Book Summary — The Upstarts
You can find all my book summaries — here.
How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are changing the World
The book provides a comprehensive summary of Uber and Airbnbs journey, which took place around the same time. It describes the start of the Trust Economy, the struggles, the competitors, the crazy fundraising and goes into a lot of detail around the legal challenges both companies were/are facing.
My Key Learnings:
- Be a cockroach — refuse to die
- Be flexible, adapt, pivot — be true to your mission, but flexible in your solution
- Act fast and with conviction in crisis situations
- China is super hard to penetrate and ideally you’re supported by one of the three big players (Alibaba, Tencent or Baidu)
The below bullet points are just prompts for myself to remember some of the key points, but by no means a comprehensive summary.
Uber Pain: There was just no way to get around, taxis never came, and getting a taxi license took years and year and cost sometimes millions of $
Airbnb Pain: Accommodation was becoming increasingly expensive, espec around big dates and events, but there are so many spare rooms in people’s places which nobody uses
Founders — Chesky, Gebbia & Blecharczyk (hacker — godfather of spam) — 2008
AirBed& Breakfast was a side project, which allowed the founders to pay their rent and think of the next big thing. The initial idea was to put up an Airbed at the hosts when designers go for design conferences.
Hit through of sorrow — novelty wore off and founders need to jump-start actual business. Made breakfast cereal and offered it to guests — cereal was a marketing hit (Obama-O’s), which paid off a bit of their debt.
Almost missed deadline to apply to Y-Combinator and got in as Graham phrased it: “You guys are cockroaches, you just won’t die”.
Founder — Camp & Kalanick — 2009
Garrett Camp just sold StumbleUpon for $75m, Kalanick sold Red Swoosh for $19m. First version of Uber was the customer sending a text message to a central “server” then forwarding to the driver. First Uber code was written in Spanish. First time sued Oct 2010.
For both companies there were many competitors at the same time, but each one died because of one reason or another — tied themselves to taxis, fleet services, didn’t control supply, didn’t take money from one investor because had others.
For example Couchsurfing was around at that time, but stuck to their belief that it should be free.
Zimride had all the problems — founders were too nice, idealistic and idea too early (share spare seat in car). Eventually, they did pull through and rebranded to Lyft.
- Focus on hosts, rather than guests.
- Access to Y-Combinator mentors
Don’t worry about competitors, startups usually die of suicide, not homicide
- Talked to customers, stayed with customers
- Had to teach hosts how to sell — hired “professional” photographers (did it themselves with good cameras)
You start, you built it, and you think everyone’s going to care. But no one cares, not even your friends.
- Blecharczyk godfather of spam — wrote tools for spammers to organise email marketing better
- Automatic email to everyone who posted property on Craigslist
- Integration to post Airbnb property on Craigslist in a “beautiful way” — help them sell and market themselves
- Targeted ads “Rent your room to a Yogi / Wine Lover” etc.
- Workations — taking whole company for work holiday to Thailand / abroad
- Negative churn — the longer they stayed around the more they would use it
- Data driven — fix supply was crucial
- Rocket Internet building copy cat and threatening in Germany
You Americans innovate. Me and my army of ants, we go fast and build great operations.
- PR problems with host having everything stolen from her — big learning: react fast with a strong opinion in the right way, don’t just let it hanging around
- Financial incentives with minimum wages, free phones and sign up bonuses to drivers and passengers
- Established playbook how to enter cities — drivers through limo fleet listings, launch party with local media and local celebrity who took first ride and blog post — offering subsidies, credits and twitter account for each city
- Redirecting drivers to busiest part of the city — core initiative to solve supply side
- Dynamic pricing — hugely controversial and huge issues at the beginning especially around NYE, ultimately worked but drivers don’t receive much more
- Picked investors who could introduce to celebrities
- Travis Law — the public if motivated can change public policy
When traditional advocacy failed, Uber could mobilize its user base and direct their passion toward elected officials.
- Started as high end service, pivoted into cheap mass consumption UberX service
- Lyft battle with unconventional tactics — slogging, ordering and cancelling rides
- Lots of legal battles and negative press — God View — no privacy for users
- Didi Chuxing in China arose — Uber couldn’t beat them due to chinese market restrictions, but battled hard with financial incentives — ended up pulling out but taking stake in Didi for leaving
- Didi was supported by one of the 3 huge players, which you need to be in China (Tencent, Alibaba or Baidu)
- lots of legal battles of max 30 nights per year allowed to rent, hotel taxes and if you rent you need to be at home yourself otherwise it’s a hotel
We found the most important thing to do is to go and meet city officials. […] There’s an old saying that it’s hard to hate up close. I have found that. It’s really hard to hate somebody when they are standing right in front of you.
You can find all my book summaries — here.