Uber and Airbnb Alumni Fuel Tech’s Next Wave
nytimes.com
nytimes.com
This is...so not true. My co-founder and I had hardly any network in SV. We applied to YC through the website, raised seed money after demo day. We ran on seed + revenue up to about 60 employees and we recently did a series A.
If you don’t have a network, don’t be dissuaded. Silicon Valley is the least credentialist, most open community I’ve ever been a part of.
They used to have a monopoly on reach. Readers came to directly to them. Today that role belongs largely to tech companies. Media companies are heavily dependent on the algorithms and whims of the likes of Google, Twitter, Facebook, Apple, and Amazon. And it's not just distribution: it's their business models, too. Apple taking a cut of NYC subscription revenue, Amazon doing similar things through its Kindle devices, Facebook and Google ads, etc.
This would be an existentially terrifying position for any business to be in. And as much as the media likes to portray itself as putting truth-seeking and objectivity first, it's still very much a collection of self-interested profit-seeking businesses.
When you're the media and you're faced with this situation, what do you do? What weapon do you have? Your content of course.
It doesn't need to amount to full-scale propaganda or anything obvious. You simply hire writers and editors who are themselves anti-tech, and results will follow. Even if you don't hire that way as a media organization, your employees' incentives are aligned such that they should naturally lean anti-tech, given the realities of the business situation and its effect on their jobs.
Journalists look down on the advertising and classifieds departments. The consider it beneath their worthiness. If you think they're hiring because they give a shit about the lowlies who pay to keep the lights on, you haven't worked in the trade.
But does anyone think print journalists haven't noticed their industry is fucked and loads of people are getting laid off? No need to break the firewall between editorial and ad sales to know that Gannett cut 400 jobs in January, McClatchy cut 450 jobs in February, BuzzFeed cut 200 jobs in January, and so on.
Reporting on shitty behaviour by tech companies isn't an anti-tech stance. It's reporting. If what you want is PR puff pieces and sloppy butt-kissing, Wired has the pro-tech angle well covered.
I mean do you actually think it's an interview question at the Times? "Tell me how much you hate Google, in words of three syllables or less". This is a literal conspiracy theory, and it's embarrassing.
Everyone hates journalists, who aren't used to dealing with them. Everyone feels victimised when it's their turn. I've seen it more than once. Hell, I've been on the receiving end of shitty coverage. But it wasn't an agenda any more complex than "does this make a good story?"
I merely find it plausible that a critical view on the tech giants is more popular among people whose jobs are threatened by tech than among the likes of us, whose jobs are created by tech. No conspiracy required for what I'm saying.
Yeah, I see a much stronger/more direct incentive for the second one. And this makes blanket statements in the spirit of "media cannot be unbiased about tech" on this site kinda worthless.
Media does screw up and can be bias. Criticizing that on an individual case by case basis is fine. Spinning a general they-vs-us narrative less so.
So you think their business being endangered because of
changes caused by tech makes them incapable of reporting
about it.
I think we actually agree more than you think: I believe that both the press and HN posters have biases; and that opinion on HN will pay relatively less attention to criticisms of tech, while the press will be relatively more critical.
For example, HN popular opinion would broadly say "self-service/user-generated content can be automatically filtered, but some things will inevitably get through because there's just so much stuff, dealing with that stuff after it's been posted is the only option" whereas the press would broadly say "we can't ignore this problem, and if a working solution means self-service/user-generated content isn't scalable, that's just too bad"
I see this division on deceptive ads, and satirical news being repeated as true, and I suspect we'll see it on self-radicalisation and livestreamed shootings too.
First, journalists don't run the organization and aren't in control of business decisions. If their disdain of the advertising arm of the business amounted to anything, there wouldn't be an advertising arm of the business. There are ads injected into the middle of their articles because higher powers than the journalists are making business decisions.
Second, journalists don't need to like the media's business model to become subservient to it. Both ad and subscription revenue are fueled by pageviews. To align incentives, you simply reward journalists who write popular articles, and reward editors for doing what they can to make articles more popular. It's not some mysterious coincidence that media tends to produce sensationalist articles and headlines. (And as I mentioned initially, it's quite effective to simply bend toward hiring journalists who already care about this.)
Who is controlling what articles end up on the front page? Are the programmers at Google and Facebook who don't like ads the ones in control of either of these two companies' business models? This just isn't how businesses work.
Businesses are incentive chains crafted by top-down decision-makers who aim to get sales-and-programmers, ads-and-journalists, and other business units who don't like each other to nonetheless work together to achieve a singular goal.
---
The front-page story on Vox right now is a take-down of tech in light of the NZ shootings: https://imgur.com/a/Li9zcAC
If anything, the majors (NYT, Guardian, The Economist, WSJ) have a lot to gain when local journalism dies because of technology.
True, but the NYT was actually one of the first to try and move past their print origins and try a new business model.
https://mashable.com/2014/05/16/full-new-york-times-innovati...
They also employed Mike Bostocks (author of d3.js) for a while, and they had a highly regarded interactive section.
Tech has been a public boogeyman for a long time. Tech causes everything from global warming to cancer.
One of the first?
Actually, the San Jose Mercury News had its Mercury Center up and running in 1992[0]. For a time, only the Mercury and WSJ were serious players.
[0] https://archives.cjr.org/feature/the_newspaper_that_almost_s...
Let's be real. Tech has had a consistently anti-tech slant the last few years.
I regularly read NYT's technology section. It seems like most things have a negative slant towards them, especially when it pertains to Google, Facebook, YouTube, or other social media sites. Most of the positive pieces they run about tech serve to emphasize how different the subject is compared to the big bad tech giants.
When your whole world is being destroyed around you, it's not that strange if you develop a hostile attitude to the people doing the destroying, even if your job description is to be an "objective journalist".
For example, AirBnB has thousands of employees and yet barely anything changed in their service in the past few years. The engineers who work there are not productive. Their main skill is in creating highly complex solutions whilst taking minimal risks; that's not what engineering is about. The same goes for almost all major software companies. Each engineer does very little work and contributes very little towards real innovation. These big network effects are holding tech back. They are draining cash away from pure tech and focusing it on social networks.
Some describe tech as a perfect meritocracy, which of course it is not. The overreaction to that is to claim startup success merely comes down to who you know. Of course that's not true either. As far as industries go -- especially industries capable of producing millionaires, billionaires, and world-changing phenomena -- tech is absurdly high on the meritocratic scale.
While I generally agree with this, I think the reason is that success is mainly determined by how much customers like something. It's certainly not due to a lack of folks waiting around to try to take advantage of founders at every conceivable opportunity.
And with respect to VC firms, most don't even list their email addresses on their websites, and of the ones who do a lot of them openly brag about deleting every single email that doesn't come with an introduction. Many won't even tell you what industries or stage they focus on.
If venture capitalists are tired of getting shit on in the media in a way that dentists or accountants or whatever aren't, then maybe they should exhibit the same baseline professionalism as is expected in every other industry.
Actually I would make the distinction that tech is ridiculously far ahead of most other industries- but still very low on the scale. (if by scale we mean zero to perfect meritocracy)
Networks matter a huge amount and are dominated by a certain class and racial demographic.
At least we've begun the conversation and I believe truly meritocratic success is very possible, but those on the inside are definitely more likely to be successful that those outside. (really specifically raising a certain kind of seed or early venture funding, where some normal business metrics may be missing- (investing in the founders) )
Most companies I’ve seen go through YC do not have any sort of revenue stream, nor a business plan or any other baselines metrics you could evaluate on a merit basis.
The only factors I can see them evaluating on are subjective in nature, not objective merit based items.
Nothing wrong with that, YC has produced some fantastic companies but just doesn’t seem to be a meritocratic process.
I think one of the most frustrating things for inexperienced founders is not understanding why investors say no, because founders believe so strongly in their vision it is hard for them to understand why someone might not be persuaded by their pitch and investors just want to make more money, right?
But ultimately the decision to invest, at least at the seed stage, is largely emotional. It's a question of feeling good about the team, the idea, and believing it will gain traction. Nobody has product-market fit at this point, so you have to use incredibly limited information to make a decision.
YC excels at this stage. They only have 10 minutes of face time to make a decision, so they're using that time to try to evaluate you and your company as quickly as possible. There is no magic rubrik for this decision, they just try to assess the founders and their idea and whether or not they think it will work.
When I say they're meritocratic, I don't mean there is some single metric you can use to compare all companies to make a perfectly rational decision. What I mean is they evaluate everyone based on that 10 minute conversation, not on their pedigree.
FWIW, I applied to YC and was accepted without knowing anybody. Maybe I just like to believe the process is meritocratic and I'm special.
By that standard there is no meritocratic way choose the best musician, actor, chef.
And maybe that's how some people use the word. But to me it just means that you choose people based on their work, not on who they are or who they know.
Whether you evaluate the work subjectively or objectively is a whole separate matter to me.
This is such a weird point to make given it seems like almost none of the Uber and Airbnb Alumni seem to have been in any kind of tight knit club before. This wasn't something like PayPal mafia members starting yet another company, they seem to have been started by relative outsiders and most of the employees seem to be as well.
Maybe there's an argument to be made that some of the people who strike it rich as early employees of tech unicorns end up investing in other companies or founding other companies. But these companies seem to be proof that you don't need to have come from a tight knit club to become a successful startup.
You literally just said YC took you in and gave you a demo day where they invited everyone. You didn’t do that, YC did. YC takes very few people out of those who apply. So instead of being a counterexample, you just provided a great example. They are a well regarded network and gave you an in to the rest of the networks! Could someone who DIDN’T get into YC achieve the same thing just as easily, getting all those employees and Series A, or would they limp along on angel funding?
You would need more data before concluding it is not true.
OTOH, YC entry is meritocratic.
I can list every luck/event in my career over the past 10 years but I would trade them all for the luck of receiving single seed round of funding to work on my own project. It's not for lack of trying.
Luck plays an important part in making a successful business, but I wouldn't say it's all that important at the seed round.
OTOH, it is true that outside YC there are subclusters that are a lot less meritocratic and more network based.
In no order:
* The business is fundamentally based on ignoring the law.
* They've done nothing but lose money, more than any private company ever.
* The money keeping them afloat is very dirty (mostly from Saudi Arabia)
* The culture is well-known to be awful.
* The drivers are completely exploited, working long days with no security and taking huge financial and physical risk.
* Their headquarters is at one of the most awful corners in the city, which they've done nothing to improve.
And in the end they'll have to start making money. Which means either increasing their prices or increasing their cut. When that day comes we'll realize what we've lost.
But yet, all the people who signed up and coded the app will be millionaires.
Smells like society misallocating value.
I am genuinely not trying to be play dumb but what is the innovation or vast improvement? Apps like mytaxi were pretty much showing up before/after uber came to light, without violating laws or exploiting folks. Also, how does such a claim get balanced to the vast financial loss they seem to be accumulating?
> created value
For whom?
In the entire Anglophone and Francophone world the taxi industry was awful. In the US they were and continue to be racist. They lied about availability and scheduling and they did it for decades. Many people on this website are familiar with the area that used to have the worst taxi service anywhere in the US, San Francisco. Taxi service in NYC existed in large parts of the city in theory but good luck getting a taxi driver to follow the law and actually take you there. And everywhere, absolutely everywhere, the taxi regulator was useless, completely captured by the taxi companies. These awful taxi companies lobbied to keep supply artificially low and prices high, for decades. In France the taxi drivers attacked Uber drivers. Uber’s civil disobedience was completely justified if it broke taxi monopolies.
In countries where taxi service was good and regulators not completely captured Uber has not done much. I’m aware of only one country, Japan.
Fuck the entire taxi industry, with their exploitation of tourists, four hours of saying someone will pick you up in half an hour, racism, tax evasion and broken credit card machines.
That’s the political agenda that supports Uber.
Germany is one of those, too. We have fairly good taxi services in any larger city, at least as far as I've seen as a user in the last 15 years. They usually have clean cars, are there on time (or waiting in taxi queues in front of public spots) and take you to your destination without major detours. I've never encountered any case (visible to me as the customer) of tax evasion or trickery with manipulated meters, so I guess correct metering is properly enforced by the regulators. And, very important: they also had apps for summoning them spontaneously and tracking their approach and optionally paying them relatively quickly after smartphones became ubiquitous and had those in widespread use by drivers, either provided by private non-taxi-related corporations (like MyTaxi) or by conglomerates of taxi companies that bound together to develop an app.
But I had multiple opportunities to "enjoy" taxi services of the classic kind in the US, specifically San Francisco and Miami, before and after Uber was a thing. And I definitely see quite a difference to the level of service I enjoyed back home, especially in the "before" time. I even think that this difference wasn't present in the minds of the Uber management - they probably thought that any taxi service in the world was generally as bad as the one in San Francisco and was thus in need of "disruption", and it seemed as if it took a while for them to notice that this wasn't the case, and to realize that people in places of the world with fairly well-working taxi networks might have much less understanding for their "civil disobedience", as you call it.
Plus, drunk driving deaths are down like 30% nationwide. Tens of thousands of lives saved.
I don’t buy the narrative that the company is built on the backs of a bunch of exploited drivers (assuming you believe taxi drivers are not exploited; if you believe they are as well, that’s probably a different argument than the one I’m refuting).
First, they're not exploited drivers. You could claim any worker is exploited at any and all times. It's not a statement with any grounding to it in this case. They are not being held hostage by Uber, this is the best labor market in two decades. You could claim all workers at every big and small company are all universally exploited. The person making $15 / hour should be making $30; the person making $30 / hour should be making $60.
Second, almost every major tech company you can name exists due to initial venture capital or investor subsidies (including Apple, Amazon, Google, Salesforce, Workday, etc). Amazon bled a lot of red ink before they turned seriously profitable (not nearly so much as Uber granted), because they were investing massively to achieve scale. It was venture capital and investor money broadly that subsidized that build out and enabled them to have low prices. So what? It was widely claimed for 20 years that they couldn't generate a substantial profit, and now they are thanks to opportunities they grabbed hold of (perhaps Uber Eats will be that for Uber, or any number of other things).
> something about Uber creating all these millionaires sickens me
This feeling is called envy.
When you're taught to always do the right thing and not to engage in the profit-maximizing morality-disregarding behavior we see from companies like Uber, when you make the decision not to become employees of those companies, seeing that others did decide to work with those companies really forces you to re-evaluate how the world works. The first step in that process involves disgust reflecting on the bad actors.
A single entity managed to smash apart the corrupt, racist and unaccountable taxi cartels in thousands of cities. No more taxis refusing to pick up dark skinned riders, no more taxis refusing to drive to neighborhoods where those same people live. No more apathetic dispatchers who don't care that the taxi driver was drunk or the car was being driven by someone other than the license holder. No more exploitative cartels bidding up taxi medallions and forcing low-skilled immigrants to work 14 hour days while preventing competition.
Ride sharing apps have fundamentally made the world a better place, especially for women and people of color. I feel far safer taking an Uber in an unfamiliar city than I ever did with the luck of a taxi, both in terms of physical safety and in terms of getting scammed.
https://uk.reuters.com/article/uk-uber-tax-britain-idUKKBN18...
This is a weird take for me. I don't mean to single you out but I see it everywhere. If I went and bought $100 worth of stocks, not many people would say I lost that money. Most people would agree that we have to wait and see how that investment works out. In every other context we call it "investing" (some investments work out and some lose money) but here it's just called "losing money" without even looking to see if it's a good or bad investment.
It depends on the stock. But there are lots of types of investments. None of the rest are referred to as "losing money" until it's clear they lost money. The act of investing is investing.
> If the ROI on that loan is negative, everyone would agree that you're losing money, investment terms be damned.
My point is that it's too soon to say what the ROI is for Uber's investments. I remember lots of people lamenting the "losses" that Amazon had year-over-year, before they realized that it was actually a wildly profitable set of investments that the company had made, creating one of the largest companies in the world.
No one is playing an investment term semantic game here. I'm simply expressing how silly (and misleading) it is when people refer to businesses investing in things as "losses" before they ever know how those investments play out. You only know how an investment turns out when you know how the investment turns out, not when the investment first starts.
I believe the point of the parent post is that the entire business model of Uber is based on losing money on a unit basis to sustain the market. This is very different than companies like Amazon that lost money due to OpEx on growing the business in a sustainable way. The Amazon equivalent of Uber would be if Amazon paid for 20% of every item ordered out of its own cash balance. I agree that it might still turn out great for Uber in the end if various market forces align, but 1) I'm having a hard time thinking of a company outside of the VC-funded tech scene that could run Uber's financial games without going bankrupt, and 2) I personally think it's important to ask if the money going to keep Uber afloat is really best allocated there.
OTOH, I believe Uber is already quite profitable in my city (Boston metro), so I don’t think a future of Uber as profitable overall is unachievable.
Take the "PayPal mafia" for instance, out of one successful company spawned others -- SpaceX, LinkedIn, Facebook (via investment cash). These companies will spawn others, so on and so forth.
It's a cycle that feeds upon itself and has been a successful model, but it does have major flaws due to "hardcoded" pattern recognition.
you just don't hear about the failures out there. I bet there's much more failures than there are successes.
If it weren't, banks would've all lent out money to startups!
Sure there are, but a few successes can make up for a lot of failures. Ycombinator, for instance, has been doing its thing for quite a while now and appears to be doing quite well.[1]
[1]Not personally having looked into their financials
I have a couple buddies who have started their own thing out of Uber and they’re doing well. The issue I see is it’s going to be pockets of companies around the gig sharing economy for Uber and similar items in rental/real estate for AirBnB.
Employees of both companies have solved some really tricky problems, and they know they can use their experience to solve another set of problems + make it easier to raise money for their venture.
Also - I do appreciate you qualified your post with SV being the lead in software companies. I think that’s still true and SV will be the lead for a long time but other cities will be cheaper + you don’t need to be in SV to find great talent anymore and you don’t need to be there to raise good capital. If you have an idea that’s solid and a decent team you’ll be able to find fundraising but it’ll be interesting to see if software stays in SV and we see the software related but more physical goods startups relocate out of SV.
SaaS businesses are so much less capital intensive than hard goods based businesses so I’d imagine those companies don’t start in SV so they can has less expenditures in areas that don’t matter.
For example, Texas loves to tout its "business friendly" atmosphere, but I have personally seen people get sued over non-competes and, much worse, non-solicits. Meanwhile, see what's happening in California: https://www.shrm.org/resourcesandtools/legal-and-compliance/...
The reverse causation seems like a compelling explanation: innovators built Uber and AirBnB, rather than Uber and AirBnB built innovators (as the title implies).
The advantage of ex-Uber, ex-Airbnb folks is not that they are more innovative—it's that they have experience in solving the organizational problems of doubling the size of a company over and over and over again within a very short time frame. If you only get people who are good at making innovative small-scale projects then they'll hit a wall when the organizational challenges of hypergrowth suck all the productivity and alignment out of the team. If you get people who only have experience operating at huge scale they won't be able to prioritize short term goals needed to get and maintain traction.
Which credentials are the most valuable then? Which company as a new grad is most similar to Stanford, MIT?
I am an alum of one of these cos, and I suspect the makeup of the average employee as far as risk-taking goes (and again experience seeing a company go from nothing to $20b+) is much higher than an equally competent employee at, say, Microsoft or Amazon. There's a level of self-selection involved here.
The smaller the company is, the higher the position has to be to make the credentials stand out.
For instance, being a recent graduate at FAANG is probably more or less equal to being a pre-A series startup CTO, if there are no other entries in the CV.
That said, at more senior levels, your model fits more closely. A mid-level Alphabet product manager is likely to have been a founder or C-level exec in a startup or two.
I was referring to early stage startup founders, which are very likely to fail in the first 12-18 months. After a startup receives VC funding or becomes profitable, of course the credentials of its founders stand above the entry-level positions at FAANG. Otherwise, they might just signal a lack of fair judgement.
In the same way that United is not a tech company, but they have a website that accepts reservation.
Tech companies create new Tech as part of their lifecycle: Intel, AMD, Google, etc etc. They create new Tech that didn't exist before, and this is core to their product.
I get that Silicon Valley shifted from Real tech 20 years ago to Futile WebApps that deliver pizzas faster, but it makes me sad that the new definition of tech shifted so much to pure business.
Do they create software as a service, hardware, and so on? No, but they are a group of practitioners that are really good at putting the pieces together.
They've also built a few things like M3 and Envoy.
10 years ago, we had some "hard tech" with a lot of tech innovation. I was arguing that the meaning of "tech company" shifted to a business company, using tech as a way to streamline operations. Those are very different in my opinion.
I obviously prefer the first one. But I accept that in the collective mind, tech company mainly means a website nowadays.
18: Go to Harvard or Stanford for CS.
22: Work at FAANG companies.
25: Quit and raise millions for your startup.
26: Sell your company to a FAANG company/IPO
28: Join a VC firm, invest in people like you, and make predictions on Twitter all day.
They are a very different company to Facebook, Apple, Amazon or Google, I feel like they are bundled in mainly to make a cooler acronym.
I hold no ill will against all of these people getting rich this way. Let's just not pretend like they're innovators, though.
I mean how many ex—Amazon founders do you see? Probably not at all in proportion to the number of alumni relative to all VC funded cos.
Is there a reason to single out Amazon specifically? Because I’ve heard of lots of Xoogler founders and exFB founders.
You need a TON of permits to open a restaurant and you can not open in your house, it has to be in a commercial space.
Furthermore, you are free to open your own hotel. You just need to do it in a commercial zoned area since you are doing commercial things.
You’re taking the same position people took against the printing press, automobiles, and computers when they were all in their infancy.
Restaurants in people’s homes were incredibly common until health regulators showed up.
I wonder if RCO8786 would eat at a small family owned restaurant with a low health score.
How do you suggest that it works? How do you propose that we regulate innovation before the innovation occurs? Bit difficult, no?
There's a reason it's not in their backyard. It's their backyard.
'Exerting voting rights' = zone newcomers, poor people, and apartment dwellers out of existence so they can't vote in our local elections.
This isn’t meant to sound combative, these are just facts.
Those companies themselves create the conditions that force tech workers everywhere to look for jobs in a few select cities.
That is the height of hypocrisy. The moment Google and Facebook stake out massive cultural monopolies is the moment the community they reside in has to give up a little bit for the well being of the larger national and global community.
Allowing buildings to be 2x the height means, lower home prices in general but also the oldest owners have the worst views/property prices in the neighborhood. So optimizing locally, people should not want more homes built.
Meanwhile, 2x taller buildings mean, 2x the people can sleep at night and work in the morning boosting the economy without the inefficiency of a long commute, traffic, CO2, etc. I.e. long term improvements for a larger set of humans.
In the name of progress/innovation shouldn’t the calculation be based on ROI for humanity/environment/etc and not based on a locally popular vote?
Electrification of mobility and transport makes the environmental argument a moot point.
Disclaimer: I live in suburbia.
I disagree. Electric cars are more efficient than IC, but they still use electricity which mostly comes from fossil fuels. Add in all the massively increased infrastructure spending and emissions per capita that are needed for suburbs, and urbanization is a no-brainer from an environmental perspective.
Urbanization is like nuclear power, financially and politically untenable. It is not a reasonable path to success.
Are you able to convince large populations of people they should pay much higher real estate costs for lower local taxes when they're still going to pay more (total monthly housing or lump sum payment) than in the suburbs? I do not believe that argument will fly.
If houses were banned on all but a few blocks, they’d be expensive too.
Urbanization is the arc of human civlization for thousands of years. The automobile era is a weird little blip.
These people are a) a market opportunity, and b) a set that might grow dramatically given the right technology catalyst. I personally think e-bikes will play a large role in getting people out of the cars-competing-for-space mindset at the root of so much NIMBYism, while preserving much of the convenience of personal transport over buses.
It's elitist gatekeeping and deep selfishness masked as "wanting to retain neighborhood character".
Zoning should be made on the state or county level, and for every development that's planned to be built, if it follows the zoning, approve it. Enough of this nonsense "yeah it follows zoning but I don't like it".
Most of those you label "NIMBY" are just looking to maintain an existing community and civic service level.
The people you should be directing your ire towards is not your strawman "NIMBY" but the city planners and commercial developers who overzone and overbuild office space and under-zone housing.
Housing, on the other hand, is blocked by them because that "gargantuan 4 story apt building" is going to lower their precious home value. I agree that infrastructure needs to keep up with development, but that's not impossible to do.
If NYC, Chicago, Seattle, etc can do it, why does SF seem to have such a hard time doing so? Because SF local government is a shitshow that does nothing but serve the interests of existing homeowners, who somehow want to benefit from the prosperity of growing cities without the construction/density those cities require.