Uber vs AirBnB: do you have to be an asshole to found a brilliant start-up?

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[Ian Leslie discovers how the two companies show Silicon Valley’s split personality. Leslie's answer is 'Perhaps in the short run, but not in the long run.' *RON*]

Ian Leslie, New Statesman, 5 April 2017

JIM WILSON/THE NEW YORK TIMES/RE/EYEVINE
The Upstarts tells the intertwined stories of two start-ups that might almost be twins. Uber and Airbnb have both become multibillion-dollar companies in the space of eight years. Both have created virtual marketplaces that blur the lines between consumers, suppliers and employees. Both have encountered staunch resistance from industries they threaten to undermine (hospitality in the case of Airbnb, taxis in the case of Uber) and both have endured high-profile public criticism.

Despite their kinship as businesses, the two brands are perceived very differently. Airbnb feels benign and optimistic, the way we all used to feel about Silicon Valley. Uber is the dark twin, a symbol of rapacious capitalism and dehumanising technology. On reading Brad Stone’s book, it becomes clear that much of this divergence can be attributed to the personality of each company’s chief executive – Brian Chesky at Airbnb and Travis Kalanick at Uber.

After moving to San Francisco in 2007, Chesky and a friend from college came up with the idea of renting out an airbed in their living room to conference delegates in order to make the rent on their apartment. A few months later, together with a third partner, they started a company offering “AirBed&Breakfast” to those unable to find conventional accommodation. That Chesky should become chief executive barely needed to be agreed: he was a natural leader.

Uber, on the other hand, was dreamt up by a Canadian entrepreneur called Garrett Camp. In 2008, he had an epiphany while watching Casino Royale, Daniel Craig’s first James Bond movie. In one scene, Bond is driving in the Bahamas and glances down at his phone to check a graphical icon of his car moving on a map. Entranced, Camp became obsessed by the idea of an upmarket limousine service with vehicles that customers could track on a phone. He chose the name “Uber” because it sounded superior. “It means great things. It means greatness!”

Unfortunately it also connotes arrogance and ruthlessness, which might not have been a problem, had Camp not later installed a chief executive who can seem like a cartoonish embodiment of both of these qualities. Then again, without Travis Kalanick, it is probable that Uber would have gone under long before anyone thought to write about it.

I think it’s fair to say that nobody will read The Upstarts for its prose. Here is how Stone describes his first meeting with Airbnb’s CEO, in San Francisco: “Chesky is five foot nine and fit from a regular workout regime. He spoke quickly, with spasms of tension occasionally passing over his mouth . . .” In the space of three paragraphs, two different restaurants in Paris are described as “elegant”, largely because they serve wine. The narrative gets bogged down in descriptions of regulatory battles. Stone, a journalist who is an astute analyst of the technology industry, does not impose himself on his material as he might have done.

But The Upstarts works as a study of the entrepreneurial personality. Its most compelling character is Kalanick, the engine of Uber’s breakneck growth (after recruiting his friend to run the business, Garrett Camp took a back seat). Stone doesn’t remark on the loopy coincidence of Kalanick’s first name – not only does it allude to travel, but its best-known fictional owner was a mad-as-hell taxi driver – but he does put him centre stage, and for good reason: he makes a terrific anti-hero.

Kalanick falls out with colleagues, competitors and friends. He makes sexist jokes. He is brutally dismissive of critics; at a meeting with a regulator he turns his chair away to signal disdain. He is irresistibly drawn to unnecessary arguments. In February, a video emerged of him getting into a row with an Uber driver who politely explained how hard it is to make a living when the company sets prices so low. The exchange ends with the billionaire snapping at his employee-who-is-not-an-employee: “You know what, some people don’t like to take responsibility for their own shit.” Kalanick has apologised and promised to grow up. He is 40.

Kalanick, to use an expression one would never hear in an elegant restaurant, is an asshole. Yet it is impossible to read The Upstarts and not conclude that he is a brilliant asshole. It is he who takes the company through dizzying swerves of direction that seem reckless at the time but turn out to have been visionary, such as giving up on being an upmarket limo company to become a mass-market ride-hailing service. It is he who sees, almost from the beginning, that Uber is not only a more convenient way of ordering a cab, but a way of reconfiguring the relationship between time, space and money in the city. As its rivals focused on competing with other taxi firms, Uber made it easier for people to give up their own cars. It is Kalanick who forces the pace of international expansion when everyone else in the firm is telling him to slow down.

Time and again, Kalanick makes the risky but right decision after rejecting the advice of clever and reasonable colleagues. It takes a certain kind of character to behave like this. Yes, it helps to be brave, resilient, and other admirable things – but it also helps to be an asshole.

Peter Thiel, the venture capitalist and provocateur-in-chief of Silicon Valley, once proposed a theory to explain why so many initiators of successful technology start-ups are just a little bit odd. He argued that although a lack of social skills will hold you back in most areas of life, it can be an advantage to the entrepreneur in possession of an innovative idea. Those with a normal desire to fit in with people around them are easily persuaded to abandon original, strange-sounding notions; those who don’t care about being liked pursue them regardless. To be unbending, it helps to be insensitive.

Thiel’s theory makes sense for firms that depend on a unique use of technology. But what if your business is built on human relationships? Arguably, Airbnb is more of a social innovation than a technological one. People were posting homes or spare rooms on sites devised by the likes of Craigslist and Couchsurfing for years before Airbnb arrived. What made Airbnb different was the care and attention it paid to subtle details that bridged the trust gap between renter and vendor – by, for instance, ensuring that hosts posted profile photos.

In contrast to Kalanick, Brian Chesky is socially adroit, an appealing spokesperson and all-round nice guy. An industrial designer by trade, he takes great care over how it feels to use his service. Good designers are usually good listeners, naturally curious about human psychology and behaviour. In the early days of the business, he spent weekends visiting Airbnb hosts across the country in order to understand better what they needed to market their flats.

Chesky realised early on that it was as crucial to cultivate the supply of rental properties as it was to find renters. That involved recruiting and retaining good hosts, which required something more than financial incentives. By organising meet-ups and conferences of Airbnb hosts, Chesky created a “community” whose members supported each other, shared the missionary zeal of its founders and amplified the company’s message in public debates.

This idea of the company as a social rather than a purely transactional entity enabled Airbnb to emerge unscathed from a shark attack originating in Germany. In the most dramatic episode in The Upstarts, the firm’s founders are approached by the notorious Samwers, three brothers from Cologne who have made themselves very rich by quickly replicating successful online ideas such as eBay and YouTube and selling the resulting businesses for millions, often to the company they have copied in the first place.

Oliver Samwer is like a business executive as written by Quentin Tarantino. He travels the world carrying only a small briefcase, in which he keeps one set of underwear and a shirt. In a leaked email from 2011 for which he later apologised, he told colleagues, “The time for the blitzkrieg must be chosen wisely, so each country tells me with blood when it is time . . . Now it is time to either decide we will die to win or to give up . . .”

Samwer invited the Airbnb founders to visit the offices of Wimdu, a clone of their business in Germany. Chesky and his partners, aware that they had become the subjects of a perfectly legal shakedown, warily agreed. In an overheated Berlin warehouse, they witnessed row upon row of young coders sitting at PCs with Wimdu and Airbnb websites open in adjacent windows.

“You Americans innovate,” Samwer told his guests. “Me and my army of ants, we go fast and build great operations.” Wimdu, he pointed out, was already nine times larger than Airbnb. He proposed a deal.

Chesky and his partners faced an agonising choice. They couldn’t just cede a major market to a competitor: Airbnb needed to be a global network if it was to succeed. But neither did they wish to sell a stake in their business to people who seemed to care nothing for good design or dreamy ­ideas of community.

In the end, the Americans decided to take the risk of spurning the Samwers. They identified another German entrepreneur to partner with and speeded up the opening of overseas offices, appointing managers who cared about the same things as they did. “Brian was always worried about how do we scale our culture – how does every Airbnb office feel?” a former executive tells Stone. The bet paid off. Airbnb became a global brand ahead of schedule. Wimdu shrank away as quickly as it had sprung up.

Travis Kalanick is a computer engineer. He never spent much time talking to Uber drivers or trying to create a community. He is interested in people in the way a physicist is interested in atoms. What fascinates him about his business is the mathematical complexity of getting enough drivers to enough riders at the right time, and at the right price. Indeed, it is a point of pride to him that Uber minimises human interaction. “We don’t own cars and we don’t hire drivers . . . It’s very straightforward. I want to push a button and get a ride.”

Paradoxically, however, Kalanick comes alive to the reader in a way that Chesky does not. His childish rages are all too human, as are his obnoxious jokes (an early Uber employee receives a veiled threat from a limo firm; Kalanick replies that if he gets assassinated, that might be good for business). There can be something a little synthetic about Chesky’s rhetoric of trust and sharing, especially now that Airbnb has evolved beyond its peer-to-peer roots: a study last year found that almost a third of the firm’s revenues in its top 25 markets were generated by commercial operators.

Nonetheless, Chesky’s approach is better adapted to the challenge of being a big company. As companies grow – and none has grown faster than these two – culture becomes more important. It influences who joins and how they perform when they’re there. It also shapes the environment in which the company does business. The stream of bad news stories emerging from Uber, such as the recent testimony by a former employee about endemic sexism in the workplace, deters talent, emboldens critics and makes political battles harder.

In Uber’s negotiations with regulators, Kalanick has been guided by what he calls, with typical humility, “Travis’s Law”. In summary, this states that if a product is so good that the public decides it must have it, all political opposition will eventually cede to pressure and become support. The business imperative is therefore to move fast and be uncompromising: build it, and they will fold. Stone points out that this ­approach has been emulated by Airbnb, but Chesky has pursued it with more finesse. Uber’s progress with regulators has been stymied, in part, because of its poor corporate image. It will not be surprising if Kalanick is forced out of the driver’s seat before Uber is taken public.

The irony is that whether he continues to lead it or not, Kalanick’s company has the potential to do far greater things for humanity than Chesky’s. Without wishing to diminish the importance of better accommodation, the advent of mass ride-sharing could reshape our cities for the better, eliminating traffic jams and reducing atmospheric pollution. If Uber precipitates such a transformation, we will have Kalanick to thank, even if nobody will feel like doing so. Hard though it is to admit, sometimes progress is driven by assholes.

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