It will not be the first time startups have disrupted big companies. It was not too long ago that Facebook, for instance, was a startup. Or Disney was struggling, and Tata Motors was hugely in debt and had a stagnant market share.
Companies keep disrupting incumbents with innovation, vision, vigor, and strategy. Compare the top listed companies in any stock market; you would observe their composition changing. Companies that were small today take the place of market leaders, with many of the latter fading away into history.
Each case of disruption is different. Still, the disruptors possess the following features:
- Customer centricity
- Responsive to market conditions
- Communicating with all stakeholders
- Dynamic business models
I want to add other characteristics like integrity, transparency, and climate awareness.
One example of a startup that disrupted an established incumbent is Airbnb. Before Airbnb, the hotel industry dominated the travel accommodation market, and property management companies typically managed vacation rentals. Airbnb disrupted this market by creating a platform that allowed individuals to rent out their own homes or spare rooms to travelers.
By creating a peer-to-peer marketplace, Airbnb was able to offer unique and personalized experiences to travelers, often at a lower cost than traditional hotels. The platform also provided a more direct and personal connection between hosts and guests, which added an extra level of trust and authenticity to the travel experience.
The hotel industry did not welcome this disruption and saw Airbnb as a direct threat to its business model. However, Airbnb’s popularity and success cannot be ignored. The company has continued to innovate and expand, offering new services like Airbnb Experiences and Luxury Retreats to meet the changing needs of its customers.
Today, Airbnb has disrupted the travel accommodation market and become a household name, with a market capitalization of over $100 billion. Its success serves as a reminder that disruptive startups have the potential to challenge established incumbents and transform entire industries.
As of 2021, Airbnb’s market share in the United States is estimated to be approximately 43% of the vacation rental market. This was a significant increase from its market share in 2015, when it held only about 4% of the market. According to data from AirDNA, as of June 2021, there were over 2.2 million active Airbnb listings in the United States, and the platform had over 100 million bookings in the country in 2019.
However, it is important to note that the vacation rental market is not the same as the overall lodging industry. Airbnb primarily competes with other vacation rental platforms, such as Vrbo and Booking.com, as well as traditional hotels and motels. In the broader lodging market, Airbnb’s market share is smaller but still significant, with estimates placing it around 10-15% of the total U.S. lodging market. Still, Airbnb disruption in the vacation rental business is unique and stands out.