Book Review: The Upstarts

The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are Changing the World
By Brad Stone
2017 • Little, Brown • 33 Pages • Hardcover $17, E-book $16, Audio $20

In a nutshell – A deep dive into the rise of two disruptive companies that capitalize on the new user economy and grow into internet business dynamos.

Who’s it for? – Want to know what it’s like to grow a startup company that quickly changes the world? Then “The Upstarts” is for you.

Author Quote – “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.”

Ten short years ago, the concept of staying in a stranger’s home or getting a ride from a stranger’s car in an unknown city would not be recommended. “The Upstarts” by Brad Stone is a book that tells with alternating narratives the stories of Airbnb and Uber. Both companies demonstrate business models that were built around inexpensive assets (Airbnb allows home owners to become amateur hotel owners and Uber makes amateur drivers into de facto cab drivers).

Like Stone’s 2013 book “The Everything Store,” which chronicled the emergence of Amazon as a major retail force, “The Upstarts” is the result of countless interviews with its subject’s employees, investors, and principals. The “Upstarts” begins in 2009 at the early idea stages of both companies working as a series of chapters that goes back and forth between Airbnb and Uber.

Airbnb CEO Joe Cheskey realized the pent-up demand of room rentals when he and his roommate couldn’t make rent and put up a flyer for out-of-town conference attendees to crash in their small living room. It took several false starts before the company found the guidance it needed to gain momentum and grow. Taking advantage of the growing public use of phone apps, the company was able to grow quickly first in New York City and then on the West Coast. Cheskey and Airbnb take on threats to their company in a usually reasonable fashion. The same cannot be said for Uber.

Co-founders Garrett Camo and Travis Kalanick began as a private ride service company that charged 1.5 times what taxi services did. It wasn’t until 2012 that UberX was introduced which allowed anyone with a driver’s license (and after background checks) to become an Uber driver.

Kalanick was the force that took on Uber competitors such as Lyft and cities that sought to outlaw Uber and protect the existing taxi services. Author Stone explains in great detail how Kalanick’s ego and brash demeanor are at times Uber’s worst enemies. Eventually, the company shielded him some from hearings and interviews. Still, no one denies that it is Kalanick’s competitive streak and strategic foresight that drives Uber’s rapid growth.

Stone takes his time going through the details of venture capital financing cycles that fueled the advances of both companies. There are also internal growing pains and countless battles as both Airbnb and Uber move into new cities and eventually expand across the globe. Some customer service fiascos of both companies described by Stone are hard to believe.

The “Upstarts” provides a fitting background to view how the new “user economy” plays out in northern Michigan. Short-term rental sites like Airbnb are already used by many home owners in the Grand Traverse region to offset non-Homestead state property taxes and growing expenses. Townships and municipalities are handling the new rental economy with varying approaches. Meanwhile, rumors persist about the Traverse City area scaling up to the point where and when Uber (or its competitor Lyft) arrive in town. How this will change our local transportation situation remains to be seen.

The firsthand accounts that Stone has access to make for an amazing set of stories. In the book’s epilogue he brings the tandem tales full circle to demonstrate how much Airbnb and Uber have changed the world in such a short period of time.

Chris Wendel is a business services consultant with Northern Initiatives, a community development financial institution based in Marquette. Wendel lives and works in Traverse City and can be reached at cwendel@northerninitiatives.org.

 

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