Pando

As the faces of the peer-to-peer economy, Airbnb and Uber's cultures couldn't be more different

By Michael Carney , written on December 1, 2014

From The News Desk

Airbnb and Uber are both pioneers of the peer-to-peer economy, and as clear market leaders in their respective categories, each have attracted billions in venture capital at valuations in the tens of billions. Both companies have created hundreds of thousands (if not more) micro-entrepreneurs, while facing down entrenched legacy competitors and facing intense regulatory scrutiny in multiple jurisdictions.

But that’s more or less where the similarities between these two companies end. NYU Stern School of Business professor Arun Sundararajan published an excellent analysis of the respective cultures of Airbnb and Uber in the Harvard Business Review over the holiday weekend, looking into the wildly different approaches taken by each company to this (arguably) very similar set of challenges and opportunities.

Sundararajan calls the two businesses “a new kind of digital institution,” whereby the platform operates like an quasi-organization with “a high-quality, customer-facing, branded service experience“ without actually owning any assets (apartments or cars) or employing any people (hosts or drivers) to deliver those services. But as he points out, the respective approaches by these two seemingly similar businesses to creating a platform-culture that drives the customer experience couldn’t be more different.

As evidence of this contrast, Sundararajan points to Airbnb’s recent host conference – which has been likened to a Mary Kay event – with Uber’s recent run of crisis-level PR incidents involving misapropriation of user data and opposition research threats against critical journalists.

Of Airbnb, he writes:

Airbnb appears to have taken the approach of investing significantly in creating community and a feeling of partnership, and of disseminating best practices.  Along with the community-building exercises, its recently concluded host convention featured a number of sessions on how to be a better provider. Airbnb facilitates host groups for knowledge sharing, integrated into a host application that also embeds hospitality standards and guidelines, as well as standalone meetups for hosts to exchange information. The emphasis on community and connectedness is very visible in the company’s recently initiated “Belong Anywhere” branding strategy. The three co-founders have consistently visited and stayed at the homes of key hosts around the world, an experience that likely builds significant loyalty.
Sundararajan’s picture of Uber is far less complementary:
In contrast, Uber unfailingly appears to place distance between the platform and its providers. Pricing changes are implemented centrally and announced unilaterally, with no visible provider consultation.  Community building is not a priority. A large gathering of Uber drivers is more likely to be a protest than a convention... Some of Uber’s recent expansion has come from facilitating auto loans for drivers who will struggle to repay them. The payments are auto-deducted from the drivers’ Uber earnings, a move that locks these drivers into their platform while further fostering a culture of control rather than community.
As we have argued here on Pando, corporate culture flows from the top down, a fact that is as true in these two organizations as it is in any other. It’s the reason Sarah Lacy’s reflection on the rising “Asshole culture” in Silicon Valley resonated so strongly within the community.

Lest you think that Uber’s cutthroat battles with Taxi and Limousine Commissions (TLC) – which more closely resemble mud-slinging political campaigns than corporate competition – dictate the company’s less-than-friendly culture, Sundararajan points to Lyft, a direct competitor which is facing the very same competition and doing so with a far more communal culture. Then again, Lyft is a fraction of the size and thus a fraction of the target – for TLCs, regulators, and the media – so this may play some role, but it can’t explain away Uber’s mercenary culture.

Y Combinator founder Paul Graham published a lengthy blog post earlier this month titled “Mean People Fail.” As someone who’s seen as many startups and worked closely with as many founding teams as anyone in our industry, his perspective on the value of ethics and culture should be illuminating. After establishing that very few of the most successful people he knows in the startup world are “mean,” Graham offers several following theories for why this is the case:

Startups don't win by attacking. They win by transcending. There are exceptions of course, but usually the way to win is to race ahead, not to stop and fight.

Another reason mean founders lose is that they can't get the best people to work for them. They can hire people who will put up with them because they need a job. But the best people have other options. A mean person can't convince the best people to work for him unless he is super convincing. And while having the best people helps any organization, it's critical for startups.

...if you want to build great things, it helps to be driven by a spirit of benevolence. The startup founders who end up richest are not the ones driven by money. The ones driven by money take the big acquisition offer that nearly every successful startup gets en route. [1] The ones who keep going are driven by something else. They may not say so explicitly, but they're usually trying to improve the world. Which means people with a desire to improve the world have a natural advantage. As Sundararajan notes, we are still in the early stages of the peer-to-peer platform economy, meaning the verdict is out on which approach to corporate culture and company building will prove the most effective in this new era. If dollars raised and valuations earned are the measuring stick, Uber is in the clear lead, although AirBnB is no slouch in either department. But if good will from “partners” and consumers plays any part in long-term sustainability, than a mercenary strategy may prove ineffective in the long term.

The reality is that each of us, as either consumers or contributors to these peer-to-peer marketplaces, gets to vote with our time and our dollars on what kind of corporations we want to support. Both AirBnB and Uber have millions of ardent fans, and justifiably so, given the value and convenience their services have added to this world. But a simple search for the Twitter hashtag #deleteuber reveals a mountain of evidence that value alone isn’t enough. People care about the culture that underpins the products and services they use. And with information traveling faster than at any point in history, it’s becoming nearly impossible for bad actors to hide.