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Brad Stone: We should watch Uber and Airbnb closely

The author of new book The Upstarts on how the new breed of tech startups changed the rules of the game

At the start of the book you note that the dictionary definition of an upstart is either a newly successful person or someone who does not show proper respect to the established way of doing things
I wanted to frame the defining question of the book for the reader. Are these brilliant entrepreneurs who have built tremendous businesses through sheer creativity and ingenuity? Or are they renegades that grew in large part through contempt for the status quo? Theres an ambivalence that surrounds companies like Uber and Airbnb, and I think this question over their identity and the dual meanings of the word upstart gets to the heart of it. My own squishy answer, of course, is that they are a little bit of both.

Youve written about Silicon Valley for more than 20 years have we reached peak Valley yet?
In terms of the business impact, I dont think so. Theres a new set of transformative technologies such as machine learning, AI and virtual reality that will spawn another set of big tech franchises. But in terms of cultural impact, perhaps we are at peak Valley. For decades, technology entrepreneurship has been revered, and people like Steve Jobs and Elon Musk were heroes. Now we have to contend with lost jobs due to automation, the effects of digital addiction and simple fatigue with all this constant change. So perhaps our feelings toward Silicon Valley are about to get a lot more complicated.

You met some of the individuals who had similar startup ideas to Uber and Airbnb but didnt become billionaires. Have these people been able to move on and were they reluctant to be featured?
I call these companies the non-starters. They had the same ideas but were too early, or too nice, or too idealistic. They all shared a strain of wistful regret; it is difficult to see someone else execute the same idea and win unimaginable success and riches. The best story was the founder of a company called Seamless Wheels a pre-Uber limo service who abandoned the business after getting a death threat on his voice mail, probably from a limo fleet owner.

Whats the best call Travis Kalanick has ever made?
Surrendering in China in an expensive battle with local rival, Didi Chuxing. Last year Uber lost $2bn trying to win that market; Kalanick couldnt bring himself to sacrifice his dream of building a truly global network. But the rules of competition in China will always favour the local champion and Didi, it turned out, had the same access to capital as Uber. By stepping away from the fight, Uber not only saved its balance sheet from more destruction but negotiated an impressive 17% stake in its rival.

And the best call Brian Chesky has made?
Branding the Airbnb user base as a community. For years before Airbnb, people posted their homes and spare rooms on the internet (via sites like Craigslist and Couchsurfing.com). Chesky and his colleagues drummed up an evangelical spirit to their endeavour and held meet-ups and, in later years, global conferences of hosts. It got Airbnb users to feel part of something larger and strengthened their ties to the company, even when it meant that they were violating provincial laws.

In most territories these firms operate outside of laws and regulations around minimum wages, health and safety, and tax collection has exploiting these loopholes been key to their success?
Absolutely just as Amazons navigation of its sales tax obligations was key to its success over its first decade. With tough interpretation of taxi and zoning regulations, neither Uber nor Airbnb would have gotten started. By the time many cities recognized their existence, both were fairly large and had the political support of their customers.

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Black cab and licensed taxi drivers protest the introduction of Uber in London, June 2014. Photograph: Gareth Fuller/PA

After publication of your book about Jeff Bezos and Amazon, Bezoss wife gave the book a one-star review on Amazon Were you surprised?
I can still remember the moment I saw it my coffee cup froze midair in my hand, my mouth configured itself into an expression conveying shock and confusion. Jeffs wife had never made such a public statement before related to the depiction of Amazon. And she was alleging serious mistakes in the book yet listed only one relatively trivial one. I think it might be the most prominent product review in the grand history of Amazon! Of course in the long run, perversely, it did nothing but boost the books prominence and turbo-charge sales.

Did you witness much sharing in the sharing economy?
Certainly some hosts on Airbnb are opening up their spare bedrooms to meet new people; and some drivers use Uber to carpool with strangers for the companionship. But the most productive members of each community are professional operators, making available their homes or cars as a way to earn or supplement a living. Its not the sharing economy at all, though that phrase has been useful for the companies to bolster their image.

Which sectors have been able to embrace upstarts disruption with any success?
The auto industry. Upstarts like Tesla have achieved enormous success but havent slowed down the car companies 2015 was their best year ever. The auto giants are all researching autonomous vehicles alongside the likes of Google and Uber and they could conceivably get there first. The real estate market has also remained fairly impervious to disruption, as well as (to everyones consternation) the airline industry. Perhaps an industrys immunity is related to the size of each individual transaction.

You state that the founders of Airbnb and Uber are very different from Bill Gates, Larry Page and Mark Zuckerberg How?
For all their strengths, Gates, Page and Zuckerberg are not charismatic communicators or storytellers. They generally avoided the press and focused their attentions inward. Chesky and Kalanick couldnt get away with that. Early on, they faced regulatory fights that their predecessors never encountered until much later. This took skills like mustering political coalitions, enlisting the support of customers and testifying publicly. They had to be politicians, as well as innovators and managers.

Are the fortunes and efficiencies created by these companies worth the price paid by the disrupted?
I think so as long as they follow on their promises. Uber has pledged to reduce or eliminate traffic in major cities within five years and to treat drivers more equitably. Airbnb thinks it can create a new industry where people are paid to provide authentic travel experiences. It has also set out to eradicate racial bias from its platform. Lets watch these companies closely and make sure they achieve their goals, instead of replacing one set of distant, dominant companies with another.

Read more: https://www.theguardian.com/books/2017/jan/29/brad-stone-not-sharing-economy-upstarts-book-interview-airbnb-uber


The Art of the Deal by Donald J Trump with Tony Schwartz digested read

A timely reissue of the business tycoon/president-elects collected entrepreneurial advice from 1987 is redacted by John Crace

I dont do it for the money. Ive got more money than Ill ever need. Some of it yours. Lets face it, you dont file for bankruptcy six times if youre planning on paying your dues. The key to making the best deal is to let others take the hit. I do it because I can. If you can get away with losing over $1bn on a deal, youd have to be a schmuck not to. Theres no way that Donald J Trump is ever going to let himself be one of those deadbeat Americans with no hope and no prospects. No sir. And thats why were shamelessly republishing this load of tosh from 1987. Heres a diary of a typical Trump week.

Monday 9am. Call my broker, Alan Greenberg, to buy $25m worth of stock in Holiday Inns. I sense its undervalued. As we speak, its value increases to $30m. My cock goes hard and I decide to sell.

Tuesday 3pm. Try to evict Carly Simon and Mia Farrow from their rent-controlled apartments, but both want to play hardball. Their loss. When you do battle with the Trumpster, theres only one winner.

Wednesday 1pm. Lunch with Ivana. Try to grope her pussy. Probably not the best time to tell her about Melania.

Thursday 5pm. Some kid at the door says hes my son. Tell him to come back when hes made his first $10m.

Friday 10am. The banks foreclose on Trump Taj Mahal casino putting thousands of people out of work. But at least I come away with $50m. My cock goes hard again.

My style of dealing is quite straightforward: 1) Get as much as you can for yourself; 2) Theres always somebody stupider than you out there; 3) Any attention is better than none; 4) Promise people the Earth even if you know you can never deliver; 5) Get yourself a top haircut.

The most important influence on me when I was growing up was my father, Fred Trump. He taught me everything I needed to know about making money. If he had a fault, it was that he was not narcissistic enough. Fred never named a tower after himself. He also wasted too much time buying properties for deadbeats. If theres one thing Ive learned from real estate, its that poor people on zero-hours contracts just dont know how to look after themselves.

My first deal in Cincinnati taught me that lesson. Having persuaded the banks to lend me the money, I put the day-to-day management of the rebuild in charge of a man I knew to be a conman. I figured he would con the contractors far more than he would con me, so I would end up ahead on the deal. No flies on the Don! Though I was glad to sell the houses off for a $10m profit before the market crashed.

In 1974, I moved into the New York property market when I bought the Commodore Hotel near Grand Central Station. It was rundown and operating at a loss and everyone thought it was a turkey, but I could immediately see its potential. As usual, I was proved 100% right and made $280m in an afternoon after renaming the hotel Trump Plaza.

I then built Trump Tower after buying a department store whose owner didnt understand its true worth. That project taught me that most politicians are just in the game for themselves. Its a mentality I just cant understand. With Trump Tower, I was determined to build as big as possible and the results speak for themselves. I have my own apartment on the top three floors and employ some limey called Nigel Farage as my lift attendant. It could be worse. I could have had Piers Morgan working for me. Can you believe that man? I met him once for five minutes on a reality game show and he hasnt stopped going on about it ever since. The guy must have nearly as big a personality disorder as me.

After Trump Tower came Trump Castle, Trump Palace, Trump Island, Trump White House and Trump Great Wall of Trump. Basically, it was the same deal every time. I was fabulously brilliant and made a huge amount of money for myself while everybody else lost big time. I was living the American dream. Bankrupt one day, rich the next. But my biggest success is the 120-storey Trump Toilet that can flush every Muslim, Mexican and gay back into the sewers where they belong. It might even come in useful for this book.

Digested read, digested: The American nightmare.

Read more: https://www.theguardian.com/books/2016/nov/20/the-art-of-the-deal-by-donald-j-trump-with-tony-schwartz-digested-read


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