part-time status.
A senior fellow at the right-wing Cato Institute voiced his support for Airbnb in their battle to roll back New York City hotel tax, rent control and zoning laws:
New York State Attorney General Eric Schneiderman, however, is challenging the entrepreneurial innovation—probably under pressure from special interests who would like the government to stifle their competition. This is crony capitalism as usual… Cato has long supported free markets, entrepreneurship, and innovations to make goods and services more affordable. Government overreach like [Attorney] General Schneiderman’s campaign punishes not only AirBnB hosts and travelers, but also the New York economy…
Another senior fellow at Cato argued that the sharing economy’s use of reviews to control service quality means that the rationale for government regulation disappears. The following comment was made in the context of the limo service Uber, but could apply to many other startups:
“The app’s review system makes it easy for the company to monitor driver quality without demanding too much effort from passengers… Which means the question isn’t whether the regulations need to be updated to accommodate a new kind of cab service: It’s why this kind of service needs a regulator at all.
The well-known Republican operative and future Burning Man attendee Grover Norquist recently weighed in, arguing that progressive’s ideological confusion over the regulatory issues facing the sharing economy is an opportunity for Republicans to take back control over major cities which are traditional Democratic strongholds.
The existing sharing economy values are designed to appeal to progressive liberals. It seems that there are very few “values-led” businesses which are designed to appeal to conservative values, suggesting that progressives are uniquely seduced by the view that capitalism is an effective tool for promoting their values and effecting political change. But it wouldn’t be difficult to invent a much more Republican-friendly brand for the sharing economy. In his speech at LeWeb before a group of investors and internet entrepreneurs quoted above, Atkin leaned in that direction, departing just slightly from the values of caring and connection that usually dominates and also stressing the values of autonomy: independence, individualism and entrepreneurialism.
We could move even further in this direction, rebranding the sharing economy as new movement that liberates individuals from the tyranny of the collectivism found in regular work, freeing them to become captains of their own destiny so they can pursue their self-interest by becoming small-scale entrepreneurs all while thumbing their nose at big government regulation. Brian Chesky, CEO of Airbnb alluded to this potential when he said to a group of Airbnb hosts, “There are laws for people and laws for business, but you are new category: people as businesses.
3. Negative consequences for workers
What would happen if the dreams of the investors and executives at these startups came true, and large parts of the economy became dominated by their business models? Employers that hire full- or part-time workers today—paying them minimum wage, overtime and unemployment, disability and social security taxes, and unable to discriminate against them—would switch to a cheaper, less regulated and more vulnerable workforce to do those same jobs. Having lowered their labor costs, they’re able to offer lower prices to consumers, forcing their slower competitors who rely on regular wage labor to adopt the same practices or go out of business.
But beyond the marketing, if people like Douglas Atkin, Brian Chesky and Rachel Botsman get their way, and the sharing economy as it is currently constituted expands dramatically to where a significant fraction of services are delivered using their business models, it will have serious negative long-term consequences for the people in their communities, and for all workers.
Sharing economy companies most often classify the people who provide services on their platforms as independent contractors—they are considered to be self-employed, not regular employees. At the end of each year, thousands of these contractors receive a 1099 form and their income is reported to the IRS. Since navigating the rules for filing self-employment taxes is not very straightforward, Rachel Botsman’s Collaborative Fund created 1099.is to help contractors understand their obligations. They say that the purpose of the site is “to try and help you to understand your taxes in the Sharing Economy.”
It turns out that employee classification is an important issue, and has some significant implications for both employers and employees.
The Department of Labor runs a program to go after companies who practice employee misclassification, a term used to describe companies who misrepresent their full-time employees as self-employed independent contractors. Because companies must pay more taxes for employees than contractors, the IRS and state tax agencies crack down aggressively on employee misclassification, treating it as a form of corporate tax evasion. To get a sense of the scale of the problem, the Government Accountability Office estimated that in 2006, $2.72 billion in federal taxes was lost by misclassifying employees.
The Department of Labor is also involved in investigating these cases because some employers try to avoid compliance with the provisions of the Fair Labor Standards Act and the National Labor Relations Act by misclassifying their workers. These laws give workers a host of benefits: the right to be covered by minimum wage laws, the right to overtime pay, the right to have employers pay social security, disability and unemployment insurance taxes, the right to family and medical leave, workers’ compensation protection, sick pay, retirement benefits, profit sharing plans, protection from discrimination on the basis of race, color, religion, sex, age or national origin, or wrongful termination for becoming pregnant, or reporting sexual harassment or other types of employer wrongdoing.
Workers classified as independent contractors are entitled to none of these benefits.
On it’s website, the Department of Labor says that “Business models that attempt to change or obscure the employment relationship through the use of independent contractors are not inherently illegal, but they may not be used to evade compliance with federal labor law.” That could mean that sharing economy startups are legal, but one former Lyft driver has filed a class action lawsuit against the company charging them with employee misclassification.
Whether the suit succeeds or not, the phenomenon of employee misclassification indicates that employers have strong financial incentives to use independent contractors, even when it is illegal. A study showed that on average, misclassification allows employers to save $3,710 in taxes for workers who earn $40,000 a year, and witnesses testified to Congress that the labor savings of misclassification have allowed federal contractors to lower their bids by 20-30%.
The Obama Whitehouse has moved aggressively to combat this form of corporate misconduct, endorsing the Fair Playing Field Act and the Employee Misclassification Prevention Act, laws that require employers to inform independent contractors that they have the right to contact the IRS to have their status reviewed if they believe they have been misclassified, increase penalties for violators, closes a tax loophole that allowed FedEx to dodge a $319 million bill for back-taxes owed when the IRS determined it had improperly classified some of its drivers, and makes infringement into a federal violation of labor laws. Obamacare also increases penalties for businesses who misclassify their employees to avoid triggering the requirement to provide health insurance if they have more than 50 employees.
When Human Events says that the sharing economy allows employers to do an “end-run around the increasingly expensive, heavily mandated and regulated business of hiring employees,” this is what they’re talking about.”