Summary

Airbnb and Uber began as side projects with barely working products, uncertain founders, and incumbents who assumed regulation would protect them. Their edge was conviction: survive the trough of sorrow, do things that don’t scale, find controversial ways to grow supply and demand, and turn a better service into political leverage. Risk arbitrage meant acting where others misunderstood the odds. The companies became institutions through city-by-city execution, charismatic recruiting, data, narrative, and lobbying + PR. Scale amplified their cultures and their failures: Uber’s blunt aggression and data-privacy abuses damaged its reputation, while Airbnb invested in community and its founding story. The decisive threshold was escape velocity – grow fast enough that customers become a constituency before opposition can stop you.

“I look at entrepreneurship as risk arbitrage. You’re basically looking at risk and saying people are misunderstanding it and I’m gonna go after it.”

“The first thing you need to do is grow really, really fast. You either want to be below the radar or big enough that you are an institution. The worst is being somewhere in-between: all your opposition knows about you but you are not a big enough community that people will listen to you yet. You have to get to escape velocity.”

“You guys are like cockroaches. You just won’t die.” – PG

Key Takeaways

Notes

1: Side Projects

1: Early Years of Airbnb

• Brian Chesky:
  • Bodybuilder, designer, inspiring speaker, “dent in the universe”, Airbnb → depth of relationships
  • Michael Sibel as early mentor
• The trough of sorrow: when the novelty of a new business wears off and the founders are left trying to actually jumpstart an actual business
• “You guys are like cockroaches. You just won’t die” - PG

2: Early Years of Uber

• StumbleUpon - early $75M acquisition
• Uber idea inspiration → research → go
• JC connects with people over analytical problem solving
• Started as a side project
• No one wanted to go full-time at start
• Tweeted looking for X
• Product barely worked to start
• Naval → Angel List only 10% responded
• Alfred Lin said it was luck
• TechCrunch → virality
• Cease and desist from SF

3: The Nonstarters

• SeamlessWeb, Taxi Magic, Cabulous, Couchsurfing, Zimride
• Lacking conviction
• Wrong bet that regulation would hold
• Best Buy Upstart program - basically employee venture incubator
• Non-profit was too slow and outdated
• You just have to will it into existence

4: How Airbnb Took Off

• Do things that don’t scale, eg. talking to every host and doing their work
• Airbnb become Sequoia’s most profitable investment ever
• Never takes off as fast as you think
• Growth hackers: find clever, often controversial ways to grow P + S
• Repost on Craigslist + manage
  • Takes a marketing-minded eng

5: How Uber Conquered SF

• It’s not about who’s right or wrong, it’s who has power + influence
• Hired 4 engineers simply with conviction and charisma
  • Persuasive, compelling, candid
• Claw your way to success
• “Blood, sweat, and ramen” motto
• Negative gross churn
• 12% advisor → 23% CEO JC
• Data science focus

2: Empire Building

6: Airbnb Wartime CEO

• Strong narrative of Airbnb’s unlikely origin
• Confident and charismatic
• 3 employees → $1B valuation in 1y
• Copycat companies
  • European serial copycatters
  • Fly to Europe to deal with it head-on after declined merger
• Dealing with controversy
  • Wholesome sorry email with personal email attached
• Opened 10+ Int’l offices, interviewing leaders for each
• Obsessed with how to scale culture

7: Uber’s Expansion Begins

• Uber growth playbook - city upstart
• Investors controversy

8: The Rise of Ridesharing

• Heylo competitor with Int’l promise trounced
• Legal hearing + fiery disagreement
• Uber Black → UberX
• Ride sharing
• “If it’s legal, we’ll do it too”
• “I look at entrepreneurship as risk arbitrage. You’re basically looking at risk and saying people are misunderstanding it and I’m gonna go after it”

9: Airbnb’s Fight in NYC

• “What’s Mine is Yours: The Rise of Collaborative Consumption”
• Decided against expanding into other sharing businesses
• Attended Burning Man numerous times
• Controversial host → lawsuit
• Hired a head of community
  • “The Creating of Cult Brands”
  • Ideology

3: The Trial of the Upstarts

10: Uber’s Rough Ride

• Longer IPOs → more private funding
• Travis’ law: “politicians accountable to the people can be pressured to accommodate any service that’s markedly better than the alternative”
• Leasing cars for drivers
• Price elasticity of paid transportation
• Insurance
• 2014 reputation collapse due to bad PR
• JC “blunt and unaware”
• Lyft 18% Uber merger talks called off
• Lyft had better brand PR despite being more aggressive
• Updated vision from “an asshole named taxi” to “provide public utility”
• God view - lack of data privacy
• Incredible series of tweets to recover*

11: Escape Velocity

• Becoming billionaires
• Regulatory compromise
• Importance of lobbying + PR
• Airbnb founding story as just an average guy with grit and luck
• “The first thing you need to do is grow really, really fast. You either want to be below the radar or big enough that you are an institution. The worst is being somewhere in-between: all your opposition knows about you but you are not a big enough community that people will listen to you yet. You have to get to escape velocity”
• Second: meet the people that hate you
• Financed the formation of 100 grassroots political forces for advocacy

12: Global Mega-Unicorn Death Match!: Uber Versus the World

• DiDi + China
• Culture
• Contractor lawsuits

Epilogue

• Expansion: upselling → visionary grandiosity
• “I want to do for travel what Apple did for the phone”