By Janelle M. Lewis, Attorney, Business & Legal Strategic Consultant

Building an IPO Strategy can also mean building a legal strategy

In a recently published article by Bloomberg news, it is becoming clear that Airbnb is spending as much time in court as they are working on going public in 2020. It is no surprise that in addition to building their IPO strategy, Airbnb is building its legal strategy. As one of the most litigious startups, Airbnb has been spending a great deal of time with their lawyers as they have been embroiled in lawsuits against city, state and regional governments in U.S. and Europe, fighting the regulatory sector. Concurrently, Airbnb has fighting user lawsuits from a range of issues to discrimination to personal injury.

Airbnb shows that the law cannot be incidental to its business growth strategy.

The Law is not Incidental to Business Growth

Whether Airbnb succeeds in some of its legal battles, as they did two months ago before the European Court of Justice who ruled that European regulators cannot treat Airbnb as a real estate agency; or is continuously appealing adverse decisions, one thing cannot be denied: the law plays an integral role in its business success. Airbnb shows that the law cannot be incidental to its business growth strategy. As Christopher Nulty, Airbnb Spokesman has said, “[Airbnb has been] forced to challenge laws…believed [to be]…in violation of federal, state or local statutes.” Given its vulnerability to the regulatory framework, Airbnb has to consider how current and emerging regulations, policies and laws will affect its margins, ability to grow, and costs. In other words, a legal strategy is a crucial factor in Airbnb’s valuable competitive position.

This is often the case for companies who, even though they are tech in nature, operate in both the digital and analog spheres. This leaves such companies, like Airbnb, more vulnerable to the impact of secondary stakeholders such as government regulators and community groups. Although the law is known to be slow to change, there is increasing pressure on regulatory bodies to create and enforce regulations that regulate the behavior of these companies in society. Regulatory efforts range from licensing to tax collection to zoning requirements have implications for business strategic objectives that concern its valuable competitive position.

Even though the law has been slow to adapt to technology, regulatory bodies and lawmakers are now understanding not only that the law has to catch up to technology, but that it has to regulate it.

The most important reason to have a legal strategy that is an integral part of business strategy is to address the current uncertainty in the legal environment. Even though the law has been slow to adapt to technology, regulatory bodies and lawmakers are now understanding not only that the law has to catch up to technology, but that it has to regulate it. A recent example is the Federal Trade Commission who made the decision this week to review the acquisition activities of Alphabet Inc., (including Google), Amazon.com, Inc., Apple Inc., Facebook, Inc., and Microsoft Corp (for more information see my previous blog post on FTC’s special order). Market analysis (such as environmental analysis and Porter’s Five Forces Analysis) combined with analysis regarding a firm’s capabilities, competitive position, and growth objectives are no longer sufficient to support strategic business decisions. This is a lesson that Airbnb is learning as it navigates through its pending cases – and a lesson for all firms operating in the tech space – that the law is an integral part of business strategy.

Market analysis (such as environmental analysis and Porter’s Five Forces Analysis) combined with analysis regarding a firm’s capabilities, competitive position, and growth objectives are no longer sufficient to support strategic business decisions. This is a lesson that Airbnb is learning as it navigates through its pending cases – and a lesson for all firms operating in the tech space – that the law is an integral part of business strategy.