Brad Stone, author of The Everything Store: Jeff Bezos and the Age of Amazon, turns his attention in this book to the shared economy. The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World (Hachette, 2017) tells the stories not only of the companies that have become part of popular culture but, in passing, of those that fell along the way, the nonstarters.
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?
Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
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.