Tech on the Side: Airbnb vs Uber and the power of mobile
Nov 24, 2014

Tech on the Side: Airbnb vs Uber and the power of mobile

Airbnb and Uber are similar in many ways. They both use tech (particularly mobile) to solve a distribution problem and they are both market darlings with skyrocketing valuations. They are both massively disrupting the established hotel and taxi industries respectively, complete with significant legal battles in these highly regulated industries that have arguably outdated business models and regulations.

The distribution problem works like this: Airbnb makes it vastly easier for anyone to rent out their property and become effectively a hotel; Uber makes it vastly easier for anyone to rent out their time and vehicle and become effectively a taxi. Previously, the resources (houses and cars/drivers) were plentiful, but there wasn't an effective distribution mechanism to connect customers to providers so we relied on the traditional hotel and taxi industries which provided a distribution system, but a distribution system that cut out small players. You had big dedicated hotels and large taxi fleets, not any old person with a spare room or a car and time to spend.

That said, there is an important difference between the two that illustrates the power of mobile. Uber is entirely dependent upon everyone having a smartphone. That is, the system just wouldn't work with a desktop site because people are calling their Uber rides out and about with their smartphone, they see the car approach on their smartphone, they pay on their smartphone, etc. The smartphone is integral to the entire experience.

Airbnb, however, works just fine as a desktop website. They could have just as easily operated a decade ago. The reason is that booking a place to stay on a trip is something you typically do far in advance, and can easily peruse at your pleasure at home or at work. For the most part*, the service is just as useful on the desktop website as on the mobile app (and there isn't even an iPad app for it). Airbnb in this way is much closer to eBay (which started as an entirely desktop site). Yet, Airbnb didn't exist until the smartphone boom.

Today, huge swathes of computing is being transferred from desktops, laptops, even tablets, to smartphones. This change is not exact, however. That is, people don't switch the amount of computing they did on the desktop to doing the same amount on a smartphone, they typically vastly increase their use. So it isn't just that people start using Facebook on phones opposed to the desktop, they also use Facebook quite a bit more.

This is the basic dynamic with Airbnb. Smartphones are so effective at reducing the friction of computing, that they end up doing far more computing and are much happier using computing solutions to solve problems. Airbnb has made a pretty frictionless system for both customers and home owners to be able to connect the two groups. It isn't that this model doesn't work in a desktop only world - it does - it is just that computing in general is so much easier and more convenient that people can do this from anywhere with the power of their phones. And they do, in droves.

The potential globally of smartphones truly is enormous, and I believe we are still only scratching the surface.

*This is not to say there are not advantages of mobile. Mobile makes finding a place to stay while travelling on the fly far easier, and particularly for hosts they get to manage their bookings without disrupting their lives since it can all be done on mobile.

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