July 30, 2018

Book Reflection: The Upstarts by Brad Stone

Learning about the early days of Uber and Airbnb seems like a good follow up after reading about Amazon/Apple/Facebook/Google. "The Upstarts" is written by Brad Stone who also wrote "The Everything Store" - a book about Jeff Bezos and Amazon.

The book is very well researched and is written in a manner where it seems like you are reading a very long piece of investigative journalism - that is, it hooks you in and doesn't let you go until the end.

The Upstarts by Brad Stone
The Upstarts by Brad Stone
The author clearly had access to the founders and inner circles of both Uber and Airbnb. Not only that, he does a great job of getting the point of view of regulators and other relevant parties. He tries his best to approach the writing of the book with an open mind and tries to paint an unbiased picture of past events for readers.

Here are a few things I learned from the book.

Using your community as your moat

Both Uber and Airbnb used their community of supporters as a defensive moat when regulators came to try and shut them down. 

For Uber, they mobilized their users to come to demonstrations and asked them to call their politicians to let their voices be heard. Uber users were willing to do this because they loved Uber - it gave them an alternative to the expensive, outdated and inefficient taxi systems found in many cities.

For Airbnb, they highlighted their good hosts whenever they had showdowns with regulators. These "good" hosts often rented out vacant rooms within their primary homes and Airbnb provided them a means to earn extra money to keep them in their homes. It also allowed them to make friends and provide more genuine travel experiences to their guests.

Because these communities loved the platform and were willing to have their voices heard in the fight with regulators, politicians had no choice but to take notice, listen and work to find a way to update outdated rules to accommodate the changing landscape.

Grow fast, worry later

Both Uber and Airbnb competed with established industries (taxi and hospitality) and moved quickly and at times ruthlessly to grow as fast as they could while getting very close to crossing the line on what was legal within those established industries.

Both companies saw that the current rules where outdated and instead of playing by the existing rules, they grew their communities so large that they became too big to shut down. 

Regulators (and well funded and established competitors) had to scramble to catch up.

From upstart to adulthood

All upstarts and disruptive companies need to eventually grow up and become adult companies. 

While they tried to skate from having to face regulators in the beginning, both Uber and Airbnb hired experienced and well respected executives to help them navigate all the regulatory hurdles they had to eventually face.

Both companies, Airbnb much earlier than Uber, came up with their vision and road map to guide them as their employee count grew to the thousands.

The stories of Uber and Airbnb are still being written

This book was published in January 2017 and in the last 18 months since the book came out a lot has changed. 

Travis Kalanick has resigned as Uber CEO due to a series of scandals. A few months later, Dara Khosrowshahi was appointed as the new CEO. The new CEO went to work quickly trying to right the ship. Uber exited South East Asia in a deal similar to the China deal written about in the book - Uber giving up their operations for a stake in their competitor Grab. And just last week, it looks like New York City will be setting a cap on the number of Uber drivers/vehicles.

For Airbnb, their problems dealing with racism on the platform went viral in 2017. And just last week, their battle in New York City took a big hit as new legislation passed now requires them to hand over the list of names and addresses of its hosts in an effort to crack down on "bad" hosts.

It will be interesting to see how the stories of Uber and Airbnb continue to unfold. Both are unquestioned global leaders in the sharing economy. Both have big expansion plans. Both companies are likely here to stay and will sooner rather than later become as ubiquitous as Apple/Amazon/Facebook/Google.