This is James Currier at NFX. And today, we're talking about what startup founders can learn from the success of Uber. With all these big IPOs coming along, you know, we should notice that most of them are networks and have network effects in them because 70% of all value created in the tech space over the last 25 years has been around network effects. So you founders, as you're looking at these IPOs, what are the things you can learn?
And today, we wanna talk about 5 things that Uber really teaches us looking back It's an incredible story. The first lesson that we've all got to notice is that speed and aggressiveness Flint. You have to remember that Flint actually got to peer to peer car sharing first. And Uber was so fast and so aggressive that they were able to copy the Lyft app into Uber X feature on their app within 30 days. So within 30 days of Flint launching, they had a direct competitor in UberX.
This type of changing of speed and and direction is only gonna come about when you have a culture that is committed to that sort of aggressive and it's really paid off for them in the long run, both in terms of the investors they got, people they were able to hire, the markets they were able to enter, the experiments they were able to try, capital they were able to raise, it's showed in every aspect of their business, and you can bring that to the way you operate your business.
If you look at chess, I can beat a grand master in chess if I can make 2 moves to every one move they make, even though they're much better than me. Speed is the ultimate competitive weapon and Uber has shown that again and again. And we can talk about their culture and the long term impacts of that, but there's no doubt that the way this company aggressively attacked this market produced a $100,000,000,000 company when their competitor Flint produced just a $20,000,000,000 company.
And time and again, people will poo poo them and say, oh, you know, those guys are bad guys and and whatnot, that became true at some point, but they still won the market and now they have a chance to do things right going forward. Now, certainly, the way they kept evolving in that aggressiveness led to what we might call the asshole personality, and that can go too far because as we see a year and a half ago, Lyft's market share was 25%.
But because so many people defected from Uber because of their culture, Flint market shares now 39% in the US and that type of impact can happen to your business when you take it too far. So there's clearly a downside to it, but there's no denying that the aggressiveness they've had over the last 8 years has been the hallmark of the company and has produced this incredibly large company that now has an opportunity to transform industries.
So the second point that founders should take from watching Uber is that you should focus on your defense abilities. So there's about 4 defensibilities left in the digital world. There's network effects, which are the greatest, and there's actually 13 different types of those. There's brand effects their scale and there's embedding, embedding your software into other people's, workflow. So Uber woke up and had what we call an asymptoting 2 sided marketplace network effect.
Which is not particularly strong. And I'll explain that in a second. They then rapidly and aggressively added in other defensibilities. So it's what we call reinforce they added brand by getting in every paper, whether it was for positive or negative reasons, they added scale by raising a ton capital being everywhere. They embedded their app inside of Google Maps and other places where people were finding rides, and then they started adding other network effects.
For instance, Uber commute in India, which is really a direct network effect, one of the strongest types of direct network effects. And they haven't rolled it out yet, but they very well could once they nail it. They've got Uber Pete. Which is actually a 3 sided marketplace network effect between the restaurants and the drivers and the consumers. This can be a pretty defensible business as well. Mean, they're competing with DoorDash right now, but both of them are sort of leading the market.
And then they're also going after Uber Freight, which is also a two sided marketplace. That is non asymptoting. The more trucks you have, the better. Well, it might be interesting to know why is the initial asymptoting network effect not as strong? Beller, because you don't really care as a consumer if the car comes to you in 2 minutes or 3 a half minutes. If I have a 1000 cars in San Francisco. I can get you a car in about 3 a half or 4 minutes.
Somebody else can come along and get a 1000 cars and get you that car. But if I can get you the car in one minute, ah, you're still putting on your jacket. You're still saying goodbye. You still gotta go to the bathroom. Still gotta come down the elevator you are. You don't really care if it comes in a minute versus 4 minutes. It's not that much better.
And since it's the same car, because the multi tenanting on the supply side is already so easy for for the dry and because you can flip over to Lyft so easily by flipping over on the app, the multitenning on the consumer side is also very easy. Doesn't really matter. So this is the definition of an asymptoting marketplace network effect and we really see it with Uber and Lyft, and it's not particularly strong. So what they did was focus on their defensibilities.
They looked at all the different things they could do with their product, with the features, to add more defense abilities, reinforce the one they started with and make a truly defensible business so that when Juno raised $50,000,000 to go after Uber and Lyft in Manhattan and be the 3rd ride sharing opportunity, they had no problem getting on the supply side. They were able to get 100100 of drivers to provide a supply network to the riders.
The problem was they couldn't get the ride They couldn't get enough consumers to use their app because there was a brand effect. There was a scale effect. There was a habit that had been formed with the consumers just to punch that Uber app or that Flint app and they weren't gonna add a third in their mind. So, Juno ended up selling for a small amount of money.
So, that's how Uber has shown us the way to focus on defensibilities and be very clear about that and move toward reinforcement to build a truly defensible business. And this isn't something that I made up. They are actually saying in their s 1 these days, Beller new service they add basically reinforces the original ones that they had. So they've actually known this from the beginning. They've been imputing on this.
And this is something that most founders don't know about and don't think about, but it's a key to building a truly important business. The third point that founders can take from Uber is really that capital can be a competitive weapon. You have to be good at fundraising if you're going to be doing a startup in a competitive space. If you're going to be trying to build something of scale and its speed, can't have your competitors out raise you. It's gonna make it very hard for you.
If you're not great at fundraising today, you need to excellent at it really quickly. And if you can't, maybe the CEO will listen for you. And if you're working with someone who's the CEO and they're not great at help them get excellent at fundraising because if you can't get them there, then they probably shouldn't be in that seat. It's such a critical skill today, particularly because there are so many venture firms.
There's so much capital out there that the people who are really good at fundraising are gonna find their capital. They're gonna get more market share. They're gonna get more employees. They're gonna get more noise, and they're just gonna get ahead of you. And it just makes it really difficult to play from behind. So you look at Uber, they've raised $24,000,000,000 to date, which is multiples of what Lyft has raised.
Now, at their IPO, because they're already ahead, they can raise $10,000,000,000 in their IPO versus Flint, which just raised $2,000,000,000. And in addition, Uber's losses are now less than 2 X's They're losing faster. They're losing more money faster than than lift this, but it's not even 2x, even though they're raising five times as much money. So the runways longer. They got ahead at the beginning.
Because of their aggressiveness and because of their ability to raise a lot of capital, which they needed to do in, relatively non defensible business. And now the further they got ahead, the further they ahead.
So capital isn't a defensibility, but it is a competitive weapon and its advantage, and it compounds on itself, and it allows you to entrench yourself in the And in this world where there's so much capital, you've gotta expect that anyone who's gonna compete with you is not just gonna grow through profits. They're gonna grow through aggressively, bringing on new capital and taking market share. And if they're gonna do it, you need to do it faster.
That's just the nature of where we are in 2 1019, and maybe 40 years ago, we weren't there, but we're there now. So the 4th point out of 5 that I wanna make today about what we can learn from Uber for startup founders is to make your vision as big as you can. From the beginning, once they realized what they had in their hand, Uber understood the vast opportunity that they could access after starting with just black cars, then going to peer to peer, and then growing the business.
They've been saying this all along in their fundraising now even in their s 1, they're saying we are not even 1% done with our work. We are addressing the $12,000,000,000,000 of world global economic activity that is transportation, and that is addressable by us. It's 15% of all the economic activity on the planet and we can go after that.
When you have that type of span of your vision, when you articulate it that clearly, it gets investors excited, it gets the most talented employees excited, it gets the press excited, and that compounds your advantage in winning and taking these markets and in expanding these and creating the markets that you wanna be the dominant player in. And Uber has done this brilliantly, over the last many years.
So, make your vision as big as you can and find phrases that get people excited like we're not even 1% done with our work. It's great. And the 5th and final point we'll make here is that Uber has done a wonderful job with language and naming. First of all, the name Uber itself is memorable. It's short. It sounds strong. It sounds appealing, and it's shared easily among Pete. The second thing is that that name, they injected it into our vernacular. It became a word.
I'm going to Uber over or I'm going to grab an Uber. It's either a noun or a verb when the name of your company and your brand name becomes shorthand for the entire Morgan category, like Google did with search, and now Uber is for ride sharing. It becomes an incredibly powerful defensive weapon and a growth mechanism for And so language is very powerful and can actually create its own network effects. It's quite rare, but when we see it happen, you usually see 100 plus $1,000,000,000 companies.
So pay attention to it, see if you can't do that in your marketplaces and and focus on that language and the naming. Now having the right name won't get you to a $100,000,000,000 by any means, but certainly a helpful leverage. And Uber, the name itself actually understands the psychology of the consumer Pete. Uber is a word for supreme or better or higher status. And as we know from Eugene Way, a wonderful, blog essay about status seeking monkeys.
We all wanna feel as if we're getting the very best, the very supreme. And so the name it self connotes you're getting the best. Your willingness to pay goes up, your willingness to tell your friends about it, your willingness to share it goes up, your willingness to be loyal to it. Why would I come down from the very best? And use a lift or something else. So the name itself has a very subtle edge on it or a very powerful edge that drives consumer behavior around this brand.
So these are the 5 lessons that we think founders should take away from the Uber IPO number 1, speed and aggressiveness wins number 2, focus on your abilities. Number 3, capital is a competitive weapon and get good at fundraising. Number 4, make your vision as big as you can. And number 5, language, and naming matters. If you wanna read more about this, go to nfx.com/essays.
We've got an article a long article about Uber there, and a number of other articles about marketplace dynamics, network effects, defensibilities.