Final Paper
A new startup occurred in 2008 that would change the way travelers would look at finding a
place to stay. Airbnb started with an idea of creating a place for hosts to list rooms or houses they have
available for renting out. Airbnb was able to create a site that connected hosts with travelers, giving
them more than just a hotel option to stay in. Airbnb labeled this venture as collaborative consumption,
which is as Arun Sundararajan, a New York University economist labels as shared economy. Shared
economy is “the peer–to–peer based activity of obtaining, giving, or sharing access to good and services”
(Sundararajan, 2017). The new model was more efficient for consumers and within 10 years of starting
up, it now has almost as many listing for rooms as traditional hotels do, in major cities (PwC, 2015).
What Airbnb did was create a blue ocean strategy in the lodging industry that had not been disrupted in
years. Airbnb was able to reconstruct the market boundaries to break out of what was a traditional
industry and come up with a new innovative idea that set them apart from others in lodging industry
(Kim, 2015). Uber was able to do the same in a world full of yellow taxis, they were able to find a way of
producing a no inventory company. In doing so they put together resources people had, and made a
new systems of others using that existing capital. They broke out of the traditional taxi cab service and
put to use people looking for extra income that had a car, and users who wanted a quick and convenient
way to get around. Shared economies were introduced on a massive scale by both Airbnb and Uber and
have lead the way in disrupting the economy and shifting it in a new direction, creating a major part of
our global economy today. The sharing economy sector is growing and not just in rentals and taxi
services, but many industries around the globe.
Schumpeter described creative destruction as a product or service that “incessantly
revolutionizes the economic structure from within, incessantly destroying the old one, and incessantly
creating a new one” (2003). He believed that it was essential to capitalism for a new technology or
product that in essence is a new competition in the market, disrupting the current economy. This
process that is needed forces economies to evolve and allow for us to have change thus, creative
destruction occurs. The newest technology that we have at our finger tips gives us; the ability to see list
of house for rent across the globe, pull up our taxi service in a moment’s notice and know the exact cost
from the start and who will be providing that service, or renting a dress that we couldn’t afford if we
were not peer sharing it. This disruptive innovation is in unutilized areas that the traditional market
players overlooked. Hotels did not think about sharing homes for travel, taxis never worried about
individuals on a massive scale taking over ride services or clothing stores borrowing clothes at lower
cost, a disruptor came in and provided lower end customers the ability to have better products. The
quality of these disruptors were able to be verified from peer to peer reviews driving the industry, giving
them the ability to catch up to the quality existing industry customers wanted to move to the new
sustaining option.
