The Upstarts
Airbnb's founding told alongside Uber's; strong on the early years.
Summary
Stone covers Uber and Airbnb from founding through roughly 2016, treating them as parallel cases of companies that built businesses in regulated markets by operating first and addressing the law afterwards.
The Airbnb material covers the founding during a San Francisco design conference when the founders rented air mattresses, the years of failing to grow, the Y Combinator period, the growth mechanics including professional photography of listings and the trust and reputation systems that made strangers willing to stay in each other's homes, and the regulatory conflicts in New York and elsewhere.
The Uber material covers the original black car service, the shift to UberX and to non-professional drivers, the city-by-city launch playbook, the subsidy competition with Lyft and with Didi, and the regulatory conflicts. Stone's analytical contribution is the comparison. Both companies faced the same structural problem of building a marketplace in a regulated sector, and they took different approaches, with Airbnb generally negotiating and Uber generally confronting. He also examines why the incumbent hotel and taxi industries responded as they did, and the specific regulatory features that made each market attackable.
The book was published in 2017 and ends before Kalanick's removal, before the public offerings, before the pandemic, and before the regulatory settlements in both sectors. Stone had access to both companies and the tone is more favourable than Isaac's account of Uber. The comparative treatment of two companies solving the same trust and regulatory problems differently is the reason to read it.
Key takeaways 8
- Both companies built marketplaces in regulated sectors by operating first and addressing the law afterwards, which was the shared strategic choice.
- Airbnb generally negotiated with regulators while Uber generally confronted them, which produced different outcomes in the same markets.
- Reputation and review systems solved the trust problem that had prevented strangers from transacting in these categories previously.
- Professional photography of listings was the specific intervention that made Airbnb's supply side credible to buyers.
- City-by-city launch with local general managers and aggressive targets produced fast expansion and repeated local conflicts.
- Subsidy competition between marketplaces consumes capital without producing durable advantage where switching costs are low on both sides.
- Incumbent taxi and hotel industries were protected by regulation that assumed a different market structure, which made them slow to respond.
- The book ends in 2016 and predates the leadership changes, the public offerings and the regulatory settlements in both sectors.
Who should read it
Founders and investors building marketplaces in regulated sectors who want a comparison of two approaches to the same structural problem.
About Brad Stone
Senior executive editor for global technology at Bloomberg News who writes reported histories of Amazon, Uber and Airbnb.
The Everything Store reconstructs Amazon's first two decades from hundreds of interviews with insiders, covering the decisions on pricing, third-party sellers and infrastructure that made the model work. Amazon Unbound picks up the following decade, and The Upstarts documents the regulatory and operating fights Uber and Airbnb had to win to reach scale.
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