Four and a half years ago, Uber wasn’t the ride-hailing juggernaut it is today. Back when Michael Pao joined, it didn’t even have surge pricing.
That ended up being one of his team’s contributions to Uber — and one of Pao’s early lessons in what it takes to build a marketplace.
Now after more than four years with Uber, Pao is joining Greylock Partners as its new entrepreneur-in-residence. He’ll be both advising startups looking to get into the marketplace business — the new word VCs are using to describe the Airbnbs and Ubers of the world — in addition to looking to build a startup of his own.
“We have a bet that the best is ahead. This is the golden age to build a market place, so when it came down to making a decision to stay at Uber and build my own team versus starting my own company, Greylock and Simon [Rothman] made it a pretty easy one for me,” Pao told Business Insider.
Pao joined Uber in 2011 as its first hire for its launch team. He launched Chicago, then repeated the process in Boston, eventually becoming the city’s general manager there.
It was in Boston that Pao learned a key lesson about how to operate a marketplace: dynamic pricing, or, as Uber now calls it, “surge”. His team had noticed that drivers didn’t want to drive until 2 a.m. since it’s a late hour, but that’s also when the bars would close down in the city and demand would flare up. Uber started incentivizing drivers to stay on later to pick that up crowd, and it worked.
Pao continued moving roles throughout Uber, but always focused on growth. He helped launch Uber in India and China, and was most recently head of product for Uber’s growth team.
“At the end of the day, what I’m really passionate about, my DNA, is going from zero to one,” Pao said.
Being passionate about growth plus learning resiliency from Uber’s CEO Travis Kalanick are two things Pao has going for him in his new venture at Greylock.
In late last year, Pao had started looking internally at Uber and externally when he realised he wanted to start something new again. Rather than opting for building a new team inside of Uber, Pao started talking with Greylock partner Simon Rothman about a marketplace business.
The two connected over their not only shared love of transportation (Rothman is a former eBay autos exec), but the realisation that startups must build their own marketplace in order to succeed. Airbnb, Uber, and even Amazon are all examples of companies that continue to only get more efficient the more they grow.
They are still rare success stories, and many of the “Uber for X” clones have struggled to recreate it. Pao though isn’t worried about trying his own hand and building the next one, even as VCs are saying there’s blood in the water as more startups fail.
“There’s never been a better time to start specifically a marketplace,” Pao said. “Great companies get started at any time regardless of the macrocycle.”