The author discusses his book The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World.
Author Brad Stone
Tavis Smiley: Good evening from Los Angeles. I’m Tavis Smiley.
Tonight, first a conversation with author, Brad Stone. He joins us to talk about his latest book. It’s called “The Upstarts”. It examines the ways companies like Uber and Airbnb are changing the world.
Then a conversation with musician, Rhiannon Giddens. She’s out with a new solo album. It’s called “Freedom Highway”. The project builds a lyrical bridge from our country’s history of slavery to civil rights anthems to the sounds of today.
We’re glad you’ve joined us. Brad Stone and Rhiannon Giddens in just a moment.
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Tavis: Uber and Airbnb have singlehandedly disrupted and transformed the taxi and hotel industries and today have a combined value of close to $100 billion — with a B — dollars. Brad Stone is the head of global technology coverage for Bloomberg News.
He writes about the parallel rise of both companies in his latest book. It’s called “The Upstarts: How Uber and Airbnb and the Killer Companies of the New Silicon Valley Are Changing the World”. Brad, an honor to have you on this program.
Brad Stone: Thanks for having me.
Tavis: Changing the world, for the better or for the worse?
Stone: Good question [laugh]. There’s plenty of criticism to lob at these companies, but I don’t think you can argue that the change has been anything but good for cities. I mean, I was telling you, I come to L.A., I don’t need that rent-a-car anymore. A lot of people don’t need to own cars in a lot of cities.
It’s created transportation options not only for riders, right, but also for people that want to drive for a living. The taxi market was a little bit of a monopoly, you know. It was hard to get a medallion in New York City or in London.
It has created a new kind of work for anybody who wants to drive maybe part-time. Maybe they’ll lose their job, maybe they’re supplementing their income when they’re in college. Same with Airbnb. Somebody’s got a property, maybe an in-law apartment. It’s a way to make an extra bit of money.
Now there are excesses on both platforms. These companies have cut corners because they were really challenging regulatory regimes. The CEOs are aggressive, young tech folks as they tend to be. But I do think that the changes that these companies have brought have been for the better.
Tavis: Let me just follow you then. CEOs are aggressive, to use your word, but the Uber guy has been beyond aggressive. People hate this guy. You know, it’s me, not you, saying that. When I say hate, that’s maybe too strong a word, but he has disappointed and angered and upset a lot of people and I’m right. Some do hate him for the way he’s behaved. So tell me about the guy that runs Uber.
Stone: Yeah, Travis Kalanick. He was the cofounder and is now the CEO of the company. Uber would not be Uber without Travis, okay? We can say that to begin with. You know, they had basically laws to either fight or overturn.
They built a company on really in the back yards of Apple and Google because they were operating through the Smartphone. And he was selling a commodity, something that any other company could do and, of course, companies like Lyft have, and he went and he built a big business. Now how did he do it?
Well, he did it by cutting some corners, right? He did it by challenging laws in a lot of cities, launching in cities where ridesharing just wasn’t legal. He did it anyway. We’ve seen him cut corners again and again. They had a system to deliberately avoid picking up regulators and lawmakers that might want to shut Uber down.
And then the other thing he did is he built a massive company, 12,000 employees, in a very short amount of time and he did it without the gargoyles of a professional HR organization. And as we’ve seen recently, that has come out in the form of sexual harassment complaints about the company and other kinds of messiness.
You know, the other aspect of it is that the driver community has always been a little bit uncomfortable, particularly full-time drivers, with the way that the fares on Uber have fallen over time. And they’ve done that not because of Travis or Uber, but because there’s so much more competition.
It’s harder now to make a full-time living on Uber and then Travis Kalanick just hasn’t handled that all that well. We saw a video that my colleagues at Bloomberg published of him fighting in the back seat of an Uber with a driver that does not accrue positively to his reputation.
Tavis: I was about to say. I mean, even if you grant him, you know, a stay on the fact that he had to do things to get this company off the ground because he’s taken on major entrenched companies, I get that for the sake of argument.
But I guess what I’m getting at is that I keep reading these stories — again, you’re the expert here — that have more to do with character and personality and style and making your workers feel a priority, making your customers feel like you’re not using them. All the trouble he got into sitting on the Trump — I mean, I get an eerie feeling about…
Stone: I think you’re right. I think a lot of people do. Look, I mean, there’s a certain archetype of a Silicon Valley leader with these qualities. You know, Steve Jobs was a tough guy to work for. Jeff Bezos, the subject of my previous book, a very tough guy to work for.
But when you’re delivering so much value to customers, sometimes they overlook it. When you’re making employees rich, sometimes they overlook it. There’s some questions around Uber right now, right? I mean, sometimes the ride is more expensive for riders because they have surged pricing and fares go up, you know. As riders, as customers, we don’t like that.
The company is still private, so he hasn’t bestowed great wealth on his employees. So I don’t know that he has been kind of tougher than some of these previous Silicon Valley techs whose difficulty we now celebrate, but clearly, he still has a lot to prove.
Tavis: Brian Chesky, the guy that runs Airbnb, seems to be a bit more under the radar, yes?
Stone: I’d say considerably so and has grown that company with a lot more awareness about the kind of managing the externalities, you know, maintaining a good brand in these fights with regulators. Airbnb has been every bit as disruptive as Uber has, in some cases, more so. I mean, there are a lot of communities that just don’t want tourists flooding in, right?
The beach communities along the West Coast, New York City, Airbnb in a lot of those cases has launched anyway and kind of done it very similar to Uber, but Airbnb has been more mindful. They’ve got, also, I think maybe a little bit of a stronger idealistic vision around restoring authenticity to travel, you know, getting people out of the double-decker buses in Time Square to the world.
I think that resonates with people, and he’s a great communicator. Very charismatic, talks in very self-effacing ways about that first year of indignity that they had to suffer through at Airbnb. You know, with Travis, you don’t get as much humility, I’d say.
Tavis: What has the impact been to date of what they’ve been able to accomplish on what we now refer to as the shared economy?
Stone: I don’t love the term because what is being shared, right? I mean, the back seat of a car of someone who’s driving professionally for a living, they’re not really sharing that. That’s a taxicab without the…
Tavis: I mean, since you went there, when I hear shared economy, what I have taken that to mean in its most admirable form or definition is that we now have these entities, these businesses, these opportunities that allow more of us to share in the economy. So Ii can drive or I can rent out my house. When I hear shared economy in its most…
Stone: I like that, yeah. I like that.
Tavis: Does that make sense?
Tavis: I mean, my point is if I were spinning it, that’s the way I’d be spinning the term.
Stone: Well, look, as I said before, it’s opened up enormous opportunity. I mean, to turn your car into a taxicab, you couldn’t do that before. On the other side, there are places in this country where, you know, taxis just wouldn’t serve, so it’s created an option to public transportation in a lot of those places.
You know, I like to think of it as the trust economy because both of these companies are allowing us to do something our mothers told us never to do. Get into a stranger’s car and go into a stranger’s home. You know, we feel good about that now and it’s because of these mechanics of internet marketplaces where we see somebody’s history, their transaction history, how well they’ve done, etc.
Tavis: What about the suffering, those who suffer, because of these upstarts? Obviously, there’s always a good side to these stories, there’s always a bad side to these stories. So tell me about those who have or are suffering because of the rise of these upstarts.
Stone: The carnage of the disrupted, yeah [laugh].
Tavis: I like that, I like that [laugh]. I would have used that if you’d told me a few minutes ago, yeah.
Stone: Let’s start with the taxi fleet owners, particularly in cities where they had to make a big investment in medallions. The value of those medallions has collapsed, right? Now you could say like they thought they were investing in an asset that would predictably grow every year and, in a free market, assets aren’t supposed to do that.
They had political power, they were exerting that to protect the asset. Uber and Lyft came along and really undermined, kind of disrupted the business. So they’ve suffered and I have a lot of sympathy for the individual taxi driver that maybe saved up or took a loan out on that medallion and now has lost a lot of money, so that’s a big one.
I think probably full-time taxi drivers, anyone who really wants to make that a living or a career, Uber has relentlessly lowered the price because of competition, because they’re trying to compete with car ownership, because they’re basically trying to use all the money they’ve raised as a competitive weapon against Lyft and other companies. So they’ve probably suffered a little bit.
Tavis: Again, you’re the expert here. When I think of Uber, I think of Lyft trying to compete with them. But I can’t think of a comparative competitor on the Airbnb side. Are they the only ones in that game in the way that they are?
Stone: There are some competitors. You’ve probably heard of HomeAway?
Tavis: That’s right…
Stone: They do operate somewhat more in the vacation rental space. Airbnb’s genius was moving into cities and recognizing that millennials would want to go and maybe spend a vacation or visit some friends in an urban center.
But HomeAway and VRBO and there are some others have moved to kind of compete with Airbnb and we’ve seen companies like ExpediaGo acquire some of these other companies. Airbnb has really sort bent the fabric of the entire travel industry, so there are some players competing with them.
Tavis: This is a really simplistic point to make, but when I first heard of Uber some years ago, a couple of friends come to mind immediately. Dave Koz, the great saxophone player, he swears by Uber. He lives in Uber. Hey, Dave. But Dave’s the first guy — he told me about this years ago. He said, “Man, you haven’t heard of Uber?” So he told me all about it, ya-da-ya-da.
I took a ride with him one night to see what it was like. The thing that turned him on, and it turned on a bunch of my other friends, which goes right to the heart of the technology, is that you can do this, to your point, do what your mom told you not to do, get in the car with a stranger and you ain’t got to exchange no money.
Stone: It’s huge.
Tavis: That technology piece is a huge piece of it.
Stone: And you know what’s funny? Then when you get into a Yellow Cab because you’re at the airport, it’s easy, you got to sit there and wait for the credit card…
Tavis: Exactly! That’s where I was going.
Stone: And it’s like, wow. It’s not only made it easier, but it’s changed your expectation for how a transaction is supposed to go, and you see it now. Amazon’s testing a store in Seattle where you can go and pick something up from the shelf and walk out without paying, but through facial recognition and recognizing your Smartphone, they’ll charge you.
It’s basically the Uberfication of the entire economy and one day this idea that maybe we don’t have to — we have to pay for things, but we don’t have to pay for them. It’s going to save a lot of time, but another key point is there’s going to be a lot of dislocation in the economy as jobs like cashiers go away.
Tavis: See, I raise that only because, again, I don’t have an Uber account, but I’ve ridden cars with friends. I love being able to hop in the car and hop out and no money’s exchanged. I’m in New York the other day and I got to wait for the cab driver to take my credit card, I got to swipe it, I’m giving cash, I got to wait for change. So you’re right. It’s really changed our expectations.
Stone: And Airbnb, by the way, is the same thing. It’s an invisible transaction. You know, this is a place where hotels — and they’re deploying their political power to go and slow down the spread of Airbnb. You know, they’re going to need to catch up from a technology perspective. Nobody wants to go and wait in line anymore to check in or check out.
Tavis: Check out, exactly. So is this to — to your Amazon example of a moment ago, walking in and grabbing some product and walking out, is this the wave of the future? This train’s left the station and this is it?
Stone: I think it’s one of the waves of the future, but there are so many other things that are happening, exciting things right now in Silicon Valley. AI, driverless cars…
Tavis: AI scares me a little bit, though.
Stone: Flying cars. The driverless cars scare you. Taking off and landing is going to be terrifying. But, you know, these companies rode on a wave of Smartphones and GPS and maps. All sorts of things made them possible and the advancements continue.
Tavis: Brad Stone’s new book is called “The Upstarts: How Uber, Airbnb and the Killer Companies of the New Silicon Valley Are Changing the World”. Indeed, they are. Brad, thanks for the book. Good to have you on, my friend.
Tavis: Up next, musician Rhiannon Giddens. Stay with us.
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