The Upstarts - Book Summary

Unlocking the backstory of two tech titans: Uber and Airbnb

When we think of 'start-ups', we usually envision fresh, compact enterprises bursting with ground-breaking ideas and concepts. Giants of the tech world like Google, Facebook, and eBay all emerged from such humble beginnings. In recent times, the surge of new start-ups has been undeniable, transforming the business landscape. But as these businesses evolve, they transition from being just a start-up to something much larger - they become upstarts.

In this narrative, we dive into the fascinating evolution of two of these upstarts, who have now become synonymous with modern living - Uber and Airbnb. Both these entities have not just disrupted but reimagined the existing structures of personal transport and hospitality, leaving an indelible mark.

But what exactly propels these upstarts to become the powerhouses they are today, and what does the future hold for them?

As we delve deeper, you'll uncover:

- The profound influence a CEO's personality can have on an organization's way of conducting business;

- How competition compelled Uber to reinvent itself;

- And a possible road map for Uber and Airbnb's journey ahead.

A deep dive into the evolution of big-league tech enterprises: Airbnb and Uber

Business enterprises like Airbnb and Uber have experienced staggering growth, skyrocketing them into the league of the extraordinarily successful. These companies no longer fit the start-up mold, having shown they can rub shoulders with established industry heavyweights and disrupt traditional business norms. These robust entities are best described as 'upstarts'.

World-renowned, Airbnb and Uber are basking in the glow of bustling business. Interestingly, unlike numerous multinational corporations, they do not possess any physical assets.

At a quick glance, Airbnb could be mistaken for the globe's biggest hospitality firm — yet, it doesn't own any of the rooms it rents out. Similarly, Uber is often perceived as the world's largest taxi service, but it doesn't possess a single car in its fleet.

The absence of assets, somewhat paradoxically, has been instrumental in enabling these tech behemoths to expand with unprecedented speed and flexibility, two key attributes in the dynamic tech world.

Let's also not lose sight of the sheer scale of these enterprises. Known as 'unicorns', these companies are start-up titans valued at over a billion dollars. In 2016, Airbnb held a valuation of thirty billion dollars, while Uber was valued at a staggering sixty-eight billion dollars.

Airbnb's astronomical rise owes much to venture capital firm, Sequoia Capital, one of Airbnb's initial significant investors. In turn, Sequoia Capital's investment has borne fruit, yielding returns that dwarf the profits made from similar investments in Google and WhatsApp.

Undeniably, achieving this degree of success demands relentless effort and occasionally, a somewhat cut-throat approach to business.

The relentless evolution of Uber: Winning despite setbacks

Initially, the concept of Uber, a business promoting rides in strangers' cars, seemed preposterous. So, what transformed this audacious idea into a reality?

Uber's journey started as a town car service in San Francisco, a city plagued with severe transportation issues. Taxis were few and far between due to a mismatch between supply and demand.

Seizing this opportunity, Uber provided a dependable car service catering to the city's young professionals. A touch of style was woven into their business model, making it appealing not to wait for elusive taxis.

Over time, competing ride-sharing services, such as Lyft, started gaining ground. Already having a foot in the door in several cities, Uber felt the need to expand into the taxi industry to maintain its edge. Their seamless app and established user base ensured this expansion was successful.

It was during this period when Travis Kalanick, Uber's then-CEO, envisioned the need for Uber to maintain a dynamic persona, constantly evolving to keep pace with shifting trends and stay relevant.

Driven by grand ambitions, Kalanick propelled Uber onto the global stage, with a remarkable impact in Europe. He even ventured into the complex Chinese market with dreams of establishing a monopoly.

However, the home-grown rival, Didi Chuxing, outpaced Uber with more abundant capital and a larger footprint in China, operating in 400 cities as opposed to Uber's 100. Acknowledging the uphill battle, Kalanick struck a deal that saw Uber withdrawing from China, selling its operations to Didi Chuxing in return for a 17 percent stake in the Chinese firm.

Although Kalanick didn't manage to establish Uber in China, this strategic move still netted billions from the Chinese market, fortifying his status as a tech prodigy. Moreover, the influx of capital provided the fuel to propel Uber's growth at an even faster pace.

It's clear that Kalanick's penchant for risk-taking was a key element in Uber's rise to fame. However, as we'll discover later, this trait often led Uber to the brink of controversy.

The ascent of Airbnb: From a single spark to a hospitality giant

The concept of hopping into a stranger's car might have once seemed outrageous. But today, it's an everyday occurrence, just like paying to sleep in a stranger's house has become a norm. Thanks to Airbnb, tourists worldwide consider this an entirely viable option for accommodations.

The genesis of Airbnb sprung from a place of necessity and modest beginnings. Brian Chesky, one of Airbnb's co-founders, was engrossed in other projects and couldn't afford to pay his rent. Consequently, he chose to bunk on a friend's couch, offering some money for the makeshift accommodation.

That's when Chesky had a eureka moment. Homeowners could lease their spare rooms, earning a side income, while visitors could save on accommodation expenses compared to traditional hotels.

The allure of Airbnb for guests extends beyond cost savings. It offers a unique, authentic experience, allowing them to engage with locals and explore off-the-beaten-track experiences often overlooked by typical tourists.

Inspired by this, Airbnb embraced the motto, "Belong anywhere," suggesting a sense of home, no matter the destination.

Over time, Airbnb transformed into a formidable force in the travel industry. In August 2016, the company broke its own record, accommodating 1.8 million guests in Airbnb listings worldwide in a single night. For context, that's more than the entire Marriott Hotel Group — the world's largest hotel company!

This meteoric rise was something few could have predicted. Initially, investors were hesitant, apprehensive that safety concerns would deter potential users.

Despite a few hiccups along the way, Airbnb has largely dispelled these fears, demonstrating that we can indeed rely on the goodwill of our fellow humans.

Without a doubt, Airbnb and Uber have ushered in some groundbreaking innovations for consumers. However, this journey hasn't always been a walk in the park.

The stalwarts of Uber and Airbnb: Bold leaders courting the storm

Entrepreneurial stalwarts like Bill Gates and Mark Zuckerberg are known for their quiet yet potent impact. Despite their introverted demeanor, they have successfully disrupted industries, steering clear of the stereotypical loud, assertive CEO image.

However, Travis Kalanick and Brian Chesky, the CEOs and co-founders of Uber and Airbnb, paint a contrasting picture. Both are known for their charisma and acute eloquence.

Kalanick's mettle was tested when he came head to head with Christiane Hayashi, the then director of San Francisco's Taxis and Accessible Services Division. Hayashi attempted to stymie Uber's expansion in San Francisco, leading to palpable tension. The heavily regulated taxi drivers whom Hayashi represented were deeply vexed as Uber seemed to evade every regulation. A particularly contentious meeting saw Hayashi branding Uber executives as "obnoxious," while Kalanick accused Hayashi of harboring "deep anger" and resorted to "screaming." This fierce contention marked Kalanick's readiness to wade into the storm.

However, Kalanick's audacious approach had its own appeal. Uber supporters rallied behind him during the company's disputes with local authorities, including those in New York City.

Conversely, Airbnb's Brian Chesky wielded his charisma to charm powerbrokers. After an engaging speech at an investment bank Allen and Company-hosted conference, Chesky received an invitation to the bank's annual party. This platform allowed him to promote Airbnb to influential figures.

Despite revolutionizing connections, Uber and Airbnb's methodologies have stoked controversy.

Uber, for example, classifies its drivers as independent contractors rather than employees. This move absolves the company from extending benefits like health insurance, a standard offering in large companies.

Airbnb, on another occasion, pledged public compensation to a host nicknamed "EJ" after Airbnb guests left her apartment in ruins. However, Airbnb didn't honor its promise, prompting EJ to start an online campaign and apply public pressure. This controversy eventually coerced Airbnb into revising its insurance policies for hosts.

The takeaway here is lucid. A CEO's charm and tenacity can propel them to the pinnacle. But it's almost inevitable that they'll ruffle a few feathers along the way.

Staying rooted: A call to upstarts to uphold their initial altruistic visions

In the fledgling phase of a startup, idealism is a commonplace trait — there isn't much at stake. The real test, however, is preserving this idealism once fame, wealth, and success set in.

Can Airbnb and Uber remain humane and resist morphing into soulless profit-churning machines?

Airbnb, during its infancy, found itself in the crosshairs of the infamous Samwer brothers, notorious for creating clones of apps and cannibalizing the original companies' markets, thereby forcing them to buy back the clones.

But Airbnb resisted the bait. They decided that the ultimate competitive edge was in creating an unrivaled app. This approach paid off as the Samwers' clone, Wimdu, eventually collapsed.

Airbnb also strives to retain its unique workplace culture that sprouted from values like thoughtful decision-making and the principle that every voice matters. Nevertheless, Airbnb would do well to remember its clash with the Samwer brothers, to avoid adopting their ruthless tactics.

On the other hand, Uber's unwillingness to allow its drivers to unionize or provide decent working conditions is disconcerting. This indicates a departure from its roots and early advocacy for community inclusivity. Drivers are entitled to fair treatment, something Uber must not lose sight of.

As the adage goes, with great power, comes great responsibility.

As the forerunners of business's future, Airbnb and Uber essentially shape the mindset of a new generation. Their wealth offers them the leverage to influence future decisions.

However, just like traditional corporations, they face the risk of falling prey to greed or the allure of more power through conformity.

While the long-term global impacts of Airbnb, Uber, and similar upstarts remain uncertain, we can hope that they will stay loyal to their founding principles.

In conclusion

The essential takeaway from this book:

Airbnb and Uber are offshoots of two dynamic, magnetic entrepreneurs and their equally compelling teams. These two establishments harbor the potential for profound global impact. However, caution must be exercised to ensure they don't misuse the considerable influence they've acquired.