The “kill zone” refers to the space near a tech giant’s core business where start-ups risk being copied or crushed simply for getting too close. The giants’ shadow deprives young firms of sun. Investors and employees often shy away, spooked by what a dominant player could do to a fledgling business. But what if survival were possible?

In this episode of the INSEAD Knowledge podcast, Associate Professor of Strategy Michaël Bikard walks us through a case that begins with a promising partnership between Airbnb and Sofar Sounds, but ends with the two companies going head-to-head.

London-based start-up Sofar Sounds built its brand on intimate secret gigs in living rooms and other low-key spaces around the world. “It's all about human offline connections through music, bringing together people in a very intimate setting,” said Bikard. “There is some fairy dust there.”

A partnership with Airbnb seemed like a perfect match. Airbnb would gain some of Sofar Sounds’ cool factor, while Sofar Sounds could scale through Airbnb’s global reach. “On paper, it really sounded like a match made in heaven,” Bikard recalled.

But the alliance didn’t last, and the brands decided not to work together anymore. Then, a few months later, Airbnb came up with their own version of Sofar Sounds, Airbnb Concerts. It looked like the classic tech “kill zone” scenario. “At the time… it felt like [Sofar Sounds was] gonna be eaten alive, frankly,” said Bikard. “And the interesting thing is that exactly the opposite happened.”

Instead, it was Airbnb Concerts that failed to gain traction. This is because the venture hinged on two assumptions: that Airbnb guests would want live shows, and that the concerts team at Airbnb would be able to use at least some of the venues from Airbnb’s traditional hosting business. But the head office did not want to risk its core business, while guests weren’t the right audience. The team couldn’t replicate Sofar Sounds’ model, or its magic.

The case offers lessons for both sides. For founders, it’s about knowing what protects your business. “You need a moat,” said Bikard. “In the case of Sofar Sounds, one of the key moats that they had was a community of fans and a very strong brand.” That is extremely hard to replicate.

For big tech players, the case highlights a classic innovator’s dilemma. Airbnb Concerts struggled because the core business was structured to protect its existing model – that is, legal and policy teams were focused on minimising risk for hosts and neighbours.

But Airbnb Concerts was not a failure in the sense that it was a mistake. “It was very hard to know that it would not work out without trying,” said Bikard. “And that’s just the cost of doing business at the technological frontier.”

Dive deeper into the case and hear firsthand from both Sofar Sounds and Airbnb.