Because they didn't do rooms in an already occupied house (and still don't). AirBnb started with renting couches or spare beds. They only moved into whole houses later, after they built up a reputation, and more importantly, built up their system of tracking the reputation of the renters.
Because the tech was terrible and they did nothing to facilitate the transaction. There was no trust model -- hosts posted their own reviews, usually from paper guestbooks and guests had to mail checks to untrusted hosts weeks in advance. There was no escrow or arbiter upon arrival. Most picture quality was terrible. Because of the transaction difficulty, the concept couldn't scale down to smaller rentals (rooms, etc) for smaller periods of time.
The only thing technical were that the sites usually had a calendar, but it was impossible to tell when and if it had actually been updated, so you had to be in contact with a dozen property owners to find a place with availability.
These services showed the potential but were little more than a collection of classified ads.
Personally I only even think about VRBO for group trips in vacation rental type areas. I think I've booked 10x the trips with Airbnb, more than half of them for just me solo.
Not sure how VRBO's mobile presence compared to Airbnb when Airbnb started gaining traction but that could be a factor?