I did a few business minors in college. Seemingly, in every course except for finance, accounting, and industrial design,((ironically, the three courses I either liked the best or learned the most in)) we did case studies on up-and-coming companies. At the time, two of the most done case studies were Uber and Airbnb. All those companies had massive fundraising rounds, they were dominating the news, and it was easy to study them. As students, we all regularly used Ubercand some had used Airbnb.
Separately, outside of the university environment, I was lucky enough to hear a former C-suite executive of Uber and a co-founder of Airbnb speak. They both talked about how their companies were changing the world. The commonly-accepted thought in tech was that taxis and hotels would never recover. “Uber for X” or “Airbnb for X” became the primary startup idea.
I specifically remember the Uber C-suite executive say a statement that I echo with my clients:
“There are two things that bring industry disruption. The first, is a 10X decrease is cost. The second is a 10X increase in user experience. We’re doing both.”
Of course, he was right. Uber was 10X better at both. In 2013, cabs were hardly a luxurious experience. Ubers were sleek. The cars just came to you. Your payment information was stored in the app. You could see where you came from, were currently, and were going all inside the app. They were so cheap.
Airbnb was similar. You could get a nice place at 25% the cost of a hotel. Or less.
Both Airbnb and Uber were promising to change the world. They were raising money at massive valuations, navigating scandals, and well on their way to being a decacorn or bigger.
Then several years later, both companies IPO’d. Lockdowns led to demand-side, supply-side, and sometimes every-side shock. Venture capitalists were replaced by the public markets. What was a maniacal focus on top-line growth became a focus on profitability and sustainability.
All of the sudden, when the need for profitability arose, the 11-minute Uber from my apartment to downtown went from $6.00 to $17.00. A trip from my apartment to the airport went from $15.00 to $22.00-$25.00. Surge pricing was more common.
Airbnb’s fees rose. Cleaning fees((not in Airbnb’s control, I know)) were requested with reckless abandon. The Airbnb fees, themselves, rose. All of the sudden, prices for a place started to rival, or exceed the price of a hotel. Some hosts started enforcing that guests pay a cleaning fee while also pre-cleaning the apartment and washing the linens before the cleaners come.
Meanwhile, taxis got their own apps. They integrated credit card terminals into their cars. Better yet, you could even watch where you were going on your phone, by plugging in the address into your Maps app. In many cases, especially at airports, they arrive faster than an Uber would.
Hotels upgraded their apps, offered more diversified room pricing and amenity offerings, and enhanced the customer experience.((Serendipitously, right after finishing the first draft of this, an Airbnb host was 2 hours late to give us the keys to our place, and had forgotten toilet paper, trash bags, and hand soap. It was our first such occurrence, but one of note.))
Companies like Booking.com allowed you to order a private taxi service to and from the airport and order a hotel at the same time.
When a new company introduces a groundbreaking new customer experience or radically lower costs, it’s easy to give credit to the technology. It’s easy to say that the old world is “disrupted” or “dead,” and that company is the “new world.”
In reality, we don’t know until the dust settles. The dust settles when investors move from private to public. It settles when the company needs profitability, not growth, to justify its valuation. When PR calls become analyst calls. When price-to-sales becomes price-to-earnings.
Now, I use Uber when I’m feeling lazy or in a new city, but if I’m at a hotel, I have them call a taxi. If I’m at an airport, I either arrange a taxi ahead of time or use public transit from the airport.((Whichever’s faster. The City Mapper app tells me.))
I use Airbnb when I’m staying at a location for an extended period, but I use a hotel for any stay fewer than 5 days. Airbnb is perfect if I’m with a big group, like my whole family.((There is an argument that can be made that Airbnb truly disrupted timeshares, but the stated disruption was hotels.))
Uber and Airbnb are firmly in the category of companies that are not disruptive; they’re transformative. They forced the old-guard of their industries to modernize and enhance their experience. Private funding allowed them to serve customers at a radically lower cost, gain market share, and push the world forward.
Only then did they truly find their niche.
Evan Ryan 