WILL YOU BE DISRUPTED? What working at Airbnb taught me about the future of business

Science Fiction author William Gibson once wrote, “The future is here. It’s just not evenly distributed yet.” This observation accurately describes what I faced five years ago when the three Millennial Airbnb co-founders asked this aging Boomer boutique hotelier to join their small tech startup to help them evolve into a global hospitality brand. I’d never heard of the “sharing economy,” I didn’t have an Uber app on my phone, and I thought the idea of people staying in each other’s homes rather than hotels sounded very strange. But, five years later, Airbnb is now the largest hospitality brand in the world (based upon the number of rooms or homes offered). So, what have I learned from this?

1.       Often, it’s outsiders who disrupt and transform industries. More than 31 years ago, I started my boutique hotel brand, Joie de Vivre, when I was a mere 26 years old, about the age of the co-founders of Airbnb when they started their company years later. I didn’t know what I didn’t know. And, I was one of the pioneers of the U.S. boutique hotel industry just a few years after investment banker Bill Kimpton on the west coast and Studio 54 owner Ian Schrager on the east coast started their boutique hotel companies. If your innovation team or Board of Directors is full of industry insiders, make sure you find a few outsiders to help mix-up the thinking.

2.       You can disrupt yourself, but be prepared for conventional wisdom to push back. Facebook founder Mark Zuckerberg said, “If we don’t create the thing that kills Facebook, someone else will” about the same time they purchased upstarts Instagram and WhatsApp. And, Reed Hastings, the innovative outsider founder at Netflix, upended the home movie rental industry because, as a customer of Blockbuster, he felt ripped-off that they were charging him for a late rental of a movie such that it cost twice what it would if he just bought the DVD. Reed used the monthly subscription model of an athletic club to launch the DVD-by-mail business that was Netflix. But, then Netflix disrupted themselves by pursuing streaming services and original content because they knew if they didn’t do it, someone else would. Wall Street beat up Netflix’s stock price when they were investing in this self-disruption, but Reed proved Wall Street wrong and the stock price and today Netflix’s stock price is 36 times higher than what it was six and a half years ago.

3.    There’s a difference between innovation and disruption. As a boutique hotelier, I was an early innovator but it took two dozen years for us to create more than 50 hotels, all of them (back when I was founder/CEO before selling the company in 2010) in California. But, because disruption is tech-driven, it has the ability to scale globally exceptionally quickly and it often opens up new markets tapping into new customer behavior, often at the lower end of the price point as Airbnb demonstrated. Since disruption accelerates change, there’s no wonder you’re feeling a little bit more competitively anxious these days as a new competitor can go from a small, new idea to market domination in just half a decade. Witness Uber. Author Gary Hamel says: “The single biggest reason companies fail is that they over-invest in what is, as opposed to what might be.” Most entrepreneurs and leading companies think they’re disrupting, when they’re really just innovating on the margins.

4.    The best disruptors combine high-tech and high-touch. Part of the reason Airbnb is a successful disruptor is because, generally speaking, our guests are so happy. While not all Airbnb guests are thrilled with their experience, our guest satisfaction is substantially higher than the hotel industry because of the technology-enabled, peer-to-peer feedback loop we’ve created (using the hospitality industry standard metric of NPS, Airbnb’s guest satisfaction with hosts is almost 50% higher than hotel guests’ satisfaction with hotels). It shows you can use high-tech (our online review system) to influence high-touch (how our hosts offer hospitality).

Since disruption is the order of the day, how likely is it that you’ll be disrupted? Which industries and companies are most at risk of disruption? I believe it’s those that….

• Have grown complacent by past successes and haven’t evolved their product offering much;
• Have lost touch with their core customers’ evolving needs and have no way to track this well;
• Didn’t imagine a whole new set of customers, with different needs, entering the market;
• Don’t take new competitors seriously, potentially because they feel competitively safe potentially due to their historical regulatory environment; and
• Have no clue what the differentiating essence of their product offering is.

Clayton Christensen, the author of “The Innovator’s Dilemma” suggests that it isn’t bad management that can lead to being disrupted, often it’s good management as, “They listened closely to their customers’ expectations. They carefully studied historical market trends. They ran focus groups. They allocated capital to the innovations that promised the largest short-term returns. And in the process, they missed disruptive innovations that opened up new customers and markets.”

If you aren’t already thinking disruptively, maybe it’s time. Just beware that disruption looks foolish until convention wisdom jumps on the bandwagon. And, it can also feel scary when you feel like such a maverick. Just know FOOL stands for “Frighten Our Ordinary Lives” so if you’re not a little uncomfortable, then you’re probably not disrupting.

Chip Conley is a New York Times best-selling author and veteran hospitality executive who renewed himself in midlife by collaborating with the Millennial co-founders of Airbnb to create the world’s largest global hospitality brand. His new book, Wisdom@Work: The Making of a Modern Elder, is now available.