“The Upstarts: Uber, Airbnb, and the Battle for the New Silicon Valley” Summary/Review

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In The Upstarts, Bloomberg’s Brad Stone tackles the short histories of two of the most successful new companies of the last decade, Uber and Airbnb. Although these two companies are just celebrating their tenth anniversaries, they’ve already established a history full of wild successes and equally extreme missteps worth retelling. Stone could fill two separate books with the stories of Uber and Airbnb, but he chooses to weave their narratives together, highlighting the parallels between these two massive upstarts.

Part I: Side Projects

Stone starts by setting the record straight on the widely extolled origin stories of both Uber and Airbnb. Airbnb began as the brainchild of co-founders and former design students Joe Gebbia and Brian Chesky, who began by renting out their San Francisco apartment to an attendee of the World Design Congress hosted by the city in 2007 as a way to pay rent. Encouraged by the results of that original weekend, the two partners enlisted Gebbia’s friend, Nate Blecharczyk, an accomplished computer scientist who began writing code to send spam emails as a teenager, to help create the Airbnb website. Despite marginal early successes, including interest from Justin.tv co-founders Michael Siebel and Justin Kan, the three co-founders found little success in terms of investments. In a last ditch effort to raise money, the designers created cereal boxes to serve to Airbnb guests, “Obama O’s” and “Cap’n McCain’s.” After sending boxes to media outlets around the country, orders began flooding in. The attention garnered and money raised earned Airbnb a spot at the famous Y-Combinator startup school, more so for the relentless hustle of its founders than for the company itself.

Uber began as the idea of entrepreneur Garrett Camp. Fresh off the sale of his internet startup StumbleUpon to eBay for $75 million, Camp became frustrated with San Francisco’s taxi industry. With plenty of time and capital on his hands, Camp began brainstorming questions and ideas for a way to summon cabs and town cars using smartphones. Not long after, he coined the name UberCab, consulted with engineers and other entrepreneurs, and discussed the idea with the man who would become Uber’s controversial first CEO, Travis Kalanick. Kalanick, an entrepreneur himself, would go on to work with Camp and engineers on the idea, begin introducing Uber to San Francisco’s town car and taxi drivers, and secure investments that give Uber the momentum it needed to launch into the juggernaut it became in the next few years.

kalanick and chesky

Airbnb’s Brian Chesky (left) and Uber’s Travis Kalanick (right)

Part II: Empire Building

Next, Stone chronicles the explosion in popularity and value of the two upstarts and the sharing economy that they ushered in over the next few years. Airbnb, under its newly appointed CEO Brian Chesky, began a massive round of financing after success at Y-Combinator. Armed with new capital and mentors, Airbnb forged onward, expanding to multiple cities across the United States and Europe. The transition from a small startup to giant hospitality marketplace was not easy. Although the founders imagined the world would be receptive to their vision of connecting hosts and travelers and sharing authentic experiences, the reality was not so picturesque. Much of the site’s revenue came from owners of multiple properties, renting their apartments and homes as if they were hotels. This phenomenon became the target of scrutiny, with critics arguing that this could price out long-term renters and bring chaotic out-of-town guests into quiet neighborhoods. As a result, along with other controversies along the way, Airbnb had to fight city to city against regulators for their vision of the company throughout their rapid expansion.

Uber’s expansion was equally mired in controversy, largely due to the brash nature of CEO Travis Kalanick. First operating only as a luxury town car service, Uber debuted in San Francisco and quickly expanded to multiple American cities, including New York, despite the ambiguous legality of the service. Unsurprisingly, regulators like New York’s MTA were unsure of how to deal with Uber, and taxi companies hated the app, arguing that it was illegal and hurt competition. Nonetheless, the company waged on due to what came to be known as Travis’s Law. As Stone puts it, Kalanick and Uber believed that Uber is “so superior to the status quo that if we give people the opportunity to see it or try it, in any place in the world where government has to be at least somewhat responsive to the people, they will demand it and defend its right to exist.” In many cities, Travis’s Law proved correct, and regulators were forced to bend to the company’s desires. Still, regulators were not the only challenge to Uber’s early success. Ridesharing competitor Lyft forced the company to move beyond their luxury town car service and to debut UberX, a service that allowed ordinary drivers give passengers rides in their normal cars. UberX proved to be a massive hit, but it received even more backlash from governments and taxi commissions.

Part III: The Trial of the Upstarts

As Uber and Airbnb matured into massive, multi-billion dollar companies, each experienced myriad growing pains. Airbnb had to fight city to city to promote their vision of “The Good Airbnb,” which gave extra income to people making ends meet and facilitated genuine connections with people across the world. Uber faced controversy due to a number of missteps. These included the revelation of “God View,” a feature that allowed employees to violate the privacy of riders and drivers and view information about their rides, Greyball, which allowed drivers to identify riders that were law enforcement/taxi operators who could potentially threaten them with fines, and the acquisition of Otto, an autonomous vehicle startup whose CEO had stolen information from longtime Uber frenemy, Google. After an arduous fight with ridesharing company Didi in China, media reaction to these problems, combined with Kalanick’s refusal to hire a CFO, his widely publicized outburst at an Uber driver who complained to him about lowered fares, the possession of private medical records by Uber executives of a passenger in India who was brutally raped, and the general culture of sexism at Uber led to Kalanick’s forced resignation as CEO. Each of these factors, along with Kalanick’s refusal to play nice with competitors and board members, led to the need of a change in leadership at Uber, and leaves new CEO Dara Khosrowshahi with a massive battle ahead to change public perception of the company.

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Review/Further Reading

I highly recommend The Upstarts. The stories of Airbnb and Uber are far from over, but Stone addresses the two companies at critical points in their short histories. He explains their origins and first years of expansion in a way that simultaneously is easy to understand and doesn’t skimp out on the details. For someone that only had a cursory knowledge of the two companies like myself, Stone’s account is thorough and accessible, and leaves me eager to catch up on recent news surrounding these upstarts and to keep following them in the future. If you enjoy The Upstarts, or before you read, I would also recommend the episode of the How I Built This podcast featuring Joe Gebbia. The podcast offers an interesting perspective on the origins of Airbnb from one of its founders and can be listened to in about an hour.

5 thoughts on ““The Upstarts: Uber, Airbnb, and the Battle for the New Silicon Valley” Summary/Review

  1. This book sounds very informative on Uber and Airbnb, two of the most successful startups in the last few years. However, as you noted, it will be interesting to see what happens to these companies in the next few years. With government regulation, the future for both Uber and Airbnb could look a lot less promising. Over the next few years, U.S. citizens along with the national, state, and local governments, are going to have to decide between allowing this kind of disruption/innovation or using regulation to preserve the status quo.

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  2. I loved the How I Built This episode with Joe Gebbia (and even wrote a blog post on it last semester!), and your summary feels like a continuation of the same narrative! I remember reading about God View and some of Kalanick’s questionable ethical choices. As Uber and Airbnb attempt to revolutionize established industries, growing pains are inevitable but Brad Stone seems to offer novel insight into that process.

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  3. Thanks for the summary! I really enjoyed reading it as I frequently use the services that Uber and Airbnb offer. I think it was smart of Stone to bring the stories of the two companies together because they are facing similar challenges, especially surrounding regulation. I am eager to read this book!

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  4. It’s so interesting to look at where these companies were only a few short years ago, compared to where they are now. While both have definitely had their fair share of difficulties, I think Dara Khosrowshahi has been doing an incredible job of saving Uber’s reputation. That being said, if none of those scandals were big enough to run Uber off the road, I can’t help but wonder just how much these wildly popular upstarts can get away with.

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