Something out of nothing

Jeffrey Pfeffer, a professor at Stanford B School, writes an interesting article about “social network” business models (Uber, AirBnB) and their ability to make money out of “nothing”. Well, nothing is used loosely here, because it really refers to their ability to parasite off of someone else’s assets. For an investor, that must be a beautiful thing - no capex required to maintain or grow the business. Pfeffer’s frustration stems from the fact that these companies take no “responsibility” for their “supposed” product. They have no product, other than a website, he says. That may be true, but Uber and AirBnb possess something more powerful than that, and that is their ability to make people’s lives easier, in its true sense. The fact that they are doing so without a tangible product but via a natural ecosystem that’s been around for centuries is what makes it even more special.

I am not saying Uber and AirBnB should dodge tax and legal regulations or that they have no further areas to develop to be better companies. However, their ability to empower independent contractors, drivers and homeowners, who are not tied by the rules of certain employers to make some $$$, is certainly laudable. These are scenarios where it is a win-win-win for the customers, suppliers and facilitators alike; and that in my view is what makes for a very viable business model. Yes, there are hiccups, like when certain drivers are not trustworthy, or sketchy individuals are trying to occupy your home to throw a rave, but it is not like all other companies “producing” something have a 100% net promoter score themselves. Tangible or not, a company should strive to solve a problem and when I can hop onto a cab in a minute on a rainy night or my friends can toggle with the idea of putting up their room on AirBnB to earn some pocket money, the mere websites definitely become an artifact. 


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"Don't judge me because I sin differently than you do" - Dieter Uchtdorf