Summary
Author Brad Stone introduces his subjects, Uber and Airbnb, through an anecdote about how the founders of both attended Barack Obamaâs first inauguration in 2009, when each company was new. Since then, both have grown beyond all expectations, though they have met resistance from all sides.
Part I: Side Projects
Chapter 1: The Trough of Sorrow
Airbnb began as a side project in 2007 as Airbedandbreakfast.com. Brian Chesky and Joe Gebbia, recent graduates of the Rhode Island School of Design, had landed day jobs, but found them deeply unsatisfying. Together, they looked for a business idea that would make a difference in the world. Nathan Blecharczyk, a former roommate of Gebbiaâs, joined the team and brought his programming talent and entrepreneurial drive to the venture.
After launching the companyâs first website, built with the platform Wordpress, Chesky headed to Austin for the South by Southwest Conference. He stayed at an AirBed & Breakfast, one the two that had signed up from the many heâd solicited via Craigslist. While in Austin, Chesky met Michael Seibel, a Silicon Valley entrepreneur who would later serve as their first mentor in navigating the investment community.
For the 2008 Democratic Convention in Denver, they built a new websiteâthis time, focusing on ease of booking and payment. With several new listings, roughly eighty people used the service for the event. TechCrunch and U.S. News and World Report followed with press exposure. Chesky and Gebbia met Greg McAdoo from the venture capital firm Sequoia Capital. He was to become a vital investor, but not yet.
Running out of money and collecting extensive debt, Chesky and Gebbia entered the âTrough of Sorrow,â where a new business idea runs out of novelty and needs to start performing. They countered with a breakfast cereal for guests linked to the presidential campaign. There were boxes of Obama Oâs, the breakfast of change, and Capân McCains, a maverick in every bite. They sent a sample to every media company, and the resulting exposure generated enough sales to recoup their costs and pay off most of their credit cards.
That year, they applied to the Y Combinator startup school for seventeen thousand dollars and a 7% stake in the company. When they pitched their company to Paul Graham, the programâs cofounder, he called them cockroaches: they just wouldnât die.
Need to Know: Paul Graham and Greg McAdoo state that mental and emotional toughness, which help you overcome the challenges and negative reactions to anything new, are the most important aspects of any startup. Chesky, Gebbia, and Blecharczyk had it in spades.
Chapter 2: Jam Sessions
Garrett Camp became a millionaire by cofounding the website discovery engine StumbleUpon, which eBay purchased for seventy-five million dollars. Wealthy and living in San Francisco, he was using town cars to avoid taxis when he began to dream of a company that could mimic a scene from Casino Royale: a car your phone could see in real time as it headed towards you.
In 2008, he registered UberCab.com and established UberCab LLC in California. He called on Oscar Salazar, his old friend from the University of Calgary, to develop a prototype iPhone app that could be used to call cabs, meter the charge per mile, and make effortless payments from a credit card on file. By this time, Campâs idea included buying a small fleet of cars to provide the ride services.
Camp recruited Travis Kalanick, an entrepreneur and investor who had sold a streaming-video company, Red Swoosh, to a larger competitor, Akamai, and was looking for his next opportunity. When they attended LeWeb, a technology conference in Paris, they found the taxi service there even more frustrating.
While the iPhone and mobile apps opened the path for Uber, the implementation of GPS locator services made it work. Now, they could locate the passenger and the nearest car, provide that information on a map to the passenger and driver, and bring them together.
Camp and Kalanick were more interested in using the service rather than running it, so they hired Ryan Graves to manage it. With a degree in economics, experience in General Electricâs management training program, along with a business development internship at FourSquare, Graves knew he wanted to join the Internet economy and run an organization by himself.
Camp and Kalanick already knew how to find investment capital. Bill Gurley, a partner at Benchmark, helped find seed capital and invested himself in 2009. The seed investors included Chris Sacca, a former Google executive; Mitch Kapor, creator of IBMâs Lotus Notes; and Jason Calacanis, founder of several Internet startups. Many others, concerned about battles with regulators and entrenched interests, declined.
Need to Know: The startup journey for Uber wasnât quite as challenging as that of Airbnb. Its founders used existing contacts and experience in the investment community to find the capital needed to support their early development. Their challenge would be dealing with growth, regulatory agencies, and battles with existing taxicab services in every city they entered.
Chapter 3: The Nonstarters
Around the same time Airbnb and Uber were making their way to the market, five similar startups were also trying to make their mark. SeamlessWeb focused on delivering meals to corporate customers from hundreds of restaurants in Manhattan. They provided menus, ordering, delivery, and expensing. The company toyed with SeamlessWheels, which would provide the same s...