A vil­lain, a prophet and two wildly suc­cess­ful start-ups

The Washington Post Sunday - - BOOK WORLD - BUSI­NESS RE­VIEW BY ANTONIO GAR­CIA-MARTINEZ

Sil­i­con Val­ley en­cour­ages an odd form of mer­i­toc­racy that in­pires the am­bi­tious to suc­ceed and dis­re­gards what­ever hap­pens to the rest — it’s a win­ner-take-all and loser-get-noth­ing world. In his new book, “The Up­starts: How Uber, Airbnb, and the Killer Com­pa­nies of the New Sil­i­con Val­ley Are Chang­ing the World,” Brad Stone re­veals the work­ings of this bru­tal tech-world battlefield. He am­ply il­lus­trates that for ev­ery tech cham­pion, there is a for­got­ten crowd of de­cap­i­tated com­peti­tors, pissed­off in­vestors, de­fen­es­trated founders and un­re­warded early em­ploy­ees. The Sil­i­con Val­ley mer­i­toc­racy re­wards some for good luck and de­stroys oth­ers for a bad twist of fate.

Con­sider the dif­fer­ent out­comes for two early Uber em­ploy­eees. Matthew Kochman was a charis­matic and am­bi­tious Cor­nell grad hired to lead Uber’s as­sault on the New York mar­ket. Re­ly­ing on his con­sid­er­able charm, he cut deals with the city’s re­cal­ci­trant limo driv­ers to use the new­fan­gled mo­bile app. But af­ter his re­la­tion­ship with Uber’s chief ex­ec­u­tive and founder, Travis Kalan­ick, soured, Kochman bailed on the com­pany only nine months into his ten­ure, walk­ing away from his un­vested eq­uity stake. In a vin­dic­tive pique, he con­sulted for com­peti­tors, bad-mouthed Uber to po­ten­tial in­vestors and founded an­other trans­port start-up that went nowhere. Right now, the Uber shares he aban­doned are worth more than $100 mil­lion.

By con­trast, Os­car Salazar hap­pened to know an Uber founder and ended up head­ing the Mex­i­can de­vel­op­ment team that coded the orig­i­nal Uber app. Since he was of­fi­cially in the United States as a stu­dent, he couldn’t ac­cept pay­ment in cash. In­stead, he took eq­uity in the fledg­ling start-up. His stake is now worth hun­dreds of mil­lions of dol­lars. “It’s way more than I de­served,” Salazar ad­mits. “It’s more than any hu­man de­serves.”

While ill fate and chance play their role, true merit also drives some com­peti­tors to the top. Uber founder Kalan­ick demon­strated his swift re­ac­tion time in deal­ing with an in­cur­sion by a Lon­don com­pany in the U.S. mar­ket. When Hailo, a mo­bile app match­ing pas­sen­gers and taxis in Lon­don, an­nounced that it planned to set up op­er­a­tions in Chicago, Kalan­ick raced into the city with Uber. By the time Hailo fi­nally ar­rived on the scene five months later, it was too late — the com­pany would never carve out an Amer­i­can beach­head.

Sim­i­larly, Kalan­ick im­petu­ously launched Uber op­er­a­tions in Paris dur­ing a per­sonal visit, and in a pid­dly mar­ket called China. Soon af­ter flying into Bei­jing, Kalan­ick had the Uber en­gi­neer­ing team whip up a very ba­sic Chi­nese ver­sion of Uber that he per­son­ally con­vinced a hand­ful of driv­ers to use. Then he took the first Uber ride in China him­self. Within months, Uber would ac­com­plish what no other U.S. tech com­pany had ever man­aged, not even Google: It cap­tured a sub­stan­tial por­tion of the Chi­nese mar­ket and even fought the Chi­nese taxi in­cum­bent to a stale­mate.

Airbnb founder Brian Ch­esky also has a claim on en­tre­pre­neur­ial ge­nius, an­chored by a much-re­told story about his com­pany’s ori­gins. Airbnb got its start when pen­ni­less in­dus­trial-de­sign stu­dents be­gan of­fer­ing lodgers air mat­tresses in their apart­ment to pay for their rent (hence the “air” in Airbnb). Early on, the com­pany strug­gled. Short on cash, the stu­dents used their de­sign skills to pro­duce ce­real boxes fea­tur­ing car­i­ca­tured faces of the 2008 pres­i­den­tial can­di­dates, Barack Obama and John McCain. They then sold the $4 boxes for $40 at the Demo­cratic Na­tional Con­ven­tion and saved their founder­ing start-up with the cash earned. As I ob­served when I pitched my own start-up, a ce­real box fea­tur­ing Obama’s face still adorns the of­fices of Y Com­bi­na­tor, the pres­ti­gious Sil­i­con Val­ley ven­ture cap­i­tal­ist firm that first funded Airbnb (and my own un­re­mark­able com­pany).

While Uber and Airbnb are the twin show­pieces of new en­trepreneur­ship, the lead­ers of these two com­pa­nies could not be more dif­fer­ent. Each em­bod­ies one of the two chief-ex­ec­u­tive archetypes cur­rently in vogue. Uber’s Kalan­ick is start-up CEO as text­book so­ciopath: glib, charm­ing, ma­nip­u­la­tive, cal­cu­lat­ing, some­times reck­less and con­tent to treat peo­ple as mere means to per­sonal ends. In one telling scene, Kochman had just re­ceived veiled phys­i­cal threats from a sketchy Ukrainian who ran one of New York’s vast limo fleets. In re­sponse, Kalan­ick whim­si­cally ob­served, “If you get whacked, do you have any idea how much press that will get us?”

The com­bat­ive Kalan­ick tena­ciously fought any at­tempts to reg­u­late Uber in the United States, alien­at­ing one reg­u­la­tory agency af­ter an­other in rowdy pub­lic hear­ings, to the point where Uber staffers even­tu­ally kept him from at­tend­ing. Mean­while, a di­rect com­peti­tor named Lyft at­tempted to woo and ca­jole the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion into al­low­ing what we now call ride hail­ing (that is, per­mit­ting any­one to be­come a taxi driver in their per­sonal ve­hi­cle). Sud­denly Kalan­ick be­came a rule-fol­low­ing re­ac­tionary, bad­ger­ing the com­mis­sion to go af­ter Lyft as in­tensely as he’d hec­tored it to ig­nore Uber. When Lyft got ap­proval for ride hail­ing in San Fran­cisco, Kalan­ick in­stantly piv­oted and an­nounced that Uber was launch­ing a sim­i­lar prod­uct (now known as UberX). What fol­lowed was a start-up death match that lives in Sil­i­con Val­ley lore: Uber em­ploy­ees rou­tinely re­quested Lyft rides and then of­fered Lyft driv­ers huge bonuses to de­fect to Uber.

On the other side of the start-up play­book, Airbnb’s Ch­esky is CEO as prophet of a new start-up re­li­gion, mo­ti­vated as much by a mis­sion as by money. Its mis­sion: to bring the world to­gether via shared ex­pe­ri­ences and cheap lodg­ings. Airbnb head­quar­ters (like that of my for­mer em­ployer Face­book) is pa­pered with ex­hor­ta­tory dis­til­la­tions of com­pany cul­ture, such as “Be­long ev­ery­where” and “Airbnb love” (Face­book’s were rather less cud­dly). The com­pany held yearly pow-wows — elab­o­rately staged in grand venues with A-list en­ter­tain­ment — for all of its hosts, while Ch­esky evan­ge­lized to the con­verted in re­vival-tent style. Even Stone, the cyn­i­cal jour­nal­ist, found some mean­ing in Airbnb hosts’ grat­i­tude to the com­pany and their pas­sion for its cul­ture.

The Sil­i­con Val­ley car­ni­val of char­ac­ters and odd­i­ties doesn’t at­tract nearly enough se­ri­ous, long-form re­port­ing. Leigh Gal­lagher, an as­sis­tant man­ag­ing ed­i­tor at Fortune, of­fers an­other much-needed per­spec­tive in her new book, “The Airbnb Story: How Three Or­di­nary Guys Dis­rupted an In­dus­try, Made Bil­lions . . . and Cre­ated Plenty of Con­tro­versy.” Gal­lagher de­scribes how the can-do pas­sion and prophetic vi­sion of Airbnb’s founders over­came all ob­sta­cles on the way to re­demp­tive suc­cess. The take is more cor­po­rate and dry than Stone’s ac­count, and the tale is told in more lin­ear fash­ion (and some­what con­ven­tion­ally) from cre­ation, to growth, to sur­mount­ing chal­lenges, to even­tual suc­cess. It’s Airbnb ren­dered as a Ho­ra­tio Al­ger fa­ble, but with smart­phones. What Gal­lagher lacks in snark she makes up for in busi­ness per­spec­tive, in­clud­ing a long com­pet­i­tive anal­y­sis with thoughts from in­dus­try lead­ers that as­sesses how Airbnb fits into the con­ven­tional hostelry busi­ness.

By con­trast, where Stone re­ally suc­ceeds is in pro­vid­ing the reader with the vis­ceral ex­pe­ri­ence of the start-up en­ter­prise, some­thing lost in typ­i­cal rah-rah tech jour­nal­ism. Read­ing “The Up­starts,” you can al­most smell the tightly wound ag­gres­sion of a pac­ing Kalan­ick inside an Uber con­fer­ence room, phone pressed to his ear, al­ter­nately hec­tor­ing an em­ployee to meet tighter dead­lines or ca­jol­ing a wary part­ner into a deal. You can feel the sphinc­ter-clench­ing fear and con­fu­sion of neo­phyte Ch­esky as Airbnb is hit with the first of sev­eral scan­dals in­volv­ing hosts burned badly by de­struc­tive guests, or guests harmed, or even killed, by neg­li­gent hosts.

We are spec­ta­tors of cap­i­tal­ism as the­ater staged inside pro­gres­sively more sump­tu­ous of­fices, all paid for by es­ca­lat­ing rounds of ven­ture cap­i­tal fi­nanc­ing that is dizzy­ing even by Sil­i­con Val­ley stan­dards: Uber and Airbnb have col­lec­tively raised around $12 bil­lion. If ev­ery­thing in our lives even­tu­ally be­comes shared, booked and op­ti­mized via soft­ware, then Uber and Airbnb will have been the be­gin­ning of that epochal trans­for­ma­tion.

Antonio Gar­cia-Martinez is a for­mer Face­book prod­uct man­ager and Twit­ter ad­viser, and is the au­thor of “Chaos Mon­keys: Ob­scene Fortune and Ran­dom Fail­ure in Sil­i­con Val­ley.”

DAVID PAUL MOR­RIS/BLOOMBERG NEWS

TOP: Travis Kalan­ick, founder of Uber. BOT­TOM: Brian Ch­esky, CEO of Airbnb.

WILL OLIVER/EURO­PEAN PRESSPHOTO AGENCY

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.