“It’s often observed with wonder,” my colleague Geoff Colvin wrote in Fortune some months ago, that “Airbnb is the world’s largest provider of accommodations but owns no real estate, and that Uber is the world’s largest car service but owns no cars.”
Each of these quintessentially 21st-century businesses connects buyers and sellers directly, instantly, and globally—dispensing with middlemen, bypassing entrenched corporate leaders and long-protected guilds, and harnessing the bootstrap entrepreneurialism of hundreds of thousands of independent contractors around the world. These companies have no inventories to stock, no supply chains to manage, very little overhead to maintain, few capital expenditures to invest in (beyond some core intellectual property), no unions to negotiate with, and relatively few employees to provide benefits for.
Indeed, in an economic sense, it’s hard to imagine business models that are this “frictionless.” And yet, both of these companies generate plenty of friction nonetheless. Airbnb, whose core business has clashed with existing short-term rental laws in many markets, has gotten pushback from regulators, unions, and—no surprise—the hotel industry that’s struggling to compete against it. And as for Uber? Well, let’s just say that if the company faces any more friction from opponents, litigants, regulators, drivers, and its own […]