Join us as we talk with Sidecar Co-founder and CEO, Sunil Paul. A serial entrepreneur, Sunil is the Founding Partner of the cleantech venture fund Spring Ventures, an angel Investor in LinkedIn and Co-founder of Brightmail. He helped found Sidecar with an intention to change the world and make owning a car obsolete.
Differentiating your product in a competitive marketplace
Although Sidecar is similar to Lyft and Uber, there are key differences. Sidecar pioneered a new category within an emerging market where drivers can set own prices and showcase what they’re capable of while competing for the best price. Meanwhile, riders get to choose the driver they want. The result is an ultra-competitive pricing model where The Wall Street Journal compared the company against Uber X, Lyft, and local taxis and declared Sidecar the winner.
Sidecar’s business model also creates price transparency. Riders know the price before they take the trip and drivers can choose the rates they set. Unlike Uber, Sidecar also doesn’t employ a surge pricing system allowing even more control for the customer booking the ride.
First 100 customers
Sunil and the rest of the Sidecar team used their existing networks to land their first 100 customers while testing the product. The University of Michigan was also part of the founding team, giving them access to an entire campus of ready and willing customers.
Today, Sidecar’s user acquisition largely spreads word-of-mouth with the boost of a referral system. New customers can also pick up a $5 coupon and help circulate the code to other interested riders looking for an excuse to sign-up. Sunil estimates there are thousands of active drivers across 10 cities during any particular week.
Innovation wins markets, not money
Sidecar’s biggest challenge are competitors with lots of capital ready to spend. But Sunil dismisses the idea that a start-up can’t compete with a marketplace full of big business money. Sidecar’s strategy was designed around the idea innovation wins markets. While it’s true money can overwhelm a market, they don’t just win because they have money. Instead, winning start-ups develop, deploy and get the word out about their product or service.
Alternating terror and elation
Sunil is an old pro at founding and running a start-up. Sidecar is the 3rd company he’s founded and run, but he’s also been involved as an investor in dozens of companies. Every single experience has alternating fits of terror and elation. Sunil’s everyday normal is one minute thinking things are falling apart to the next it going to the moon.
Sidecar is the biggest opportunity Sunil’s ever chased with a huge marketplace. He predicts Sidecar will make smartphones so capable we won’t need a car anymore. But a big concept takes a connected leader and team. Sunil talks about how CEO’s need the ability to articulate a vision for where you’re headed and build a team that connect with that vision and actually care about it.
It also takes unified motivation to keep a start-up going. The team at Sidecar strives to make the world a better place. Sunil says its the core to the DNA of almost every employee and that motivation helps push the company to new levels. It also doesn’t hurt if your team genuinely likes each other and wants to spend time together even outside of work.
Predictable company cycles
Sunil has worked in enough start-ups to predict company cycles. Every start-up has a phase of developing an idea, testing them, figuring out whether or not they work and iterating on those ideas. Sometimes entrepreneurs have to go back and re-strategize to be more disruptive in the industry.
Sunil reflects on his experience at BrightMail where they needed to introduce new capabilities to make a bigger impact on the marketplace. Recently Sidecar released Back-to-Back rides to build on their services and further differentiate themselves from competitors.
Expanding on the startup cycle, Sunil walks through how a startup can thrive where big business gets stuck. Sidecar is maniacally focused on how what they’re doing fits the market needs instead of getting tangled in internal politics and bureaucracy.
The blurred line of work-life balance
Being an older entrepreneur also has its advantages. Sunil exudes a calm demeanor that most startup founders seem to lack. He explains that entrepreneurs are obsessed with their business and can think of little else. But being a seasoned entrepreneur means the advantage of perspective and knowing the importance of taking time for yourself, your loved ones, and understanding your place in the world.
Sunil is also realistic about the limitations of truly disconnecting. He estimates he’s only successfully 50% of the time in putting his phone and computer down to hang-out with his young twins and have a family dinner.
That unplugging concept also lends itself to focusing on one company at a time. Coming from an investment background with Spring Ventures, Sunil says it’s simply not possible to run a company like Sidecar and have attention diverted into other directions at the same time.
VC vs. CEO: What’s the real difference?
With a unique advantage of being successful as both a VC and CEO, Sunil can expand on the vast differences. Although both are time consuming, investing isn’t as intense and allowed more time with family. It’s also easier to put aside work at the end of the day and experience less frequent waves of terror and elation. At the end of the day, being a VC really means being in the business of managing a portfolio while being the CEO for Sidecar means changing the world for the better.
“Lean Startup” – Eric Ries writes on finding ways to test entrepreneurial vision, adapt and adjust to growth and change.
“Running Lean” – Ash Maurya writes about creating systematic processes for vetting product ideas and raising the odds for success.
“Future Perfect: The Case For Progress In A Networked Age” – Steven Johnson looks at the new model of political change transforming everything from local government to health care.
Eric: Hi everyone. Welcome to this week’s edition of Growth Everywhere where we interview entrepreneurs and bring you business and personal growth tips. Today we have Sunil Paul from Sidecar. Sunil how’re you doing today?
Sunil: I’m great. And how are you?
Eric: Doing well. Thanks for joining us. So Sunil, why don’t you tell us a little bit about your background and then we’ll go from there.
Sunil: Sure. I’m a serial entrepreneur. CEO of Sidecar. Sidecar is an app that allows people to connect with one another to give and get rides through a market place.
Eric: Got it. So, pretty much like Lyft and Uber?
Sunil: Similar accept that we’ve really pioneered a new category of having a market where drivers are able to set their own prices and show off what they’re capable of and riders choose the specific ride that they want. So, it sets up a dynamic where drivers are competing for the best price and that’s a very different kind of situation compared to other companies where those companies set the prices.
Eric: Interesting. I’ve used Sidecar in the past and did you guys just change this model recently?
Sunil: Yeah. This is within the last three months.
Eric: Wow! Okay cool. I’m going to start using Sidecar again.
Sunil: Yeah. Try it out. The Wall Street Journal reviewed us right after we launched this and compared us with Uberx, Lyft, and Taxis across different cities and declared us the winner. We’re the cheapest in most of those cities.
Eric: Got it. To me Sidecar was always Uberx before Uberx happened. So I’m going to be very excited to try it out. How do you guys, I’m sure you get this question all the time, how do you guys differentiate yourselves in terms of, I guess in terms of marketing, how do you differentiate yourselves from Lyft and Uber, besides the things you just talked about?
Sunil: Well those are the big things. There’s a couple of…The reason people use and love Sidecar is because there’s price transparency. You always know the price before you take your trip. Very different from competitors. And the second is that you have, because of the nature of our system the prices tend to be lower. And we don’t have a surge pricing system and prices are determined by the driver. They’re competing for your business. And so, as a result you’ve got all this control and a great price that you know up front.
Eric: Got it. Cool. So, we always like to talk about user acquisition on this podcast.
Eric: How did you guys acquire your first one hundred customers?
Sunil: That’s a good question. You know, I think like a lot of startups it was just through reaching out to people we already knew. A hundred is such a number, you can run some ads, but you don’t actually need to run a lot of ads. It’s also, at a hundred you’re still in a test mode, at least from a consumer product and so a lot of it was just reaching out to existing networks. There’s a bunch of folks from the University of Michigan that are a part of Sidecar, a part of the founding team and so that helped a lot in reaching out to the University of Michigan crowd.
Sunil: You know, the biggest number one thing that works for us is word of mouth especially with the new version of Sidecar. People are spreading the word because it is a different experience than it used to be. And then the important second source of customer acquisition is our referral system, being able to circulate a code, being able to ask other people to try it out and I think they get a five dollar coupon.
Eric: Got it. Okay.
Sunil: And we do other things as well. Digital advertising and email marketing, etc., but if you ask, one of the big drivers is word of mouth and referrals.
Eric: Are you able to talk about the number of drivers you guys have today?
Sunil: Yes, we have thousands of drivers across ten different cities. Those are the number that are actually active in a particular week.
Eric: Okay. Got it. Obviously growing a business like this, I mean, Uber started like a “for fun” type of deal and obviously grew to the scale it’s at right now and I’m sure you guys are facing a lot of different problems too. Can you talk about one big struggle you face while growing Sidecar?
Sunil: Well, I’d say one of the biggest challenges has been that we have competitors with a lot of capital so we have really focused on a strategy that is capital efficient and one that is designed to win based on innovation and not just money. As you look at things we’ve done around marketplace, around our incentive programs, they are all organized around the idea that innovation tends to win these markets. There’s no question that money can overwhelm a particular market, but if you look at the history of successful companies they don’t win just because they have extra money. They win because they developed a ploy and get people do know about the best product.
Eric: Walking back to the whole; I know you guys changed your model three months ago, so what was your whole thought process behind that?
Sunil: In a lot of ways it was going back to the original vision that we had for Sidecar. When John and I were first kind of noodling on ideas, this idea of a marketplace was the early concept and in an effort to try to get things out and also to simplify it down to something we knew would be likely to work we built an interface and experience that was similar to what we’d seen with Uber Black. As we have continued to grow and frankly as we’ve seen growth and these large fundraising rounds from others we have really gone back to our roots of creating an experience, creating a marketplace that can really scale; and scale up to be the largest transportation marketplace, which is the ambition that we have.
Eric: Okay. Got it man. Was there any point in time where Sidecar was on the brink of failure? Was there any moment where you kind of had an “Oh Shit!” type of moment?
Sunil: This is the third company that I’ve founded and run and then I’ve been involved in…been an investor in lots of companies. Every single one of them has moments where…I describe startups as alternating fits of terror and elation. One minute your thinking, “Oh my God. The whole thing’s going to fall apart.” and the next minute you’re thinking, “Oh my God. This things going to the moon!”
And so, yeah, there are times at startups where you’re just not sure if it’s going to work and there are other times when, “Oh my God. This thing’s going to take over the world.” And both those things have happened at Sidecar and continue to happen in Sidecar. I think that the moments that really kind of keep us going are when we think about, “Wow! This category; what we’re going after, is huge.” The largest opportunity I’ve ever chased which is…we have an opportunity to make smart phones so capable that you don’t need a car anymore and that’s kind of a once in a life-time opportunity.
Eric: Okay. I know you’ve had those “Oh Shit!” moments a few times you’ve just mentioned with Sidecar right now. With the whole team, if they’re experiencing those moments how do you keep them motivated? And you’ve done these other businesses before, so I guess that’s something that always caught my attention.
Sunil: Yeah. You know, the number one job for an entrepreneur and for leader of a company is being able to articulate a vision for where you’re headed and build a team that connects with that vision and cares about…connects with the vision and cares about everybody else on the team. So, one of the things I’m very proud of at Sidecar is we’ve built, like we have…Everyone at Sidecar is committed, not just to the vision of, “We’ll replace the car with a phone”, but we are there because we know that we can actually make the world a better place and we really do mean that. It is kind of core to the DNA of almost every employee there.
So, I think that’s a part of the motivation. I think the other part of the motivation is we like each other and we do a lot of things together inside work, but also outside of work.
Eric: Got it. Okay. So with the, especially with the three companies you’ve had in the past before, is there…I know the “Oh Shit” moments are constant. You’re always going to experience those with any startup or any company you’re invested in. What are some other consistencies or other constants that you’re experience with running or having run these companies in the past?
Sunil: Well I think there’s…Every company kind of goes through a similar cycle of, you know, you’re constantly going through a cycle of; you have some ideas, you test them, figure out whether or not they work, and then iterate on those ideas, and sometimes you find that you’ve got to go back to the well and be even more disruptive in the way you’re thinking about things. We certainly had that at Bright Mail where we had to rethink and introduce new capabilities into our products. At Sidecar we created this marketplace experience that’s very different from competitors, differentiated within…deployed new capabilities for drivers like with what we call back to back rides which is built on top of marketplace and required destination.
And that kind of cycle of “Okay, where are we now? What are the things that will move business the most? And how do we know whether or not what we’ve done actually fits what the market needs” That’s a constant theme.
Part of why a startup succeeds is that we are maniacally focused on that and we’re not focused on, I don’t know, managing multiple layers of politics and internal bureaucracy. Big companies have advantages because they can get on the bead and really stay organized around and execute against a particular idea. Startups have the advantage of, they can be really, really focused on a particular market need and only focused on that rather than… and can move very quickly to a market change or to a new opportunity.
Eric: Very well put and I agree. You know, something really sticks out to me. You have this really calm and cool demeanor. Have you always had that? Where did this come from?
Sunil: Yeah. I think it’s a part of my personality. It’s not a practiced thing or anything. It’s just kind of who I am.
Eric: Got it man, because I think it’s something that all entrepreneurs, first of all, could use, I think anyone in the startup world could use too. You just seem very calm and collected and you’re just a cool guy in general. So if you have any practices you can share we’d love to hear them, but it doesn’t seem like you’re practicing anything right?
Sunil: I would say over the years, I’m much older than most entrepreneurs and a couple things I have learned over time is to…Part of the advantage of a startup is that you are completely obsessed with it. Every entrepreneur will tell you the same thing, like he can’t think about anything else. It’s one of the important skills.
I think, though, it really helps to provide, have perspective and to take time for yourself and to take time for the important people in your life because it is a part of what allows you to stay centered and not get web sawed by, like the crazy ups and downs of a startup which really are…some of the more extreme experiences, at least in a normal life in a modern world. I’m sure there are other more extreme things; our veterans going back from Iraq and Afghanistan have seen, and there are other things in the world, but, you know, certainly in the business world it’s one of the most extreme things you can go through.
Eric: And when you say take time for your family and friends are you saying…because I know a lot of startup founders like to work seven days a week and that’s all they do and I hear other entrepreneurs, “Oh, I hate playing with my kids. Maybe I’m just a bad parent. I just think about work all the time.” So, do you have any process in mind where you take Sunday off, you take Saturdays off too, what are you…?
Sunil: On important practice that I’ve got is when; I’ve got kids, they’re twins, thirteen years old, when I get home I put phone and my computer down for a little bit and between then and typically through dinner, we eat dinner together, I try to completely disconnect from that for what ends up being between one, maximum three hours. To be honest it’s a struggle.
I don’t pretend that I am fantastic at this, but it is what I try to do, be present during that time and be connected because I don’t think it’s necessarily about, it does matter how much time is put into it, but more than anything it’s like, Okay, lets at least spend a little bit of time where I’m not thinking about work, I’m thinking about family and you kind of put in place the family, friends, or time in for yourself. It is important because you need some perspective on the world in order to execute well on a particular product experience. There’s maniacal focus, like “Let’s get this done” and there’s also understanding the broader world and your place in it and that does come with perspective.
Eric: Got it. And when you say you try to disconnect, ballpark, what percentage of time do you think you succeed in disconnecting for that one to three hours?
Sunil: Boy, you’re really…Honestly, these days maybe I’m able to do it 50% of the time.
Eric: Okay. Cool. Ballpark is good. One of the things I wanted to touch on also as well is, you have Spring Ventures and I believe the founder of that?
Eric: Okay. Can you tell us a little about what Spring Ventures is exactly?
Sunil: Yeah. So, Spring Ventures is a platform for investment, you can either call it a super angel fund or a very small VC fund, you have successful investments out of it; include LinkedIn and [Solozon 00:18:27], both of those are two IPOs, and then there’s a number of other investments in it. I’ve stopped making new investments out of it so that I can focus on Sidecar. I don’t think it’s really possible to run a company and have your attention diverted into too many other directions.
Eric: Got it.
Sunil: And I’ve got to tell you making intelligent investments is tough and it takes a lot of attention and focus. I did try it for a while and I just decided it’s not possible to have that kind of focus.
Eric: Okay. I’m sure there’s prospective Angels Investors or maybe even future VC’s in the audience so can you tell us the difference between being a VC and a CEO?
Sunil: You know, I remember when I took a break and after being an operator and went around talking to investors because I was going to focus on being an investor, and one of the lines I used was, “One of the reasons I want to focus on investing right now is my kids are young and it’s not as intense, it’s not as many hours, etc.” And I could predict to a person the investors that had never been operators because they always got defensive, like, “Well we work hard. We roll up our sleeves and…” blah, blah, blah.
The ones that had been operators are like, “Yeah. You’re right.” I mean, Many investors work hard, they all work long hours, but there’s a difference and the difference is you’re not maniacally obsessed and you know I think it’s easier to put aside your work at the end of the day when you’ve got fifteen, twenty investments and both the terror and the elation are less because you have a big hit, that’s awesome, but it’s balanced out by some others that don’t do so well. You’re in the business of managing a portfolio and as an entrepreneur it is not about a portfolio. You’re all in one thing. So that has its rewards and it has it’s downsides. It all kind of depends on, not only what you like, but also what else is going on in your life.
Eric: Got it. Okay. So what, you’ve had some success with your investments. What are some things you can recommend, what’s Sunil’s process for determining if it’s a worthy investment or not, very high level?
Sunil: I’m not going to bore folks with the same stuff that you can read out. I sort of look for a lot of the same things that all investors in this category look for. I don’t know if your audience is entirely folks who are looking at this kind of equity venture style of investment, but I think one important thing to understand for entrepreneurs broadly is that’s only one particular style of investment, one particular style of building companies. It also changes the way you think about what kind of investments you make. I looked at other styles of investment as well, ones that are more based on cash flow, and I’ve looked at debt offerings and things like that, it’s just a different set of risks.
So, in this world of fast equity growth, what this entire world of venture is all about, you going to own a piece of the company and you want that piece of company worth a lot more down the road and your willing to take a risk that your bets on other pieces of companies are not going to work out as well. You’re looking for the ability to grow rapidly, you’re looking for teams that can be adaptable and can move fast, and you’re looking for a category and a set of ideas that have low barriers to get going, so that the small company can grow rapidly, but where barriers build over time.
Compare that to other categories like, and easy an example that people can relate to, of restaurants or movies, or commercial real estate. These are all things that are based on cash flow and there you’re much more focused about wanting to insure that you get to a real cash flow stream coming back to you. You might also make money off of selling that property, whatever it is, whether it’s commercial property or restaurant, or whatever, but you’re almost always making most your money on the actual cash flow. You’re much more focused on how do you get to those cash flows, where are you in the sequence of cash flows as compared to where are you in the ownership of the company. Anyway, just one example of a different style of investing.
And if you’re an entrepreneur and you’re thinking about how do I raise money for this company it’s important to understand the motivations of the different kinds capital out there and how that matches up to what you’re trying to get done. I always tell entrepreneurs the single best source of financing is actually revenue from your customer. It’s rare the company that can actually do that, but sometimes it happens.
The second best source of funding is your customer giving you some advance payment, some debt kind of structure that is premised on you delivering your product because it’s directly connected to your offering. There’s a lot of good reasons why that’s good thing if you can get it. Again, it’s not that easy to get. Generally speaking debt and things like government grants are a better deal for the entrepreneur. The problem is, again, it’s pretty hard to get those things.
Which brings you to equity, in other words, selling a piece of your company. It’s actually the most expensive way to finance your company, but if you have the right characteristics for your company, you think you can have it grow very rapidly, then selling a piece of it can make a lot of sense. Selling it to this style of investor. Anyway, there’s a lot more to talk about on that front, but I think your question was, how do I think about investments? So, we didn’t really talk about that.
Eric: No man. This is really helpful. Continue.
Sunil: The way I think about it in essence, I do tend to emphasize the quality of the entrepreneur because I feel like a great entrepreneur can take a category, an idea that is just good and turn it into something that’s great. Not all investors have that attitude. Some investors, especially some VCs have more an attitude of all that matters is traction of the idea itself and if the team’s not that great they’ll find a new team. I tend to lean more on the side of I’m making the bet on the person on the team.
Eric: Got it. Cool. This is really interesting. The stuff you talked about, the different ways of financing and all that, besides using Google, which Google’s search results are sometimes have more to be desired. Where can one go to learn about more of this stuff?
Sunil: Gosh, that’s a good question. I think it’s useful to know about the names of these different categories of capital. I mean, what I just named, looking at the way that commercial real estate’s financed. Commercial real estate is probably the easiest to one to understand because there’s a lot of it out there. There’s probably a lot of explanations about how those financing structures are set up. Part of the reason I learned a lot about this stuff is because of investments in Clean Tech and a lot of Clean Tech investments there’s the standard VC stuff, but there’s also elements of it that are very related to the way commercial real estate is financed.
Gosh, I don’t have any good reference points. You know, there’s text books and books on venture finance and then there’s going to be books on debt financing which there are a gazillion different varieties. You know, I’m sure there are resources out there specifically on this, what I keep referring to as commercial real estate, but it’s really financing that’s based on being paid back through cash flow rather than being paid back through selling equity. Anyway, I don’t have a good answer for you other than some places to refine your Google searches.
Eric: I think that’s really helpful because you don’t know what you don’t know. At least you’re giving people a starting point here, so thanks for that. What’s one piece of advice you’d give to your twenty-five year old self?
Sunil: Twenty-five. I think at twenty-five I would have told myself that, especially if I were twenty-five today, that if you want to want to be an entrepreneur now is a better time than perhaps ever, especially in the world of information technology and that you’d spend some time learning the basic techniques by ideally working in a startup, but then try it because there’s nothing like actually trying it. One of the things, I realize at Sidecar is almost everybody there wants to be an entrepreneur someday.
As we get bigger and bigger there are maybe not as many people that are in that category, but I try to have a culture of talking a lot about the experience as we’re going through different experiences, like what we’re learning and we’re big fans of looking at startup methodologies and deploying that and making that part of the company culture, but also just talking about how these financing things work and management structures and simple light weight processes that are important to implement, all the kind of startup 101, but there’s nothing like actually doing it to build better experiences.
Eric: Got it. Couldn’t agree more. What’s one productivity hack that you can share with the audience?
Sunil: I like, probably my favorite right now is just trying to identify maximum three things that you absolutely, positively, want to get done that day. And kind of having a separate list for it verses…what I do is I write it down, old school pencil and paper then I’ve got my electronic to do list that’s kind of all my different tasks, but I find that that focus, even though I might have a bunch of meetings or bunch of different things going on that day, knowing that I know there’s at least a couple things I’ve got to get done today and they’re usually not the ‘send an email to follow up on something’, they tend to be more on the important side rather than the urgent side, to use that Stephen Covey breakdown.
Eric: Got it. Cool. And final question from my side. What’s one must read book for the audience that you can recommend?
Sunil: So, for an audience of entrepreneurs I have been really influenced by Eric Ries, “Lean Startup” and also Ash Maurya “Running Lean”. I really find those important. I’m trying to think if there’s anything else. There’s other books but they’re not really businessy books.
Eric: It can be anything. I’d love to hear it.
Sunil: I was pretty influenced by, I like Steven Johnson’s, I’m trying to see it on my shelf here, I think called “Future Tense” It basically talks about the power of peer networks and their profound ability to change really all aspects of society and certainly the world of business. That deeply affects my thinking and I think that the ability of individual actors, people to work together is a capability that is kind of architecturally enabled by the internet and is spreading, and certainly Sidecar is part of that movement, but it is spreading to pretty much all sectors of the economy.
I think it’s going to spread on that. I think it’s going to transform the way we think about government, the way we think about even other segments of society, how we think about philanthropy, how we think about science and potentially how we even think about religion. I think it’s a deeply profound thing that’s going on that we’re living through, that we’re participating in, that we’re building ourselves. It’s one of the things that makes me excited about the era that we’re in.
Eric: Okay. And you said that book from Steven Johnson was called “Future Tense”?
Sunil: I think it’s called “Future Tense” [Future Perfect]
Eric: Future Tense?
Eric: Got it. I’m going to leave that in the resource for the audience and that sounds like something I want to pick up to. Wonderful. Sunil, thanks so much for joining us. Everyone, check out Sidecar, it sounds like a brand new Sidecar. I’m definitely going to be checking it out again so, thanks so much.
Sunil: Awesome. Great to talk to you Eric.
Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.