The Value of Uber and Airbnb

By Kevin Meyer

The following is not an advertisement, even if it sounds like it. I will admit I am a big fan of Uber and use the service pretty much anytime I travel. Now that they’re in my relatively small town, I might start using the service instead of paying for airport parking, especially on longer trips.

After dozens of rides I have yet to have a negative experience. The cars are new and clean, the drivers well-dressed and polite, and the cars arrive on time and within minutes of being requested. In Seattle a few weeks ago the car was a new Tesla, a few weeks earlier in Jacksonville it was a BMW 7 series. The convenience of having the financial transaction handled by the app eliminates the need for cash and negotiation. Sound like any taxi ride you’ve had? Ever? Nope. Welcome to disruption.

This misnomer of “sharing.”

Services like Uber, Airbnb, and others are often called the “sharing economy.” That’s an incorrect characterization. No one is sharing – both parties are out to obtain value. Micro-scale demand is being matched with micro capacity. Such demand and capacity has always existed, however it took real-time computational power to match them in a dynamic fashion that creates value for both parties.

Instead of a batch of taxis prowling the streets in search of fares, a single limo driver with an hour to kill between assignments can now fill that gap – that capacity. Hence why you often get nice rides like Teslas and BMWs with drivers in suits. At peak times fares go up, incenting an increase in capacity to match the increase in demand… instead of making the demand wait for hours in the rain.

The value to our environment.

The impact of this micro-scale demand and capacity matching is huge – and one that should be embraced by capitalists, socialists, and environmentalists alike. Uber, as of six months ago, is providing one million rides per day (yes, per day).  Airbnb has over one million rooms in its portfolio, and is doing 37 million room-nights per year of bookings. More that some of the world’s largest hotel chains.  And that’s last year’s data.

How many fewer cars, guzzling gas and expelling fumes, are on the streets because of the short-term capacity of unused limos and even private vehicles being freed up?  One million rides a day equates to a lot of cars.  How many fewer hotels, consuming utilities whether empty or full and contributing to urban heat islands, have been built because of the micro capacity of unused private rooms being freed up?  37 million room-nights is a lot of hotels.

The value is growing, but isn’t all roses.

New such services are being created every day.  You’ve seen all of those cranes and other pieces of construction equipment that sit idle for days at a time?  No longer, thanks to Yard Club.  Tutors, house cleaners, private aircraft. You name it.  Have a short term availability?  Match it to someone that needs it now.  Sometimes it can go even deeper, such as with same-day delivery services partnering with the likes of Uber and Lyft to further improve their efficiency and reach.

Sure there are issues, although many of those are more political than real.  Uber’s background checks are more extensive than taxi drivers… except in some key states  and countries like California and South Korea.  Airbnb does pose an issue for cities resting comfortably – until now – on hotel room tax receipts.  Those problems will eventually be resolved, just like they have been in the past when innovation disrupts the status quo.  Sometimes it won’t be pretty, at least for a while.

The potential value to you and your organization.

But let’s take the concept of matching micro capacity and micro demand to an even more immediate, direct level.  Where do you have a few minutes of potential capacity in your day that can be filled by creating value – recognizing that value is sometimes the mindful pleasure of just sitting on a beach or enjoying a long lunch?  Where can what seems to be larger chunks of demand by a group in your organization be divided and filled by smaller chunks of capacity?

How do most meetings, CYA policies, ego, and lack of training or even trust affect your ability to match internal organizational demand with capacity?  Does your organization look like a batch of beat up taxis driving around in search of demand, or smartly-dressed drivers in BMWs efficiently filling a few minutes of available time with a person willing to pay above par for that value?

2 Comments

  1. Rob Thompson

    June 19, 2015 - 4:59 am

    Uber makes total sense.

    Instead of roaming around doing nothing, wasting time and petrol, drivers do a job where they can drive around and get paid for it. Before Uber arrived a customer’s experience was the same in 2015 as it was in 1983. Once a company had a locked-in majority of all cabs in a given jurisdiction it remained static. It had little incentive to modernize its operation or innovate.

    Uber is the sort of disruptive innovation that will influence the world economy in the next decade. Corporations, entrepreneurs, professionals and the labour force will need to prepare ahead. The first set of operators of these new technologies are going to be the big winners as we all enjoy the benefits.

  2. John Hunter

    June 25, 2015 - 7:47 am

    That “sharing” name has never made sense to me. I think it may well have emerged with the “lending options” such as loan toys your kids don’t play with anymore to neighbors and lend them your tools you don’t use much… Before Uber and Airbnb took off those kind of things were not exactly popular but were in the new of how the internet was changing things.

    It is similar to how lots of stories (and pitches…) now say uber of x when that really makes no sense. They would call call hotels the uber of apartments if hotels were just started in 2015. Plenty of business models have rented out micro capacity for a fee for centuries before Uber. Yeah it is fairly new (I think) for the business to not own any of the thing they are coordinating.

    Though it isn’t unheard of – that is basically what travel agents did back when, right, and I guess a few still do. It isn’t a perfect match but it is similar. The way many doctor’s and related medical people charge seems similar – you go to a hospital to get some surgery, the hospital outsources a bunch of work to others (aren’t anesthesiologist and others often billed separately – are they the uber of time travel becoming uberized before uber existed?). I imagine the rest of the world the crazy USA billing for health care seems beyond belief but hey it is what we have.