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“Everybody tom ellsworth here and welcome nback to case studies with the biz doc this this week. It s the making of travis kalanick nand uber. We re going to out what made uber co founder nand ceo travis kalanick into the man he is today more importantly. The highly successful leader nand ceo.
And along the way. We re going to look at nthe first four rounds of financing for uber in a later case study. We re going to dive nin to uber a little deeper and take a look at what they did to overcome controversies nwhen. They reached opposition in the face of their success.
And how a great company recovers nand keeps growing at a record rate. But for today let s dive in to what made nuber and what things were in travis life that formed him into the ceo. We know today there s going to be three points that we re ngoing to dig out today that i think will be very helpful and interesting to everyone one is most great ceos don t come out of nnowhere. They learn lessons and they acquired skills nand experience along the way.
Today s core points are the following three nitems. 1. Most great ceos don t come out of nowhere. They had some sort of learnings or experience nalong.
The way there are very few bill gates and mark zuckerbergs. Nwho. Dropped out of harvard joined a company and then went forward and in the case of zuckerberg and gates. They nboth had a lot of experience along the way.
Other ceos don t have it that way they learn things along the way. And that s point one most great ceos don t come out of nowhere point. 2. When you re building a company assemble a ngreat core team early you can t do it yourself.
But keep yourself in the vein of the lean nstartup a great book that i recommend by eric ries. Keep it lean. But get a great team of core npeople that will be the brain trust and the genius that moves your company forward and point. 3.
The moment you know what you ve ngot go big and go fast. And if you have a great core team that s nyour platform to go big and go fast. Because you can t do it alone so those are the core points. And now let s dive in to the life of travis nkalanick and take a look at the things in his background and the founding of uber travis turned 40 this year.
He was born in 1976 in los angeles california. He grew up in the valley as they call it nin a place called northridge northridge is famous for in 1994. There was na massive earthquake that made world headlines and that s the area where he grew up after getting out of high school in the valley nhe got into ucla in a computer engineering degree path that was his major that s what he was studying so as you can see this is a very bright guy nthat got into a great college and he was studying pure geek. A lot of good geek.
That goes into that some of the greatest companies in the world nare made out of comp sci majors and engineers who are just taking that geekdom into stardom. Nand build fantastic companies. Travis was no different. But apparently he had a little bit of an itch nto do more than just go to college.
Because at the age of 22 in 1998. He dropped nout of ucla. Something that i happen to think is actually ngood you need to get a degree to learn things like ncomp sci. But there is a side of me that doesn t believe that everyone should go to college.
But anyway. That s for another story and another nday. But in this case he drops out and he joins na company called scour and scour was a peer to peer search engine nthat included video not just audio now for those of you that remember there s na. Little company called napster that was doing peer to peer audio and allowed people to nshare songs.
Without paying for them or one person paid over here and a thousand npeople shared the song and meanwhile. The artists and record companies ngot. Upset yeah. That was peer to peer.
And travis was working in a company. Called nscour. Now it had some interesting first investment nwhich. Put travis in contact with some big players one of those was michael ovits.
Former president nof disney and the founder of mega agency. Caa creative artists. Agency. And ron burkle of yucaipa companies.
A massive nprivate equity company. So. Here. He is dropping out of ucla.
Joining nscour and getting an acquaintance with some very big players well in october of 2000. If you go back and ntake. A look at history. You ll see that the peer to peer companies were getting sued.
And that s what happened scour was sued by the motion. Picture association. Nof america and the recording association of america. And about 30.
Other plaintiffs for nwhat was said to be approximately 250 billion. Okay if you re sued for 250 billion. It s nreally not a problem and let me tell you why if someone sues you or me. For a million dollars nwe re in trouble they could take everything we have from us.
But if they re suing us for 250 billion nthey re in trouble. We don t have that you can sue me for that you could sue me nfor earth the value of earth. I haven t got it so good luck with that and what really happened is it forced the ncompany into bankruptcy. So they filed chapter 11.
Bankruptcy. After nbeing sued for an amount which is bigger than the gross domestic product of nicaragua you nknow. They said okay that s it but then undaunted travis creates red swoosh. It was also a peer to peer file.
Sharing company. Nso. He was staying in the peer to peer space. And you should stay tuned.
Because napster nwas also peer to peer. And there were some guys at napster the peer to peer community nwas. A small world so we re going to see a relationship here nshow up later. Which is really important even in the midst of failure.
Sometimes relationships nyou have here become in handy here. So don t make enemies move on because you never know who can come back and nhelp you later so anyway this runs for about five six years nand. He sells it to akamai well. He s 30 years old now.
And he sells a ncompany to akamai. So he experienced dropping out of school njoining. A company that gets sued and goes bankrupt and starting. A company that doesn t ngo crazy.
It only sells for something around 20 million and funny thing is he said. It was kind of na revenge business kalanick did an interview with fast company nwhere. He said basically everybody that was suing him over here became customers of red nswoosh. So he thought it was kind of ironic and he nreferred to it at the great revenge business.
But anyway he sells it so he s had a successful nsale and he s at a conference. And he s at a web technology conference and nhe hears. Some things that lead him to think about you know maybe ordering a black car nyou know town car to take you to the airport or out to dinner or something maybe that could nbe made easier by using a cell phone app. And so.
The concept is born that would become nuber and so uber s founded in march 2009. As a ncompany called uber cab. It was a black car service and travis was none of the co founders and back in those days. He called himself a mega adviser and chief nincubator.
He wasn t the ceo as of yet in 2010 in early 2010. A guy named ryan graves njoins a real product guru and he becomes the first ceo so they re working on this putting it together and in june 2010. Uber launches in san francisco and at the. Time an uber black car cost like n15 times the cost as a cab.
But guess what you could get it really quick and you could nget it from your phone and you could see how long it would take so if we think back. It s a blue ocean strategy nand those four points that you remember about that some very interesting things happened. What did they do with uber. They added ease of use with technology they reduced the hassle of waiting and hailing na cab on the street is that guy available is that guy available is that guy available.
We ve all been there they also increased the availability of rides. Because you could see cabs that weren t necessarily non the street you could see cars now with the uber app that nmaybe were five streets away you could signal them to come to you so they increased the availability of rides nand then they eliminated the number one thing that we hate about cabs is the stinky car nthat is just atrocious you don t ride in cabs. Because you want to we ve always ridden in cabs. Because we had nto and we ignored the thoughts of whatever has nhappened in the back seat been thrown up in the back seat or left.
In the back. Seat. The whole smelly cab experience we set aside and guess what all of those four factors is pure blue ocean. So here comes uber a blue ocean in getting nrides for you and me to go where we need to go.
So. There you have 2010 well in october of. 2010 they raised 125. Nmillion in seed funding.
They got it from first round capital. A guy named chris sacca. Who was a friend of ntravis who was a lawyer who had worked at. Google he had also been a guest on the shark ntank show on tv.
So he had been around with some early stage nyou. Know wild ideas of course and another investor napster co founder shawn fanning nback from the peer to peer days back. Here. Becomes.
An early seed investor in uber. What goes around comes around sometimes people that you worked with over nhere come in handy over here. So. There.
It is december 2010. After this nwonderful successful launch in san francisco. And ryan graves. Who was a ceo.
He decided nhe d be the gm and travis becomes. The ceo and so there you have it in 2010. He becomes nthe ceo. So take a look at what he s learned in these n12 years from dropping out of ucla to becoming ceo of uber.
If you didn t know his history you would nthink. Wow. He just got lucky and had an idea to start a company. There was no luck here this was a 12 year education.
He got a master s degree in experience failure nsuccess founding a company and all of the headaches that go along with it that s what led to the creation of travis nkalanick. Who s now the ceo of uber as 2010 comes to a close well things were off and running and once nyou have your seed funding and you re successful and you got a good team in place and a capable nceo guess. What it s time for your series a financing your nfirst real financing and they raised 11 million in a round that nwas led by benchmark. And it was a 60 million value and 11 million into the company invested and bill gurley.
The legendary vc bill gurley nof benchmark joins. The board of directors. But bill gurley was a guy that invested in na company that i had the privilege to be a part of jamdat mobile. He was in our series d.
But he was a guy that ni had a lot of respect for and has always been on the forefront of some real innovative nideas and nonetheless. There he is series a 60 nmillion valuation. Well in may of 2011. Just a couple of months nlater.
They actually launched in new york city. That was a little controversial. Because new nyork city is a union cab town but nonetheless they launched today. It s one of their biggest markets.
And what s interesting five years later nafter launching over a one year period from april 2015 to april 2016 uber averaged 170000 ntrips a day in new york so five years later and all that controversy nlater new york is one of their most controversial. But one of their most successful markets now. There s also an interesting thing that nwent on in 2011. There was a conference in the 4th quarter nof.
2011. Called failcon a conference. Talking about failure and you know who spoke travis kalanick. And you know what he said.
He said. The 10 years before uber was a case nstudy in failure and he openly talked about all the things nthat led him to do this. And do that and the experience that made him who he is today. So you should go google that video and take na look at travis s comments at failcon 2011.
You ll learn a lot from it in december 2011. Uber decides it s time to ngo international. So they start with paris france and they raise a 32 million series b. So nnow in the course of just a few months.
They ve raised you know 43 million and the people nin series b check this out menlo ventures. A leading vc not as good nor as big as benchmark. But certainly a high quality vc amazon s jeff bezos was involved nand goldman sachs and if you don t think the goldman sachs boys nmaking. An investment here are thinking about a future ipo you re not paying attention.
That s exactly how some banks get involved nearly so you know five years later here in 2016. Nyou look back and there were riots in france and protests because uber had been very successful nand now they were trying to force basically. The entitled cab drivers were trying to force nlegislation and stuff to push uber out of the way. But there would be no uber.
If people didn t nlike it and didn t want to pay for it. And so they re trying to legislate away free nenterprise and it s just not going to work so anyway. That s what was happening this nyear. The seeds of which were 2011.
As they raised 32 million to launch their first international nmarket in paris. France they continued to grow and move and in july nof. 2012. They announced uberx and it wasn t just black cars.
Anymore now you could get a prius. And it cost a little less than the black car. So they were just applying their technology nand their expertise building another product chapter putting their mind to good use and so you can see they didn t just say. It s all about black cars.
All about limos nope. They were thinking beyond and as we nwill see in a few minutes. They were thinking well beyond so that service about again 35 less expensive nthan. A black car you had prius picking you up.
And there you have it well in august of 2013. Now we re less than ntwo years later they were continuing to grow and add cities and controversy would come nup from unionized cabbies. But here comes the big money they raise 258 million from google ventures nand by the way it was a 376 billion valuation they were now what people like to call a unicorn nwhich is a company that s a startup and is suddenly worth more than a billion dollars. And that was just incredible so their forays and success drove a need for ncapital.
But with that came the valuation. This is part of my point about going big and ngoing fast within a year of that july of. 14 so july nof. 13 july of.
14 they raised 14. Billion. In a series d at a 17 billion valuation. Let me say that again 17 billion valuation.
And at one point uber was the most valuable nprivate company that hadn t gone public. Yet and they continued to invest in technology nand apply technology for instance they started uber pool which. Nyou and i may know about it s a car pool you could see people going nyour direction. You could hop in an uber with them you only npay for your part of the trip.
But you re all splitting it so it s efficient for two or three people nto share one uber then they started uber rush. Which was a bicycle nmessenging service in new york. They also started uber cargo. Where you re nallowing people to pick things up and drop it off in trucks and small vans and then uber eats as a matter of fact.
The founder of valuetainment npatrick bet. David. He uses uber eats a lot because we re working crazy hours. And we nwant good meals delivered.
So we re customers of uber eats and we say nhey we need to get something get me one of these one of those we call for uber eats and great food is here. And that is an example of strategy. Thinking nbeyond and strategy applying saying. You know we got this technology with mapping nwe.
Know how to map things we know how to make efficient routes. We know how to do all nthese things why not deliver food. Why not pick up cargo gosh. Why shouldn t bicycle messengers use nthis.
As well and that is the first chapter of uber. Going all the way to their series d. The first nsix years with the growth and as you know if you read the headlines nand. I know you pay attention because these viewers.
I know you ask me questions and things nto show me that you re really diving in i m going to do a second case study that talks nabout 2014. 2016. And all the things that uber faced such as facing competition from nlyft much smaller. But also a competitor facing the city of austin texas.
Putting in nlegislation that actually led to uber and lyft saying. Okay the hell with it we ll leave austin texas. See what the people have to say about that nand maybe they go back to city hall. And say hey you know we need more than just taxis come back.
We re going to see how that plays out. We re also going to see some things happened ninternationally such as having to leave. Hungary because hungary forced federal legislation ndown their throat and basically defended legacy. Inefficient cab service socialist entitlement.
Squashing free enterprise. Nat its worst happened in hungary. And so we re going to see how uber maintains nits status of an incredible growing company and raises. Billions and billions of more dollars nin capital to continue global expansion.
And it becomes a fantastic mature company responding nto things that are going on around. It under the leadership of a ucla dropout. Named travis nkalanick. And that my friends is chapter.
One of uber nthe. Making of travis kalanick and uber. Reminding you of those simple points great ceos. Quite.
Often don t come out of nowhere. They have a lot of experience. And if you re out there getting that experience nyou could be the founder of something really special when you get there and my other two points. One put a great core team around you early nbut stay lean and then when you know you ve got something and that it s time to go big ngo big and go fast.
And as you can see uber went out to get the ncapital to do exactly that i m looking forward to another time where nwe dive into the other side of uber and i gave you a little sneak peek of that and for today. We are saying thank you and ni ll see you next time and please subscribe to valuetainment the best channel on the ninternet for content for entrepreneurs. ” ..
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“Subscribe to Valuetainment: http://bit.ly/2aPEwD4 The Biz Doc, Tom Ellsworth dives into case study #8 The making of Uber, it s CEO and what Uber did to overcome controversies in the midst of their success.nnGrab your notebook, take notes and join the conversation as Valuetainment brings you case studies with The Biz Doc – a new way to learn entrepreneurial lessons. Please subscribe, comment and share to help educate entrepreneurs from all over the world.nnBook recommendation: Lean Startup by Eric Ries http://amzn.to/2iQ7dUUnnAbout Tom Ellsworth: THOMAS N. ELLSWORTH, is an experienced CEO / COO and entrepreneur. He has been disrupting industries and driving consumer shifts through Venture-backed companies in technology, software, publishing and mobile that have generated exits totaling over $1B. Watch the interview with Patrick Bet-David: https://www.youtube.com/watch?v=nFStiXqG894u0026t=732snnConnect with Tom: https://www.linkedin.com/in/thomasellsworthnnAbout UBER: Uber Technologies Inc. is an American worldwide online transportation network company headquartered in San Francisco, California.nnVisit the official Valuetainment Store for gear: https://www.valuetainmentstore.com/nnValuetainment- The Best Channel for Entrepreneurs”,
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