Buying a used car can be a nightmare.
If you’ve ever bought one on Craigslist or AutoTrader, you probably had to go through a frustrating process of contacting private sellers, arranging times to meet them, driving out to inspect the vehicles, being disappointed by many of the cars you saw, and possibly ending up with something that hadn’t been as well maintained as the seller told you.
Enter CarMax. CarMax is the biggest retailer of used cars in the United States, selling $11 billion worth per year. All of the cars they sell go through a thorough inspection, with each vehicle receiving an average of 12 hours of work before they are sold. They offer a 30-day warranty, a five-day money-back guarantee, and the company is consistently ranked on Fortune’s “100 Best Companies to Work For” list.
What does any of this have to do with companies like Airbnb? If you think about it, CarMax is a lot like the current wave of tech companies streamlining fragmented markets and services. Before Airbnb, renting a private room was extremely difficult. Before HomeJoy and Handy, you essentially needed a referral to find a house cleaner. Before GrubHub, finding a good restaurant that delivered meant sorting through the flyers in your snail mailbox and sampling a bunch of local spots. And before CarMax, finding a good used car meant poring over classifieds and hoping you found an honest seller.
Where CarMax differs from many in the current crop of Silicon Valley startups is CarMax knows they aren’t the actual creators of the product. They know they aren’t Ford, Chevy, or Toyota, while many in the the tech industry share a delusion that selling something, or creating a marketplace for a product or service, is the same thing as being the actual provider or creator of said product.
Everyday I hear people saying things such as, “Airbnb is bigger than Hilton.” That’s like saying CarMax is bigger than Honda. The comparison is absurd. Nobody would compare CarMax to Honda. CarMax is selling cars someone else manufactured, Honda is selling cars they built. Airbnb and the other sales platforms are essentially car dealerships. Airbnb is selling other people’s rooms, Hilton is selling rooms in hotels they built or bought. GrubHub is delivering other people’s food. Domino’s is delivering pizza they cooked.
There’s nothing wrong with being a sales channel, especially when these platforms have unlocked resources that were previously underutilized. There’s legitimate value in that. The problem is when the sales platform is confused with the resource or treats the actual resources with disdain.
This salesman’s delusion is not uncommon. Salespeople love to minimize the engineering or production functions. It’s a regular occurrence to hear salespeople say things along the lines of, “I sold X units and production screwed it up.” I’ve said similar things myself when I held sales roles. From this point of belief, and especially if the sales department is powerful, it’s a short jump to treating production as servile and unimportant.
Of course, the problem with this thinking is that product and production are extremely important. As much as salespeople or sales platforms want to believe they are what matter, at the end of the day somebody has to build, create, or provide the actual product or service, and the Silicon Valley belief that Airbnb equals Hilton or TaskRabbit equals handymen has lost sight of this fact.
My criticism isn’t toward Airbnb’s or TaskRabbit’s business models. There is value in sales and there is definitely value in streamlining access to previously difficult-to-utilize resources. My criticism is directed at everyone who can’t distinguish the difference between selling a resource and creating or providing a resource.