Airbnb and Uber: What's next?

Airbnb and Uber are two of the largest companies in the sharing economy. Airbnb is a community marketplace for people to list, discover, and book unique accommodations in more than 34, 000 cities and 190 countries. Uber is an on-demand ridesharing app available in over 200 cities in 45 countries, connecting riders to taxis, private cars and rideshares right from their phone...

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They are both; tech companies that touch the physical world in a way that the average tech company does not, global yet hyper local, dealing with policy and regulation issues in the cities they operate in and heavily reliant on acquiring high quality supply (the best hosts and homes on Airbnb and loyal drivers for Uber), with no lack of consumer demand and fast-growing companies with high valuations. Uber: $17 billion, raised about $1.5 billion. Airbnb: $13 billion, raised over $794 million.

There is no doubt that these two companies are established, well-recognized, and will continue to evolve and iterate in the coming years.

Airbnb

Why it’s here to stayWrede Petersmeyer, New York City Manager, spoke about Airbnb’s current global impact: “Airbnb is adding about a million new customers a month. There are 500,000 hosts so far, and this number is growing quickly.” The company is also working with countries and cities in passing progressive laws, educating regulators and instigating policy change, as seen by the recent legalization of Airbnb in San Francisco. Airbnb travelers are different from those who go to resorts or stay in large hotels, they tend to look for unique and authentic travel experiences. According to Wrede, “this year 600 000 people will have stayed at an Airbnb in New York City, spending $768 million.” With NYC hotel occupancy rates over 80%, this shows that this industry is not a zero-sum game – in order for Airbnb to win, hotels don’t have to lose. 

Next evolutionAirbnb aims to be the world’s leading community-driven hospitality company, which doesn’t stop at accommodation. In a Fast Company article, Airbnb’s CEO Brian Chesky says “Our business isn’t renting the house. Our business is the entire trip.” Speaking with Ryan Lawler, Senior Editor at TechCrunch, he believes there are many options for Airbnb to move into: “a marketplace for home cooked meals, local guides, cleaning services for hosts – any concierge-type or value-added services.” What will be interesting is if Airbnb partners with or acquires companies already providing these services, or creates their own solutions. 

Uber

Why it’s here to stayUber aims to take cars off the road and provide safe and reliable rides for its users. While it has been consistently dealing with driver protests and regulatory issues in current and new cities, it’s undeniable that Uber’s reach and aggressive expansion will keep it relevant and top of mind for consumers globally. Nairi Hourdajian, Head of Global Communications at Uber, states there are currently “hundreds of thousands of drivers, with 50 000 new drivers every month.” Uber’s website claims 137 million Americans are using this platform – that’s 43% of the population. Uber has also engaged in strategic partnerships, like a recent one with AT&T to preload the Uber app on all future Android phones, further extending its reach.  

Next evolutionUber’s core business is moving people, and could address other gaps in the transportation space. They already have uberPOOL, a carpooling service that allows passengers to share the same ride, which could easily be recreated on a larger scale with buses (see Kutsuplus in Finland where this is already happening). Driverless cars offer another option, replacing Uber’s drivers and bringing the cost of ridesharing below the cost of owning a car, potentially making car ownership obsolete.

Uber also has the potential to lead in logistics and delivery services. They’ve already executed a series of on-demand “experiments” and marketing campaigns in various cities that show they have the capability to do this:

  • uberKITTENS: In partnership with local animal shelters in New York City, San Francisco and Seattle, users could request a kitten on demand, with the option of adopting the kittens
  • uberICECREAM: Ice cream delivery in over 140 cities in 41 countries
  • uberRUSH: Bike messenger service, transporting goods in New York City
  • uberFRESH: Lunch delivery in Los Angeles
  • uberESSENTIALS: Delivery of pharmacy-type items in Washington DC
  • uberCHOPPER: Helicopter rides from Manhattan to the Hamptons
  • uberTREE: Christmas tree delivery in 10 U.S. cities, partnering with Home Depot

According to Arun Sundararajan, Professor at NYU Stern School of Business, “the sharing economy represents a new kind of capitalist transactional activity that can scale.” We’ve seen both Airbnb and Uber scale their business exponentially in only a few years. The next evolution will see both companies move into new avenues and industries that stray away from their core business. Will Airbnb be able to maintain its brand and consistency across various verticals without straying away from its core competency of unique accommodations? Will Uber move into areas beyond transportation and provide on-demand everything through a logistics and delivery platform? Anything is possible for these two sharing economy giants.

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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