Travis Kalanick : From being sued for $250 billion dollars to starting Uber
Story of Travis’s decade of failures before Uber .
Uber was the brainchild of Garret Camp and UCLA dropout Travis Kalanick ,the flamboyant and outspoken entrepreneur who had to go through a number dead ducks before Uber.
Put everything you got every time you fail and stand up again and push till it hurts was his motto which is clearly seen in his life 10 years before Uber.
Dropping out of UCLA and getting sued to take money
This was during the pre-napster days Travis and few of his classmates at UCLA started Scour , a peer to peer file sharing website where you could search a phrase like ‘Tupac’ and get all the files containing that phrase .Just a few months before graduation Travis dropped out to work on Scour full time, during his senior year Scour got funded by two media moguls Ron Burkel and Michel Ovitz who was the then president of Disney and made Kalanick sign a term sheet with a ‘no shop’ clause which meant that they couldn’t approach any other investor for any investment. So when they ran out of money and started looking for other investors they got sued by Ovitz and were forced to take his money.
Fun fact, Do you remember the scene in the movie “The Social Network” where Sean Parker meets then 20 year old Zuckerberg and Sean suggest to remove “The” from “TheFacebook.com”,well in reality Travis was present with Sean Parker when he made that suggestion and for some reason Travis wasn’t portrayed in the movie ,well probably that’s because Travis need’s his own movie.You can watch that scene here .
In 2000, the Motion Picture Association of America (MPAA), the Recording Industry Association of America (RIAA), the National Music Publishers Association (NMPA) and 30 other companies brought a $250 billion lawsuit against Scour, alleging copyright infringement and in September of that year Scour filed for chapter 11 bankruptcy to protect itself from the lawsuit.
Swooshing — blood sweat and Ramen years
Turning the companies that sued him into customers and taking no salary for 3 years
In 2001 Kalanick and Michael Todd started Red Swoosh which was another peer to peer file sharing company, the idea was that when you try to consume any media on the internet say YouTube instead of streaming directly from YouTube’s servers with YouTube’s bandwidth you stream over 30 peers close by to you with their bandwidth which save hundreds of millions of dollars for Youtube , sounds cool right!! But you know what they were 5 years early to the market and their main competitor was a company named Akamai Technologies who’s valuation during the dotcom bubble went from $50 billion dollars to a $160 million dollars,hence investors were skeptical in investing in Red Swoosh.
Red Swoosh was very quickly running out of cash and just when they were getting some traction Kalanick’s co-founder Todd sent an email to Sony venture’s saying that Red Swoosh wasn’t going to work out and he asked them whether they could hire him and the other engineers, Kalanick went blank after knowing this and kicked his co-founder out.
Kalanick later found out that Todd had withheld dues to the IRS to the amount of $ 110,000 which is a white-collar crime and you could go to jail regardless of you knowing about it or not. In order to pay of the IRS bills and pay his engineers who weren’t getting paid for 3 months Kalanick raised $300 K from Chaos Ventures and Red Swoosh went from a valuation of $3 million dollars to $1.5 million dollars, of this $300,000 $110,000 was paid to the IRS ,$100,000 paid to the engineers and Kalanick was left with only $90,000 to run the company which wasn’t enough, he need to raise more money and this time hope came from Cable and wireless which was a telecommunications company who were competing with Akamai, they put in $150 k into Red Swoosh.
Around this time a Venture Capitalist came into the picture and gave Kalanick an offer that they would put up $10 million dollars into Red Swoosh if he persuades another VC to put in $5 million of that $ 10 million ,but as fate had it when Kalanick finally got in another VC the previous VC backed out crashing the deal.
Around 2003 Microsoft wanted to acquire Red Swoosh as they wanted to integrate peer to peer into their operating system itself .
All the due diligence and the paper work to finalize the deal was done ,
But the person from Microsoft who was responsible for the deal called Travis and said that he wanted to present the term sheet in person ,which meant they were about to low ball Kalanick and that is what they did.They made an offer of $1.2 million dollars to acquire Red Swoosh which infuriated Kalanick and the deal collapsed.
One of Kalanick’s First tweets
Later that year Kalanick convinced the World Economic Forum that he was a Tech pioneer and went to Davos ,where he was about to sign a $1 million dollar per year contract with AOL and he received a tweet from his last engineer that he quit Red Swoosh to join Google and this news leaked and AOL backed out from the deal
Enter Mark Cuban
Watch here — Mark Cuban on missing out on being one of the earliest investors in Uber
In 2006 Mark Cuban put in $1 million on Red Swoosh .
Later that year Kalanick decided to take his engineers to Thailand and Trivandrum and code from there, taking some time off the bay area and relax a little.
Ecostar wanted to sign a deal with Red swoosh which was a million dollar a year contract and now Mark wanted to back out (probably he did like nerds coding around women in bikinis ) and Kalanick had to get another VC to buy out Mark Cuban and make the Ecostar deal happen.
Akamai acquires Red Swoosh
Finally in 2007 a beacon of hope for Kalanick when Akamai acquired Red Swoosh for $23 million
Uberrrrrrr
In 2009 Travis and Garrett went to Paris for a conference and had an idea of an app to call a cab with a push of a button,Garrett came back to San Francisco and put up $250K of his own money and started UberCab and Travis joined in as chief strategy officer and eventually became the face of the largest ride hailing company in the word which is now envisioning air taxis and self-driving cars.
At its peak Uber was valued at $72 billion.
