There’s a meme about digital disruption doing the rounds of technology and digital presentations and social networks at the moment that goes along the lines of
The world’s biggest taxi company owns no taxis (Uber);
The world’s biggest hotelier owns no hotels (AirBnB)…
I increasingly am starting to think that this particular train of thought isn’t very helpful for two key reasons.
First of all, presenting this particular nugget to people who work and lead big organisation has the tendency to make them think “What’s the best practice that got Uber to be Uber and AirBnB to be AirBnB” as if there is some magic formula that can be followed for digital disruption success.
This is, unfortunately, a case of quite severe Selection Bias – the process by which theories are drawn from a limited subset of data. To understand the success of AirBnB and Uber, you need to look not just at them, but also at the hundreds, if not thousands of startups that had good, mediocre or plan bad ideas that fell at the various hurdles.
The success of a few startups is in part because of the massive rates of failure of all the rest. It’s not a case of looking for what made the few successful, but of how can an established business play with and sustain the massive rates of unsuccessful projects that the startup ecosystem manages (spoiler alert: buy companies when they’ve demonstrated some level of success, if that’s your bag). Throw enough mud at a wall…
The second reason I don’t think the meme is particularly helpful is because the one thing worth learning from it is that Uber isn’t a taxi company and AirBnB isn’t an hotelier. They are both data brokers, but by relating them to the areas in which they are currently playing too often people lose the point of the disruption.
Uber is a platform that today has created a marketplace for people who want to travel from place A to place B. AirBnB is a platform for selling physical resources for a period of time. The services that they are providing are matching buyers with sellers, and now that the platforms are established could be switched to any other market which demonstrate similar properties. This is exactly what Amazon did by starting with books, and then moving into adjacent retail markets. These days there are few traditional retailers whose businesses aren’t in some way impacted by Amazon’s reach across markets.
But by saying “taxis” or “hotels” executives in other sectors start asking questions about “How can we learn to do things like Uber in our sector?” which is daft for the reasons above. The question that they should be asking is “How can we stop Uber and AirBnB disrupting our market” in exactly the way that most high street retailers outside of booksellers didn’t in the late 1990s...