One of Uber’s earliest investors explains why he invested in the first place, and how the company is going to keep growing past its IPO (UBER)

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Uber filed regulatory documents Thursday for its highly anticipated public offering.
Menlo Ventures, a prominent Silicon Valley venture capital firm, led Uber’s $32 million Series B fundraise in 2011.
Shawn Carolan, who co-led Menlo’s original investment, says that he’s confident Uber is on the right track, citing its willingness to experiment with new lines of business like UberEats.
He says that founder and ousted CEO Travis Kalanick played an undeniably crucial role in the success of Uber, but also acknowledges that his management style led to big problems at the company.
Now, he says, Uber CEO Dara Khosrowshahi is the right person to take the company through its IPO and beyond, citing his humility and vulnerability as major pluses.
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When Menlo Ventures partner Shawn Carolan first considered investing in Uber, circa 2011, there was reason to be skeptical. For one thing, the deal would value the startup at a $290 million pre-money valuation — pricey for a two-year-old company.

His attitude changed when he pulled up the app and ordered his first Uber from the second floor of his building. He says the car was waiting for him by the time he walked downstairs. That’s when it clicked.

"[Uber] was the perfect customer experience, similar to what Google did for search,” said Carolan. “They had a viral growth engine and a product people were willing to pay for. You never see that.”

And so, Menlo ultimately decided to invest: That same year, Carolan co-led Uber’s $32 million Series B round of funding that same year. Uber would ultimately raise over $24 billion in venture capital and debt financing.

Fast forward to this week, when Uber filed the regulatory documents to go public ahead of its long-awaited initial public offering, which could value the company as high as $100 billion. Needless to say, Menlo Ventures stands to make a significant return on what Carolan had thought was a pricey investment.

Read: Here’s who’s getting rich on Uber’s massive IPO

Now, Carolan says, Uber has an even brighter future ahead — assuming it continues to execute.

“In the end it all comes down to good old fashioned execution. You have to keep making the business better and keep finding the right talent to build the best product. You invest in the areas that build the business and divest from the areas that don’t,” said Carolan.

Kalanick’s contribution, and the rise of Khosrowshahi

Carolan says Uber’s growth may not have been possible without founder Travis Kalanick, who was ousted as CEO in 2017, but remains the company’s largest individual stakeholder even after selling $1.4 billion worth of his shares in the company to Softbank.

Carolan says it’s “undeniable” that Kalanick was an incredible entrepreneur, but the skills and values that helped him build the business didn’t always hold up as it scaled — leading to a string of controversies that shook up the company and, by the company’s own admission, damaged the Uber brand.

“I really admired the guy," Carolan said. "Many of the ways he changed the way transportation was working, especially that quickly, needed his skill set. Obviously, it had downsides as well in the business and the culture. There was a lack of sensitivity in people working at the company. The company values around hustle were not being held in check."

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Carolan said the decision as a major investor to support the ousting of Kalanick was “sad,” but that ultimately, stakeholders knew Dara Khosrowshahi was a better fit to lead the company as it scaled. According to Carolan, it was Khosrowshahi’s humility and vulnerability that best indicated his ability to lead the company past its troubles.

“I deeply admire Dara. I felt the difference between him and Travis in Dara’s letter [in the filing]. There was a ton of vulnerability, and that language is so powerful coming from leaders of companies like this. That’s real. Nobody’s perfect, and he’s the type of person I know will be working really hard and trying his best to figure out how the system should work,” Carolan said.

Business moves

As Uber continues to meet with potential investors ahead of its IPO, Carolan thinks the company’s investment in long-term lines of business will pay off.

He points to the success of UberEats, one of the fastest growing parts of Uber’s business, as evidence that the company is willing to take big bets before achieving profitability. He also points to Uber’s acquisition of Jump, a motorized bike startup that Menlo Ventures had previously invested in, as evidence of a longer term strategy around chasing new, often eco-friendlier, modes of transportation.

“One thing that was always striking was the simplicity of the value [proposition] at the heart of these truly incredible businesses. [Uber]’s is getting from point A to point B, and that’s in the context of the company getting from point A to point B, but also the value proposition for the planet.”

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