The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World

by Brad Stone

It was the beginning of something remarkable. Nearly two million people poured into Washington, DC, the week of January 19, 2009, for the inauguration of President Barack Hussein Obama.

They had plenty of help. The late Apple co-founder Steve Jobs introduced the first iPhone seven months before Obama’s inauguration.

The juggernauts Uber and Airbnb did not generate this technological wave, but more than any other companies over those eight years, they rode it and profited from it.

The two companies, both in San Francisco, their headquarters only a mile apart, are among the fastest-growing startups in history by sales, overall market value, and number of employees.

Together they have scrawled in the annals of entrepreneurship the most memorable stories of a third phase of internet history—the post-Google, post-Facebook era of innovation that allowed the digital realm t...

Airbnb can be considered the biggest hotel company on the planet, yet it possesses no actual hotel rooms. Uber is among the world’s largest car services, yet it doesn’t employ any professional drivers or own any vehicles ...

Their names are nouns and occasionally verbs, used by retirees looking to earn extra money, millennials seeking authentic travel experiences, and young people who have no interest in owning expensive assets like cars.

Entrevista realmente não deu em nada você disse que estudos feitos em Nova Iorque onde contigo pode reduzir a quantidade de cargos cargos uma cidade uma relação de 20 para um. Filho de 22 anos, moro em São Paulo, deixou seu carro Fortaleza somente anda de Uber em São Paulo. Minha filha de 20 somente Uber Rio de Janeiro. Em 30 anos, qual é a redução de carros no mundo por causa de plataformas de compartilhamento de carona como o O Uber?

Camp, Kalanick, and their friends wanted to ride around San Francisco in style. Chesky and his cohorts were looking for a way to make some extra cash when a conference came to town.

Uber’s valuation in late 2016 was sixty-eight billion dollars, more than any other privately held startup company in the world. Kalanick and Camp have an estimated net worth of more than six billion dollars each.

In many cities, Uber sidestepped laws requiring professional drivers to undergo rigorous training sessions, submit to fingerprint-based background checks, and acquire expensive, government-issued chauffeur licenses.

Uber is also the target of hundreds of lawsuits, many of which concern the legal status of its drivers, who are designated by the company as contractors, not employees.

Taxi medallions, municipal licenses to operate a cab, were an early twentieth-century invention meant to prevent an excess of cars on clogged city streets and assure riders that drivers were trained and vetted and knew how to navigate the city.

Uber and Airbnb have also come to represent, at least to some, the overweening hubris of the techno-elite. Critics blame them for everything from destroying the basic rules of employment, exacerbating traffic, and ruining peaceful neighborhoods to bringing unrestrained capitalism into liberal cities.

At the center of this maelstrom are the young, wealthy, charismatic chief executives: Travis Kalanick and Brian Chesky. They represent a new kind of technology CEO, nothing at all like Bill Gates, Larry Page, and Mark Zuckerberg, the awkward, introverted innovators who typified the previous generation of tech leaders. Instead, they are extroverted storytellers, capable of positioning their companies in the context of dramatic progress for humanity and recruiting not only armies of engineers but drivers, hosts, lobbyists, and lawmakers to their cause.

Despite the inauspicious start, Kalanick seemed willing to listen. He asked what he had to gain by cooperating. “If you want people to embrace a radical future in which they give up their cars,” I argued, “you have to allow journalists to explain and demystify your story. If you want to change the way cities work, Uber must be understood.”

“You’d start this story with a city council meeting,” he mused. “The city council people are sitting up in front of the room and they are misinformed. They are thinking mostly about where their next campaign contribution comes from. There’s an Uber rep there, but he is basically alone, trying to describe an unfamiliar and strange technology to people who have no understanding of it.

Finally, you have the big taxi guys there, and they have the city council locked up and paid for.

It is instead a book about a pivotal moment in the century-long emergence of a technological society. It’s about a crucial era during which old regimes fell, new leaders emerged, new social contracts were forged between strangers, the topography of cities changed, and the upstarts roamed the earth.

With another guest staying at Rausch Street, Kat Jurick, Surve attended the pecha-kucha, and later in the week, Gebbia took him on a tour of the city, showing him sights like the famous winding block of Lombard Street and the farmers’ market outside the Ferry Building. Gebbia, who liked to exhibit his design sensibilities with stylish items like colorful sneakers and trendy, oversize eyeglasses, sported an aviator hat with furry ears in the fall chill. After the conference, Surve had an extra day in the city and wanted to see the famous d.school—the Institute of Design at Stanford University. Chesky wanted to see it too, so he offered to drive. At Stanford, the pair sat in the front row at a free lecture given by the Italian designer Ezio Manzini and afterward introduced themselves to Bill Moggridge, a co-founder of Ideo, the iconic design firm, and chairman of that week’s design conference.

When they weren’t at their jobs (where they occasionally bent protocol by inviting the individuals and families they counseled into their home), they spent their time catering to their children. “We had no life,” says Brian’s vivacious mother, Deb. Adds his father, Bob, “Some people invest in their career. We invested in our kids.”

Then one summer in the middle of high school, Gebbia took art classes at Valdosta State University in Georgia and decided that he really wanted to be a painter. “You’ve got something there,” noted an instructor who admired his work, and he suggested Gebbia apply to one of the top art schools in the country, the Rhode Island School of Design. Gebbia spent the following summer taking classes at RISD and was enthralled by the majestic French and Neocolonial buildings clustered on the banks of the Providence River. Gebbia enrolled at RISD in 2000, a year after Chesky.

He was living his college dream. He had a real job, earning forty thousand dollars a year as a designer for the consultant shop 3DID in Marina del Rey, working on toys for Mattel, guitars for Henman, medical equipment, footwear, dog toys, and handbags. “When you are a designer at school, especially an industrial designer, you just dream of getting something on the shelf,” Chesky says.

For Chesky, that unhinged criticism was cutting. At the time he was obsessively following the story of the fantastically successful founders of the video-sharing site YouTube; he was spending hours on the site as well as watching Steve Jobs’s keynote presentations and the television film Pirates of Silicon Valley. This was a universe where new things really did change reality. “I got kind of obsessed,” he says. “I was living vicariously, escaping to a world where someone could build something and actually change something. I was not doing that. I was sitting in a dark office making stuff for closets and landfills.”

Nevertheless, Blecharczyk came through with a new version of a site on March 3, a week before the annual conference in Austin, Texas. The new slogan was “A friend, not a front desk.”

McAdoo spoke about why being a great entrepreneur required the precision of a great surfer. If you want to build a truly great company you have got to ride a really big wave. And you’ve got to be able to look at market waves and technology waves in a different way than other folks and see it happening sooner, know how to position yourself out there, prepare yourself, pick the right surfboard—in other words, bring the right management team in, build the right platform underneath you. Only then can you ride a truly great wave. At the end of the day, without that great wave, even if you are a great entrepreneur, you are not going to build a really great business.8

Design students seemed risky; Stanford computer science dropouts were considered a much better bet.

A person close to the discussions, however, said that at drinks after the dinner, Craig gave Chesky the impression that he would make a difficult partner.12 In Silicon Valley it was orthodoxy that the right investor could empower a company but a difficult one would cause unending problems.

A few weeks later, Chesky decided that the founders of the struggling company should apply to the prestigious Y Combinator startup school, which invested seventeen thousand dollars in each startup, took a 7 percent ownership stake, and surrounded founders with mentors and technology luminaries during an intense three-month program. It was a last-ditch effort and Chesky actually missed the application deadline by a day. Michael Seibel, an alumnus of the program (and later its CEO), had to ask the organizers to let the company submit late. They got permission, and the co-founders were invited for an interview. Blecharczyk flew out to San Francisco and crashed on the living-room couch on Rausch Street, and the three co-founders gathered themselves for one last try.

McAdoo and Graham were discussing that most essential characteristic of great entrepreneurs: mental toughness, the ability to overcome the hurdles and negativity that typically accompany something new. McAdoo and his partners had identified this kind of true grit as the most important attribute in the founders of their successful portfolio companies, like Google and PayPal. Scouting for new opportunities despite the gathering economic storm enveloping the world, McAdoo asked Graham: “So, who in this class of startups is the most mentally, emotionally tough?” “Well, that’s easy,” Paul Graham responded, and he pointed across the room at two designers and an engineer, all hunkered over their laptops. “Hands down, it’s those guys over there.”

The system guaranteed a healthy availability of passengers for the taxi companies even during slow times and ensured that full-time drivers could earn a living wage. But demand for cars greatly exceeded supply and so taxi service in San Francisco, famously, sucked. Trying to hail a cab in the outer neighborhoods near the ocean, or even downtown on a weekend night, was an exercise in futility. Getting a cab to take you to the airport was a stomach-churning gamble that could easily result in a missed flight. (Even when a passenger arranged for a taxi via phone, he couldn’t be sure the cab would show up; the driver might decide to pick up a street hail instead.)

So on January 5, 2010, Travis Kalanick Tweeted in the peculiar shorthand common to the 140-character messaging service: Looking 4 entrepreneurial product mgr/biz-dev killer 4 a location based service… pre-launch, BIG equity, big peeps involved—ANY TIPS?? Halfway across the country, in Chicago, Illinois, a twenty-seven-year-old General Electric employee named Ryan Graves sent the single most lucrative Tweet in internet history: @KonaTbone heres a tip. email me :) graves.ryan[at]gmail.com.

Most of Silicon Valley’s best and brightest passed on the deal, just as they had with Airbnb. They said no because Ryan Graves wasn’t experienced enough or because the two founders weren’t involved enough or because they saw the concept as an extravagant indulgence for wealthy urbanites. Some said no because they had worked with the combative Travis Kalanick before at his previous companies and didn’t want to deal with the aggravation again; others because they knew the company was going to run headlong into a hostile tangle of city and state transportation laws.

Both Camp and Kalanick were well connected, so they were able to avoid the awkward groveling that the Airbnb founders had endured the previous year. They kicked off the process simply by contacting a friend, Naval Ravikant, who had created an e-mail network of SEC-accredited investors called AngelList. Kalanick had been informally talking to Ravikant about becoming a partner at AngelList, and Ravikant offered to help Kalanick try out the service to reach out to some top investors.

Ron Conway, the “godfather” of Silicon Valley, famous for backing the holy trinity—Google, Facebook, and Twitter—passed on the deal.

There were a dozen other seed investors. Chris Sacca, a former Google executive with a taste for embroidered cowboy shirts who had just bet big on Twitter, heard about it over a sushi dinner in San Francisco with Kalanick, Camp, McCloskey, and Oscar Salazar.

Now Uber had $1.3 million in the bank, a $5.3 million valuation, an office (small and crowded), and a product (buggy). It was finally looking like a real startup. Uber’s founders and investors told their influential and affluent San Francisco friends, and word began to spread. On July 5, the blog TechCrunch wrote its first story about the app: “UberCab Takes the Hassle Out of Booking a Car Service.”

“I saw the way people talked about Uber and all the positive words they used about it, and I knew it was going to be big,” says Ouali, who became closely acquainted with early Uber riders like Kalanick, Camp, Geidt, and Brian Chesky.

Everyone failed in the taxi industry. The fleet owners failed. The drivers failed. Riders spoke clearly. Some people chose to listen and some didn’t. I was part of it, and I accept it. —Thomas DePasquale, founder of Taxi Magic

Disruptou?

So Finger and a friend decided to come up with a solution. They built a food-ordering website that catered to law firms and investment banks. They called it SeamlessWeb.

SeamlessWeb contracted with hundreds of Manhattan restaurants and gave its corporate customers and their employees a way to browse menus and place orders over a website, expense meals to the company, and coordinate the flurry of deliveries.

But he also defends the decisions he made to work within the confines of the taxi industry. “We bet the regulatory environment would hold,” he says. “There was rationale behind the bet. Medallions were worth a couple million in some cities. Almost every city had police that enforced the taxi laws.”

“You can’t spank me any harder than I spank myself,” he continued. “Everyone failed in the taxi industry. The fleet owners failed. The drivers failed. Riders spoke clearly. Some people chose to listen and some didn’t. I was part of it, and I accept it.

Wolpert was conceiving of a service that empowered those yellow-cab drivers. It would make the traditional taxi businesses more efficient and help drivers boost their earnings. This was his fatal mistake. If Seamless Wheels suffered from bad timing and Taxi Magic from stubbornness, Cabulous was doomed by civility.

“I was a Boy Scout. I was going to go with the date that brought me,” he says.

Over the next few months Cabulous warily circled Taxi Magic, drawing up expansion plans and jockeying to sign up taxi fleets. Then UberCab, with its more elegant app and deluxe black-car experience, started gathering momentum, plaudits, and venture capital, and it eventually blew both companies out of the water.

When he heard that San Francisco officials had served UberCab with that first cease-and-desist notice, adorned with a head shot of Ryan Graves, Wolpert believed it was justified. Regulation had a purpose. Taxi prices needed to be strictly controlled so that grandmothers could afford a ride home from the supermarket. He knew the pricier black cars were regulated more lightly, but by law they had to be summoned in advance, limiting their ability to compete with cabs.

“Hey, let’s completely disregard decades of regulation!” Wolpert shouted at him. “How is this a good idea?”

He concedes that it was probably a mistake to partner with yellow-cab drivers and taxi fleets, which were handcuffed by regulation and ill prepared to counter the disruptive threat posed by Uber.

If you have enough money and can make the right phone call, you can disregard whatever rules are in place and then use that as a way of getting PR. And you can win.”

An online home-sharing service called Couchsurfing won devotees and attention five years before the rise of Airbnb. It wasn’t bad timing, stubbornness, or chronic niceness that doomed it, but something just as deadly in the cutthroat world of business: idealism.