Wednesday, February 1, 2017
Stone, The Upstarts
Airbnb, now valued at $30 billion, more than any hotel chain in the world, and Uber, valued in late 2016 at $68 billion, more than any other private company in the world, both began as side projects, with modest business plans. Neither seemed especially promising. After all, who would want to sleep in some stranger’s house or have a stranger sleep in his? And who would think that making the San Francisco cab system more efficient was a revolutionary business idea?
Even as Uber modified its initial business model, most potential investors had serious reservations. Ron Conway, “famous for backing the holy trinity—Google, Facebook, and Twitter—passed on the deal. ‘This one looks like it will be a fight in every city,’ he sagely e-mailed a fellow investor.”
Funding was a major hurdle, but actually making the businesses work was much tougher. One crisis followed the next. A woman who had rented her apartment for a week via Airbnb returned to find it burglarized and trashed. She wrote about the incident on her blog. After Airbnb didn’t come through with the promised compensation or provide her with alternative accommodations but instead suggested that she “shut down her blog or update it with a ‘twist’ of good news,” she posted that she was “basically homeless, terrified, and ‘broken’ by the situation.” She told readers to “book yourself into a nice, safe hotel room the next time you travel.” A nonstop Twitter-fueled media storm followed.
Uber had its share of horror stories about drivers who assaulted passengers. And its surge pricing, which eventually became orthodoxy inside the company, was initially a public relations disaster. One New Yorker tweeted: “While I’m glad I’m home safely, the $107 charge for my @Uber to drive 1.5 miles last night seems insanely excessive.”
Both companies, of course, faced, and continue to face, major political pushback.
The stories of Uber and Airbnb are nowhere close to being finished. Airbnb is now providing unique experiences for travelers, using local entrepreneurs and celebrities. Uber is experimenting with driverless cars. They are evolving along with technology.
The Upstarts is a testament to grit—lots and lots of it—and, yes, luck. It’s quite a good read.