What’s wrong with disrupting the status quo

At a recent event, I found myself sitting beside a business angel who seemed less than happy about the growth of the collaborative economy and crowdfunding in Belgium. He told me that all these internet start-ups, Uber, Airbnb etc… were not real businesses and would cause more harm than good for the economy. He was also very against any form of subsidising businesses as they should be able to stand on their own two feet.

Collaborative economy crowdfunding BelgiumThe lady across from him, a budding entrepreneur, took issue with his opinion. I liked her argument. Supermarkets have dominated our economy for years, at the expense of local commerce in many cases. Now, we are seeing a bit of a revival of the “corner shop” even if it is taking new forms such as http://villagemalin.com . This in turn, will possibly put jobs at Supermarkets at risk. In other words, when an industry gets disrupted, there are winners and losers. It’s the case with Uber and Taxi’s, Airbnb and hotels, car sharing and car rental firms etc….

I think that in any disruptive innovation process, there will be casualties along the way. I also believe that it is up to the governments and incumbents to find ways to benefit from this disruption rather than trying to stop it. To illustrate this, Airbnb now collects tax on properties rented out in Amsterdam http://www.dutchamsterdam.nl/3326-no-amsterdam-airbnb-ban .

Ryanair versus Airbnb. What’s changed in the last 20 years

A number of years ago, I was part of a “brand council” which was put together to work on redefining the company brand. We were each asked to name a brand which we admired. Though it pains me to say it, I picked Ryanair. I have had some horrible travel experiences with them but I have to say, that when it comes to disrupting an industry, they have made an enormous difference to European travellers. I love this sketch about them:

That got me thinking about how the art of disruption has evolved in the last 20 years or so.
Both Ryanair and Airbnb have, and continue to, disrupt the travel industry. The growth of internet has been an enabler for both. In the case of Ryanair, booking online and bypassing the travel agent was pretty disruptive at the time. Their approach was even problematic, as many people didn’t have visa cards to pay, nor access to printers to print their own boarding pass.

There are also major differences. Ryanair owns its airplanes whereas Airbnb do not own the rooms which they rent. Ryanair have invested billions into infrastructure, whereas Airbnb have been able to leverage everyone else’s and spend their money on advertising, branding and possibly bigger legal bills.

So to come back to my business angel. Which is creating more value for the economy? I did a very hasty look at some figures and the result is very interesting.Collaborative economy crowdfunding Belgium

Airbnb would argue that even though they create less direct jobs, they have a much greater impact on the broader economy, and certainly have a broader social and environmental impact than Ryanair do. Time will tell. Personally, I think I benefit from the fact that Ryanair have done what they did but I also believe that the disruption caused by the collaborative economy may have far greater social and environmental impact and that there will be a price to pay for this.

By the way, if you are interested in knowing why some of these internet start-ups are worth so much despite being relatively small companies, I highly recommend this article from the Harvard Business Review https://hbr.org/2014/11/what-airbnb-uber-and-alibaba-have-in-common


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