Subscribe to Working Capital Conversations via iTunes or Google Play to get new episodes automatically downloaded to your phone.
If you thought Uber’s network of cars is strong, you’ll be very interested to learn about a new network that two former executives are spinning off – and how they’re impacting the venture capital world.
Josh Mohrer is one of those former Uber execs – he was the General Manager of Uber in NY, NJ, CT and PA and helped grow revenues there from zero to $3 billion. Now, with William Barnes, who led Uber’s West Coast ops, Josh is leveraging the entrepreneurial spirit that drove Uber and driving it in a new direction.
He put together a syndicate of investors – nearly all former Uber employees – to invest in startups either by other former Uber employees or in adjacent businesses and sectors. The combination – funding plus operational expertise – is called Moving Capital and has created a model that others in the VC world are watching.
How does it work? What are the growth expectations? Here’s my conversation with Josh Mohrer.
Transcript: Josh Mohrer Conversation
Chris Riback: Josh, thanks for joining me. I appreciate your time.
Josh Mohrer: My pleasure. Good to be here.
Chris Riback: So you have an incredibly interesting investment thesis. It sounds like you are building and leveraging an Uber network. I haven’t heard that before from other folks. It’s both Uber employees as investors, and my understanding is as business owners. So first of all, kindly correct everything that I got wrong. And secondly, describe your unique approach to VC.
Josh Mohrer: You’re on the right track there. A little background on me just to set the stage. I joined Uber at the end of 2011, beginning of 2012 to head up New York City operations. At that point, Uber was basically a limousine service only in a few big cities in the United States. You would request a car through the app, not unlike you do now, but something a little fancier would come, someone would open the door for you. And that sort of evolved over several years into UberX and a mass market product that is now used all over the world. I’d like to say I graduated from Uber in the middle of 2017. After about five and a half years there, I started just running New York. By my last day, I was running the Tri-State area in New York, New Jersey, Connecticut and Pennsylvania with a team of about $73 billion in annual run rate in my book.
And so that was, of course, an amazing experience, and sort of towards the end of that, and speaking with a friend of mine who had a similar job on the west coast, we remark that we believe people leaving Uber going to go and do fantastic things. And there’s some precedent in that as alumni of Google and Facebook and PayPal and other transformative tech companies over the years have left to go and start amazing companies. And so what if Uber has a similar pattern, and people leave the company and go and start great things. And at this point, we’re now having a conversation in September or October of 2017, about a year ago, and there’s a scooter company starting in Santa Monica, Bird, founded by a friend of ours who we worked with at Uber. And so William and I both invested in that and saw, this is really happening. People are going to start companies coming out of Uber or be aware of them or be helping them or investing, and then there’s going to be a lot of activity.
Uber, because it’s based because it operates all over the world, it has staff all over the world. And so a lot of my colleagues who had similar roles as I did, we’re located in other parts, in other cities and other countries around the world. So the network is very good, powerful and kind of widespread.
From that point, we said what’s the best way to move forward? And we built the Uber Alumni Syndicate, which is basically a group of about a hundred former Uber folks. So everyone has graduated from Uber, and no one is still working there, and we share opportunities for investment. We’ve done about 10 companies so far. So some of those opportunities come through my partner and I who kind of lead it. We’ve also done a few that have come from folks in the syndicate, and we continue to think that there’s big opportunity, not just in companies started by Uber alumni, but companies in the mobility, transportation space started by other folks that would really benefit from our expertise. And so that is sort of what we’ve been doing for the last year, and we’re considering raising a fund to support that idea as so far, it’s been pretty exciting.
Chris Riback: I want to talk to you about some of those adjacent companies and adjacent markets. But first, what you’ve described, this Uber network of alumni, and this club, and I’ve read about that. There was a piece, I think it was in Axios where they said, a few other VCs suggested that lots of startups would likely come out of Uber due to a highly entrepreneurial environment, particularly on the ops side, which of course is where you and, you mentioned Your Business Partner, William Barnes worked. Is that true? I’m sure you say you feel that that’s true. Describe that culture because you mentioned, okay, Facebook, there are a lot of alumni who created businesses there. But was that the culture within Uber? For outsiders like me, we know the crazy stories about Uber. But that sounds like a real business entrepreneurial spirit that went deep within the company. Am I getting that right?
Josh Mohrer: Yes. The general manager role, which I held and William held, and there was basically one in every city, was we were told, “Look, you’ll have a product that’ll look the same everywhere, but the implementation of it in each city is going to be unique based on the regulatory climate, existing transportation options, sort of the local economy. Every city’s different.” And so it’s just kind of funny example of that. San Francisco is famously the first city, that’s where the HQ is. The highways there are known as freeways because they have no tolls. They come into New York and tolls are a thing, and so the software didn’t support that, and so that has to be built. That’s sort of a glaring difference, but there are little nuances in every city, all which is to say that GM was given a lot of autonomy, and tended to be someone with an entrepreneurial bent who could really run the show in their own city, be like the mayor in some places bringing in new transportation options to the city.
And so the entrepreneurial genes in the company are real, and I think that led to both some of its biggest successes and maybe some failures too as people maybe didn’t have quite enough supervision. And I think, you know, sort of hard charging at our goals, knocking down walls sometimes would have a bad outcome. But I think on balance, it was definitely a positive. And so the DNA of the company is very entrepreneurial, particularly in the operations org. And that’s how the founder of the company sort of set it up. And so I think that that take from Axios is right, that there will probably be interesting startups coming out of Uber, not just from the ops org, but also the product org and the engineering org, and a lot of the sort of central staff in San Francisco. So yeah, I think that’s a fair take, and we’re sort of being, we don’t know. So we sort of see this whole thing as an experiment.
A lot of what we’ve done so far is just iterating on this idea as we went on this startup. So we have a theory that people that helped build Uber will have sort of spectacular next acts, whether that’s as a startup operator or as an investor, or just an advisor and community leader in tech wherever they live, and just sort of being able to harness that would be really magical. And so far, that’s been the case. The email list, , it is technically right now about 160, and it started as just a few dozen, and people tap other people on the shoulder and say, “Hey, there’s this thing, and just get in the deal flow of this group, and maybe there’ll be other opportunities.” And I think, as far as other opportunities go, we’re definitely seeing a lot of job hunting happening in this group. People leave Uber and some aren’t doing anything now, and others are starting things, and others are just joining existing startups. And so the network generally we see as powerful, and the investing piece is kind of a subset of that.
Chris Riback: Yes, it really is kind of an incredible virtuous circle is what it sounds like. You’ve got the Uber folks who will invest, Uber folks who have the entrepreneurial DNA who will launch, have launched, and I want you to talk to me about a couple of those companies. And then in addition, you mentioned this very briefly, you have expertise because by defacto, the people who are investing from Uber have held, I assume, a full range of roles, many of them in operations that you just mentioned, but also, I would assume other areas. And so you almost have an advisory expertise capability that you could help to support the companies in which you invest as well. Is that right?
Josh Mohrer: Yes, the expression that William and I use as we’ve seen this movie already. We’ve seen the movie before. And so just as an example, scooter companies, but Bird and Lime, Bird, William and I invested individually before where the syndicate started. Lime was a proper syndicate deal where about 50 of us were able to participate in Lime’s Series C, which coincidentally, Uber did as well. It’s not exactly like Uber, but it has a lot of similar dynamics. You have a distributed group, you have a GM in each city, you have supply concerns, you have demand concerns. So there is a lot of similarities, and using Lime as an example, we’ve helped them hire a lot of people and sort of think through how they should run their operations because like I said, we’ve seen this movie before, and it’s not a one-to-one on everything, but there are a lot of similarities.
So I think from a company’s perspective, particularly a company like Lime whose Series C was rather competitive, it was led by Google Ventures and Andreessen Horowitz, and it was hard for us to get an allocation, and our pitch was we can be actually helpful. VCs sort of all say that they can be helpful, and many are and many are not. But our pitch is, we just did this thing and you might be able to learn something from us, or we might be able to help you solve your problems. And I think by definition, this is a limited time opportunity. I think the band is still fresh, and we’re still all kind of used to working together. But I think in five years, it’s likely to less powerful. So we definitely see it as a right now opportunity. But I think anything in transportation and mobility, food delivery, any kind of logistic space business, something that’s going to be started in one city and expanded to many marketplaces more generally, are all areas we feel comfortable investing and advising in.
And I think anyone who works at Uber, the one thing that everyone has an eye for is what a rocket ship success looks like. You sort of know when you see it. The growth curves when we invested in Bird, the Series A was after they were only live for about a month. And when the founder shared with us the ride data from the first month, it was like, okay, we’ve only ever seen this one time before, and it was when we launched new cities at Uber. And so even though you have 50 scooters in Santa Monica and you’re doing 200 rides a day, we’ve seen this pattern, and we went in on that and have not been surprised at how successful that team has been, and sort of a similar story with Lime but at a slightly later stage. So the pattern recognition of what success looks like, I think we’re probably the best at because of what we got to be a part of at Uber.
Chris Riback: That’s a really interesting term, interesting way to look at it. Pattern recognition. So then extrapolate off of that and talk to me about some of the marketplace or any of the marketplace type companies that you are investing in, and what special skill, insight, experience do you feel the Uber network and Uber alumni bring to that type of investment?
Josh Mohrer: Sure. So one that we did that is particularly adjacent to Uber is called Cargo. Basically, they envisioned putting a vending machine type device in the back of every Uber. And the story with Cargo is pretty funny. They approached me while I was still at Uber in 2016 with this idea, and we looked at it and said, “We don’t really think this is gonna work, and this is not necessarily something we want to add it to the ride experience.” And so we shut the door on it, and the founder just continued building and he’s at a thousand cars and then 2000 and then 5000, and I get reconnected with him earlier this year, and the progress has been stunning. And so the Uber Alumni Syndicate invested in the company, this was probably in May or June. He opened a note for us, and we got in there, and there’s more specific skills like wrangling drivers and how to best communicate with large groups of drivers and how to run events where a thousand show up and who to talk to within Uber.
Shortly after we invested, they were able to get a global partnership with Uber. So that’s sort of an example of us being able to really engage with an Uber-adjacent business, and Uber as a platform I think will have increasingly many of those, and particularly as the company’s philosophy shifts, to sort of being more open to those sorts of things. And so with Cargo, they were able to then go and raise a Series A from a founder’s fund, uh, which we participated in as well. But that’s almost too perfect an example because of how engaged the company is with Uber.
Chris Riback: What about something like SALIDO, or something outside of that that doesn’t appear at first glance to somebody like me exactly, it’s not a service that fits in the back of an Uber car?
Josh Mohrer: We’ve known Michael Schneider for a long time. He was actually an early advisor to Uber, and is very well known in the Los Angeles tech scene. That one is more just like, we know Michael well, and we’ll back anything he does. We sort of see him as part of our team in that way. And then SALIDO is sort of a similar thing. Shu is a very well known tech guy here in New York, and has this vision of creating a layer on top of restaurant operations to help give owners better visibility and help them make more money. Some of those first few deals were more based on the relationships that we had with the founders, that sort of fanatic relationship to Uber. But it’s definitely similar. With service, Michael has built this amazing thing that it syncs with your inbox at any time you have trouble on a flight or a hotel. It sort of goes in and automatically requests money from the hotel brand or the airline, and that’s a pretty interesting thing.
And I think where we come in is we’ve been helpful in getting them in front of the right people at some of the companies he wants to form partnerships with. So that’s been a good one. Truck Map is another, that we sort of, this is a company that we found through someone in the network. They haven’t raised a lot of money yet, but it’s actually one guy, Eric. He created an APP for truck GPS, which sounds like regular GPS, but if you drive a truck, if you’re one of the three and a half million people in the United States who drive a truck, you know that you can’t drive on all roads. There’s sort of a limitation on because of height and weight of the vehicle, and not all roads support it. And so Truck Map is a lot of things. But the feature that’s been sort of the breakout success that’s making it go viral in the truck driver community is the turn-by-turn navigation on truck friendly routes. With the demand for truck drivers in various industries, giving businesses the means to recruit suitable candidates is crucial. They will, of course, desire drivers who are experienced, reliable and have a clean driving record. Services like Tenstreet help businesses reach out to potential applicants who would suit their driving positions best.
Chris Riback: That is fascinating. There’s an overpass for I-95 very close to where I work, and I swear to you, once every three weeks, there’s a truck. It’s a low overpass, there are a couple of signs, no trucks. So every three weeks there’s another, they block the road, the cops are there, they have the tow trucks, and they’re having to back out some type of truck has just gotten the top of the can opened by that overpass.
Josh Mohrer: It’s a classic problem and it happens all the time. And so there are other features about rest stops and way stations and the right places to go for some R&R when you’re on the road. And so I think there’s an opportunity to, if you can get onto the phones of a significant number of the three and a half million folks who drive trucks for a living, there’s a big opportunity there. The trucking industry generally has is not really modernized. A lot of matching drivers with freight is still done over fax machine and bulletin board. So it’s definitely an area that’s ripe for disruption or making better through technology. Aside from any kind of autonomous trucking. Still the standard version, but freight in the marketplaces matching drivers with businesses that want to ship something, most truck drivers are in fleets of three to five trucks. They’re not big companies doing this. So there’s no consolidation, it’s highly fragmented and we think there’s an opportunity to be the companion app for that job.
And so that’s when they were doing now. We haven’t closed on that quite yet, but that’s exciting for us. That’s the first investment where we’ve really taken the lead role.
Chris Riback: Philosophically, for folks listening to this and folks interested in VC, because you’ve talked about investing both ways, how do you balance the people versus the technology versus the business opportunity? It sounds like you have had interest in all three of those and been led into investments by all three of those. How do you think about balancing those?
Josh Mohrer: I think a really, really great idea is table stakes. Something that sounds great, I think, is where you start. The next level is can the people that are trying to solve the problem do it? Do they have the requisite experience, or do they seem like they have it in them to put in the work to make it happen? Will the execution be there? So I’d say typically, Uber’s success, I think at its very core, is the product market fit of the product. I did not invent it, no one in the syndicate was the inventor. Our founders sort of had this idea that you can push a button and a car would come to you, but the right place, right time in tech, the proliferation of the iPhone and android with GPS on it. That’s what set the stage, perfect idea at the right time. And so that drove a lot of the success, but it was critical to have the right folks. We would definitely see success correlated to the strength of the GM in the city, and so there was clearly both at play.
I think you need both a great idea, whatever you’re selling or the service has great, but also the team doing it has to be able to execute well. What was the third thing that you referred to?
Chris Riback: The technology, going in based on not just the people, not just the business opportunity, but maybe also purely based on, or maybe not purely, but incented strongly by the technology itself.
Josh Mohrer: Yes. I think for us, it’s more often the business idea and the person, the technology. We’re looking at a company’s standard cognition, which is they’re about to raise a pretty monster Series A, we’re looking at it now. I assume by the time this goes up we’ll have decided whether to do it or not, but that’s an example of. So what they do is the Amazon Go style cashierless store where you sort of walk in and grab a can of soup off the shelf and just walk out and it charges you automatically. They’ve developed that technology for everybody else because Amazon has it themselves. So it’s a super interesting application there for all the big chain stores that are going to want to compete. They have this, and apparently, the implementation of the technology through this company requires less infrastructure, fewer cameras, less computing power, which is obviously an advantage. So that, the onramp for us was like, wow, that’s super cool technology. That’s a little bit, we typically are doing more things where the technology is not the centerpiece, it’s more the business idea and the executing team.
Chris Riback: So a couple of questions to close things out. First, on maybe the more controversial, more challenging side. Uber, incredible company, incredible, incredible, incredible company with obviously very high profile challenges that it had both at the founder level, which you’ve mentioned, and also at some of the city levels, and it was interesting to hear you talk about that. That’s kind of baked into with, you have general managers who are incented to be highly entrepreneurial and are operating individual businesses within an overall framework that one potential risk side of that is an overaggressive general manager, let’s just say, and we’ve all seen the headlines. How do you do, have you operationalized how to manage against that type of thing? Have you operationalize or thought about how do you manage against some of the negative cultural components that came out about Uber? How do you think about that?
Josh Mohrer: Yes, so I have a whole bunch to say about that as you can imagine. Certainly, the experience of joining a company of 30 people in my office was three people, 30 all over the world, and you, like everyone else who works in an office, have the goings on of your office to seemingly in a couple of years, wake up and have the goings on in your office be front page news and the New York Times and the Wall Street Journal, is among the most unique experiences I’ve had and probably will ever have. It is both amazing and frightening. And so a lot of it is, I think Uber, every company has its challenges. It’s just that our challenges sort of appeared on the front page of the newspaper.
I think some of what was reported are real problems, and we do our best to relay to CEOs and founders of new companies about what things they should keep an eye on early. What kind of cultural implementations they should be thinking about even at a very early stage, because you plant the seed early and that’s what becomes the culture of your company down the road if you are lucky enough to get to that kind of scale of 100 or 500 or a thousand employees. And so I think you want to keep an eye on that., and I think we’re well positioned to warn founders and guide them and coach them towards having the kind of culture that they’ll be proud of, should it be reported on the front page of the newspaper or not, or just what employees tell a candidate when they’re considering joining up, like what kind of company, but by experience.
With Uber, when you’re in a hundred offices and you’re 20,000 people, I don’t think there is a single experience that you have. I think everyone has, each office sort of has their own experiences. And so I say what the press sort of got wrong is that there is this uniformly bad experience. I think if you were to ask the average person, or ask any random Uber New York employee if they feel like what was reported is accurate to their experience, I think you’d most likely hear a lot of no’s. That said, there were certainly lots of errors, and I think I’d sort of classify, I would separate them further, like the silly stuff, like the 2016/17 knucklehead stuff, and I’ll just use myself as an example of someone who made plenty of mistakes. We had a reporter who we wanted to show off our technology, and that we’re good guys and that we’re doing the best we can, and it went into, “They have this tool to spy on us.”
So that was an enforced error. It wasn’t nefarious, but it was kind of knucklehead, or just being aggressive with competitors. The limousine and black car and yellow cab industry is tough, and it requires serious competition, and sometimes we took that too far. We made plenty of mistakes, and I think we learned from them. And so I think when someone is considering letting us invest, I think that’s one of the value props they see. These guys made every mistake. They made every success, but they also made every mistake, so they can probably help me avoid those same mistakes.
Chris Riback: Well, what an incredible set of experiences. And yeah, it sounds like you went through it all. So what about the folks who are waiting for you to turn into a traditional VC fund, and they didn’t work at Uber and they want to get in on this action, they like your thesis. Is that a direction that you see yourself going, or are you happy with the Angel List Syndicate?
Josh Mohrer: That’s a good question. Right now, it’s a business kind of in that occasionally, if we get an allocation is larger than that Uber alumni want to fill, we have a network of outside LPs who will pay us to carry to participate. And so there is the beginnings of a business for William and me here where primarily, we’re doing this for fun, and to hopefully rise to the surface, cool ideas and companies that people all over the world and our network see. We do think about how we could make this a little more serious, I’d say. We’re openly considering lots of avenues, whether that be raising a traditional fund, or continue with SPVs and make those larger. But we quite like doing this, and see it could be particularly in this few year period where I think there will be a lot of strength in the alumni network. We’re keen to make it a real thing. What exactly the format of that, is sort of remains to be seen.
Chris Riback: We will stand by for it. Josh, thank you.
Josh Mohrer: My pleasure.