The Upstarts (2017) Book Insights
Subtitle: How Uber, Airbnb and the Killer Companies of the New Silicon Valley are Changing the World
Publication date: 2017
Author name(s): Brad Stone
Table of Contents
- 1 About the author
- 2 Brief summary
- 3 Who is this book for?
- 4 Buy book
- 5 Disclaimer
- 6 Lessons and key book insights
- 7 Key quotes
- 8 Conclusion
Brad Stone is the senior executive editor of the global technology group at Bloomberg News and a New York Times best-selling author who frequently writes about Silicon Valley. He also wrote “The Everything Store: Jeff Bezos and the Age of Amazon”.
The idea of getting into a strangers car at night or living in a strangers room in another country (Airbnb) is something most people would consider frightening a few years ago. However, this is the norm today and is as easy as ordering a book online.
The Upstarts is a great expose of the founders of Airbnb and Uber. It looks at the impact these companies have had on the world and where they might go from there.
Who is this book for?
Entrepreneurs and anyone interested in the tech economy.
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Lessons and key book insights
Large corporations such as Google, Amazon and Facebook that have relatively revolutionised industries in our world today started small and were once called start-ups. However, at some point, they started growing exponentially and at this stage and we call them upstarts.
Even though new start-ups are created every day only very few get to grow like Airbnb and Uber which are two upstarts that revolutionised the hospitality and transportation industry within a short period.
Not every company is qualified to be an Upstart
Airbnb and Uber have one thing in common:
They caused massive disruption in their respective industries relatively very quickly and fought to make sure nothing comes in their way. Today Airbnb and Uber are very popular around the world with an enormous following and activity.
Airbnb and Uber operate on models that enable them to expand rapidly making them very difficult to beat. More specifically: with over 1 million customers per month, Airbnb can be said to be the largest hotel company in the world, although it does not own any physical rooms which it rents. Uber, on the other hand, can be said to be the world’s largest car service although it does not own its fleet.
The phenomenal growth of Airbnb and Uber did not come that easy and was dependent on the support from various investors who hoped to reap their rewards when these companies have captured a significant portion of the market.
Uber embraced change to grow
Uber officially launched in 2010 as a black-car-only service (Lincoln town cars and limousines) service in San Francisco, which did not have enough taxis to meet the meet the daily demands and this got worse during festive or busy seasons. The increased demand for taxis was because transportation agencies in San Francisco and most cities in the US enforced the medallion system for over 70 years(since the great depression). The medallion system was put in place to regulate the quantity and quality of cars on the streets. The medallion system lead to the number of medallions in most cities to be stagnant even as human population and activity increased. The competition among drivers for medallions was fierce, and some were on the wait list for up to 20 years to get the badge which most felt was very profitable as some medallion owners can action off their badges for up to $600,000 per piece or lease it for up to $200 per shift.
Uber offered an app-powered car service that helped drivers make money outside the medallion system which amounted to more vehicles to fill more people. However, Uber’s price was not affordable to everyone as its service meant for the upper class. For example, Ubercab ride in 2010 cost a Wired reporter in the San Francisco area $25, whereas a taxi could have cost $10-$12. A few years later, Uber’s business model came under threat when strictly ridesourcing services like Lyft entered the market a few years later. Local and state legislators fought Lyft by issuing cease and desist orders, but Lyft carried on undeterred which then prompted Uber to launch its service called Uber X (now commonly known as Uber).
Kalanick, the co-founder of Uber soon realised Uber would need to grow faster than its competitors did. He rapidly expanded Uber to Europe where it saw some success amidst the regulations and controversy it faced. Kalanick saw massive potential in the Chinese market and launched Uber in the country. However, Didi Chuxing, the Chinese equivalent to Uber had more capital and was more entrenched in the Chinese market, which made dominating the Chinese market almost impossible. Realising Uber may not win the Chinese market, Kalanick decided to withdraw Uber from the Chinese market and sold its Chinese operations to Didi Chuxing for 17% stake in the company. This decision would prove financially fruitful for the company.
Airbnb: From bizarre idea to marketplace
A few years ago most people found the idea of sleeping in a stranger’s house strange, but this is the norm today due to Airbnb’s enormous success. Airbnb started as a simple idea from Brian Chesky, and Joe Gebbia who could not afford to pay for rent so decided to start an air bed and breakfast to make some money. They started a simple blog called airbedandbreakfast.com to promote their air bed and breakfast. After they had their first guests, they thought their venture could be big. They invited their former roommate (Nathan Blecharczyk) to help them build the site, and after a series of funding and expansion, Airbnb is where it is today with over £90 million in profits for 2017.
Uber and Airbnb were okay with being bold and stirring controversy
Kalanick, the co-founder and CEO of Uber (2009-2017) and Brain Chesky the co-founder and CEO of Airbnb are not your stereotypically shy and softly spoken fortune 500 CEOs like Mark Zuckerberg.
Kalanick was not afraid to court controversy through his speeches and have utilised Ubers users to challenge local government bodies to pass legislation that is favourable to Uber.
Brian Chesky was charismatic and was able to sell his vision to people, and this made him instrumental to Airbnb’s success.
Airbnb and Uber have brought significant innovations to the world today but have also courted controversy.
Uber does not pay health insurance for its drivers because it considers them independent contractors which means they do not have salaries, expenses or benefits such as healthcare and insurance, as a full-time employee would. However, Uber drivers believe they should be treated as employees and feel resentful for not having much representation to help negotiate better pay as Uber drivers do not have a union.
Airbnb did not compensate some hosts that had their houses wrecked by guests and have had issues with the rental law in major cities.
Staying true to the core principles
Upstarts need to remain faithful to their core vision in other to succeed. Airbnb faced a series of competitors who copied their model with the hopes that they can steal Airbnb’s market share or be acquired by Airbnb. However, this prompted Airbnb to focus on making the best app and delivering an exceptional customer experience. Today, it is the most significant force in the hospitality industry. Uber on the other hand still does not allow its drivers to unionise.
These are some key quotes from the book:
It’s about a crucial era during which old regimes fell, new leaders emerged, new social contracts were forged between strangers, the topography of cities changed, and the upstarts roamed the earth.—Brad Stone.
If you want to build a truly great company you have got to ride a really big wave. And you’ve got to be able to look at market waves and technology waves in a different way than other folks and see it happening sooner, know how to position yourself out there, prepare yourself, pick the right surfboard—in other words, bring the right management team in, build the right platform underneath you. Only then can you ride a truly great wave. At the end of the day, without that great wave, even if you are a great entrepreneur, you are not going to build a really great business.—Brad Stone.
Chesky was moving slowly, but at the same time, he was frustrated that his imagined success wasn’t arriving quickly enough. “Every day I was working on it and thinking, Why isn’t it happening faster?” he told me.4 “When you’re starting a company it never goes at the pace you want or the pace you expect. You imagine everything to be linear, ‘I’m going to do this, then this is going to happen and this is going to happen.’ You’re imagining steps and they’re progressive. You start, you build it, and you think everyone’s going to care. But no one cares, not even your friends.—Brad Stone.
Airbnb and Uber have been continually evolving and are both valued at over £30 billion today(2017). Their success is primarily due to the leaders they had, timing, funding, and the network effect, which enabled them to expand rapidly.
Airbnb and Uber have a potential to expand even more and could face further competitors or regulations.
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