Summary and Analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are Changing the World: Based on the Book by Brad Stone
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Summary and Analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are Changing the World: Based on the Book by Brad Stone
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This short summary and analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World includes:
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About The Upstarts by Brad Stone:
Brad Stone’s The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World is a detailed account of the founding of Uber and Airbnb, as well as each company’s climb from small startup to transportation and hospitality powerhouse.
The Upstarts provides insight into the early lives of entrepreneurs Travis Kalanick and Brian Chesky, including their forays into new business ventures, some successful, most of them not. Stone points out the amazing parallels between the two tech companies as they fight for startup capital, wrestle to find the right framework for their products and organizations, and bring in the talent and technology needed to support those offerings.
The summary and analysis in this ebook are intended to complement your reading experience and bring you closer to a great work of nonfiction.
Product Details
| ISBN-13: | 9781504046473 |
|---|---|
| Publisher: | Worth Books |
| Publication date: | 05/16/2017 |
| Series: | Smart Summaries |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 30 |
| File size: | 3 MB |
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Summary and Analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World
Based on the Book by Brad Stone
By Worth Books
OPEN ROAD INTEGRATED MEDIA
Copyright © 2017 Open Road Integrated Media, Inc.All rights reserved.
ISBN: 978-1-5040-4647-3
CHAPTER 1
Summary
Introduction
Author Brad Stone introduces his subjects, Uber and Airbnb, through an anecdote about how the founders of both attended Barack Obama's 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
The Early Years of Airbnb
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 Gebbia's, joined the team and brought his programming talent and entrepreneurial drive to the venture.
After launching the company's 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 he'd 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 website — this 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 "Trough of Sorrow," 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 O's, the breakfast of change, and Cap'n 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 program's cofounder, he called them cockroaches: they just wouldn't 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
The Early Years of Uber
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, Camp's 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 Electric's 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 IBM's 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 wasn't 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
SeamlessWeb, Taxi Magic, Cabulous, Couchsurfing, Zimride
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 service for town cars. However, investors were wary of taking on the existing businesses in this arena, and nothing came of it.
Taxi Magic had developed BlackBerry and Palm apps to enter the taximeter charges and pay taxis directly. Later, with iPhones, their app also allowed users to summon taxis. But their primary customers were taxi fleets — they were working within the industry, not trying to disrupt it. Potential investors (including Bill Gurley) who had other ideas for approaching the market were rebuffed. Eventually renamed Curb, Taxi Magic was sold to Verifone in 2014.
Best Buy sold off Cabulous during the 2008 economic crisis. The company had also attempted to work within the existing cab industry, but couldn't generate a sufficient fleet during peak periods, when drivers would just turn off the app. Eventually it closed in the face of competition from Uber.
Launched in 2004, Couchsurfing pitched its home-sharing service as a way to meet new people and have travel experiences off the beaten path. After their nonprofit status was declined and they became reckless with their back taxes, they closed.
Zimride has a different story. During a trip to Zimbabwe, founder and UC Santa Barbara student, Logan Green, traveled by minivan that first collected people until the vehicle was full and then began their journey. Returning home, Green decided to start Zimride, which aimed to fill every seat in every car. Green and his partner John Zimmer tried many business models, and then in 2012 decided to follow Uber's approach to town car services. They called their service Zimride Instant; later, changing the name to Lyft. Lyft continues to be a major competitor to Uber today.
Need to Know: Many factors hindered competitors, including idealism and limited funding. But their real downfall was failing to recognize the opportunity of disrupting established interests or lacking the guts to do it.
Chapter 4: The Growth Hacker
How Airbnb Took Off
Coached by Y Combinator chief, Paul Graham, Airbnb started to help hosts with property presentation. Gebbia and Chesky worked with hosts to take high-quality photos of their bedrooms as well as their profile pictures. This made the site much more compelling for travelers, and resulted in more bookings for the hosts. This strategy was in sharp contrast to others in this market, who focused simply on the travel experience.
Meanwhile, Blecharczyk, who had made a name in email marketing (a.k.a., spam), developed a system for sending an email to everyone who posted a rental property on Craigslist suggesting that they also post on Airbnb. When that proved controversial, he developed a technique for cross-posting to Craigslist from Airbnb with a single click. He also used Google and Facebook ads to drive business. His technical marketing skills were vital to the company's growth.
In 2010, reaching for another round of investment capital, Chesky met with Reid Hoffman, cofounder of LinkedIn and a partner at Greylock Capital. There, Chesky shared his vision of Airbnb as the largest hotel chain in the world, without the burden of physical buildings or staff. Hoffman seized the opportunity.
Need to Know: Developing and sticking with the vision, Airbnb's founders found ways to enhance their product as well as help more people find and use it. They were actually helped by the severe economic downturn that began in 2008: travelers were seeking low-cost lodgings and hosts were looking for extra income.
Chapter 5: Blood, Sweat, and Ramen
How Uber Conquered San Francisco
After working as a SAT tutor in college, Travis Kalanick, a math whiz, eventually dropped out his senior year to start a company called Scour.net, around the same time that Google launched. Built for college campuses, it allowed students to search all computers on the network for multimedia files. Scour experienced tremendous growth until Hollywood realized it was facilitating illegal music and video file sharing. The resulting lawsuits scared investors off, and the company filed bankruptcy. He eventually built another company, Red Swoosh, with a similar intent. After several difficult years, he sold the company. By that time, the young Uber, cofounded by one of his friends, was urging him to join the team as CEO.
In 2010, the San Francisco Metropolitan Taxi Agency issued a cease-and-desist order to Uber, threatening penalties of five thousand dollars per ride and ninety days in jail for each day the company remained in operation. Travis Kalanick — no stranger to the threat of a lawsuit — had finally agreed to serve as Uber's CEO and help fight the MTA without stopping rides. The MTA was responding to the taxi driver association's concerns that the new cab service was unregulated. However, Uber did not consider itself a cab or limo service. Instead, Uber argued that they were only the intermediary between drivers and riders, not a fleet operator. They were the technology that connects the transportation to the customer, similar to Obitz or Expedia. After winning the case (the lawsuit also meant free publicity), Kalanick teamed up with investor Bill Gurley. Uber was popular and was making money. The next step for Uber? Expand to every city in the world.
Need to Know: Uber's advantage lay in providing services that existing taxis and limos couldn't — due in part to regulations designed to preserve their market monopoly. That meant not only a technological challenge but a legal battle for Uber.
Part II: Empire Building
Chapter 6: The Wartime CEO
Airbnb Fights on Two Fronts
In 2011, the nation's financial recovery was well underway. In Silicon Valley, Facebook raised half a billion dollars, and LinkedIn went public with a four-billion-dollar capitalization. Spotify, Dropbox, and Square all hit over one billion dollars. Through publicity and word-of-mouth recommendations, Airbnb was booming: bookings were increasing by nearly 50% every month.
This boom also came with risks for investors. There were concerns about safety for guests and hosts, competition from clone sites, regulatory battles, and a leadership vacuum. Three German brothers, the Samwers, were responsible for the most competitive clone site, Wimdu. As they gained popularity in Europe, the Samwers tried to force a merger. Instead, Brian Chesky and his backers stepped up, bringing in key executives to drive their own European expansion. They then swiftly moved to the rest of the world.
Fallout after a host's home was ransacked by an Airbnb guest, soon dubbed #Ransackgate on social media, proved to be another challenge. Airbnb initially promised to repair the damage, then failed to deliver. This quickly escalated into a major public relations disaster, but it forced Airbnb to behave like the billion-dollar corporation they were. They introduced an around-the-clock customer service hotline, doubled their staff, launched ways to verify user identities, and offered an Airbnb Guarantee with an initial $50,000 reimbursement, which they increased a year later to one million dollars.
Need to Know: By January 2012, Airbnb had booked a cumulative five million nights since opening for business. Six months later, the figure was ten million. The change from startup to billion-dollar organization necessitated important adjustments, like recruiting key staff members, growing as business managers and leaders, and significantly ramping up their level of customer service.
Chapter 7: The Playbook
Uber's Expansion Begins
In 2011, with Travis Kalanick driving growth, Uber moved into New York City. Existing limo services, regulators, drivers, and Kalanick's own management presented immediate challenges. He responded by hiring his first lobbyist to work with regulators and, uncharacteristically, came into alignment with existing regulations by registering a base of limo cars.
Meanwhile, Uber also launched the service in Seattle, followed by Chicago, and then Boston. A massive amount of data and analytics ensured that they were moving into the right cities at the right pace. They also used a specific model of local management in each city: a general manager to head the full operation, an operations manager to recruit drivers, and a community manager to stimulate demand from riders.
One point of contention was Uber's implementation of surge pricing, or charging more during periods of high demand. It was an essential move to attract enough drivers to work during the very busy times they would otherwise avoid — such as New Years' Eve, when rowdy drunks tend to close out bars. Riders objected, and Kalanick modified rider communication, but continued to use surge pricing.
By early 2012, Uber was in a dozen cities, had fifty permanent employees, and had raised enough capital to take expansion to the next level.
Need to Know: In September 2011, Uber generated nine million dollars in fares that resulted in nearly two million dollars in commissions. At that time, 80% of their customers were in San Francisco, with a total of nine thousand customers using their app. It was clear then that it was time to extend their operations into other similar cities.
Chapter 8: Travis's Law
The Rise of Ridesharing
In 2012, a campaign by the DC Taxicab Commission attempted to intimidate Uber drivers with the threat of fines and impounding. Existing regulations didn't actually prohibit most of Uber's operations, since cars carrying six passengers or fewer could legally charge on the basis of time and mileage as long as they adhered to the usual taxi and limo regulations. But the taxi drivers were furious about Uber's incursion and spurred the new taxi commission chairman to act.
Later that year, the matter was sent to the city council, and Uber negotiated with the city councilwoman leading the effort. The result was a transportation bill that gave Uber a legal basis for operation, but set a price floor several times the rate of a taxi's. While Uber's lobbyists were pleased with the progress, Travis Kalanick decided to fight further.
He launched the social campaign #UberDCLove, and by the next day, council members were deluged with fifty thousand emails and thirty-seven thousand tweets. In September, the city council called another hearing. Discussion was heated, but Kalanick framed the issue in terms of providing citizens access to timely and cost-effective service versus catering to the establishment. By December, the city council implemented a new law that expressly allowed a service with cars dispatched by app that charged by time and distance. Uber had won this battle by ignoring the advice of their lobbyists and attorneys — in typical upstart fashion.
Uber had officially established "Travis's Law," which said essentially: "Our product is so superior to the status quo that if we give people the opportunity to see it or try it, in any place in the world where government has to be at least somewhat responsive to the people, they will demand it and defend its right to exist." Uber was to apply this law many times thereafter.
Meanwhile, two competitors, Sidecar and Lyft, entered San Francisco. At the time, Uber employed only professional drivers. Their competitors positioned themselves as ridesharing or carpooling services. In response, Uber considered offering their own ridesharing service, but instead chose to leverage regulators to force others to close.
(Continues...)
Excerpted from Summary and Analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World by Worth Books. Copyright © 2017 Open Road Integrated Media, Inc.. Excerpted by permission of OPEN ROAD INTEGRATED MEDIA.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Contents
Context,Overview,
Summary,
Timeline,
Cast of Characters,
Direct Quotes and Analysis,
Trivia,
What's That Word?,
Critical Response,
About Brad Stone,
For Your Information,
Bibliography,
Copyright,