A History of Silicon Valley

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These are excerpts from Piero Scaruffi's book
"A History of Silicon Valley"

(Copyright © 2016 Piero Scaruffi)

The Selfies (2011-16)

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The Sharing Economy

The "gift economy", about sharing content for free, rapidly evolved in something more lucrative and also based on the contribution of the masses: the "sharing economy", in which people make available to others under-utilized assets such as rooms and cars.

Airbnb, founded in 2008 in San Francisco by two alumni of the Rhode Island School of Design, Brian Chesky and Joe Gebbia, and by Nathan Blecharczyk, was the most famous of the bunch, offering rooms or houses for short stays in dozens of cities (600,000 rooms in 160 countries by mid 2014).

The pioneer of smartphone-based taxi services was RideCharge, launched in 2006 in Alexandria (Virginia) by George Arison (born in the Soviet Union as Irakly Areshidze), Tom Depasquale and Toby Russell, an on-demand taxi service (using professional taxi drivers) for BlackBerry-equipped corporate travelers, and available as an Apple Store's app named Taxi Magic since the end of 2008 (and later acquired by Verifone and renamed Curb). The pioneers of ride-sharing were instead Logan Green and John Zimmer, who in 2007 debuted a computerized ride-sharing service at Cornell University called Zimride. Uber, the company that was going to revolutionize urban transportation in the next few years was born out of those two ideas: use the smartphone to get a car, and use computers to arrange shared rides. Garrett Camp had founded in 2002 in Canada the recommendation engine StumbleUpon and in 2006 had relocated it to San Francisco. Travis Kalanick had been co-founder in 1998 of Scour in Los Angeles, one of the early peer-to-peer file-sharing applications sued by the entertainment industry, and then of another peer-to-peer platform, Red Swoosh (sold to Akamai in 2007). In 2009 Kalanick and Camp designed a smartphone app similar to Zimride, UberCab (later simply Uber), which initially was only for limo drivers and business passengers. The Uber app was enabled by the iPhone 3G, released in July 2008, which included an accelerometer (an electronic instrument that can measure changes in velocity) and an A-GPS feature. The founders of ride-sharing services (and of many other "sharing economy" startups) understood that the combination of GPS and mapping software (Google Maps) enabled smartphone users to navigate the world. In the case of ride-sharing startups, the users were either drivers or riders, and they were connected by that magical combination. The Uber app went live in July 2010 in San Francisco, followed by New York and Chicago. In December 2011 it launched in Paris and began its global expansion. Uber's exponential growth began with the introduction in April 2013 of a true low-cost ride-sharing option, UberX. Uber would become the poster-child of the smartphone age. Almost every service was rapidly being ported to the smartphone, but Uber belonged to the generation of software that was "mobile native" (and, in fact, only available on smartphones). Meanwhile, relocating to San Francisco, in 2012 Green and Zimmer replaced Zimride with a smartphone application called Lyft that allowed anybody to offer and order car rides. Compared with Uber, Lyft was first at democratizing the concept of ride-sharing, targeting the huge audience of ordinary people driving ordinary cars and of ordinary people going to ordinary places. In fact, the typical Lyft passenger was a social animal, ready to strike a conversation with the driver, at the time when the typical Uber passenger was still viewing the driver as the traditional chauffeur. But soon the difference between Uber and Lyft became a pure abstraction. Uber and Lyft had come up with the winning business model: encourage drivers with spare time to become independent-contractors (the supply) and match their location and availability with the location and needs of passengers (the demand) through a smartphone app equipped with GPS technology. That business model would be imitated by countless startups in various fields. For example, Sunil Paul launched SideCar, also in 2012 in San Francisco, with the same business model as Uber and Lyft; and in 2010 Lynn Breedlove conceived the nonprofit ride-sharing service Homobiles to serve the "queer" community of San Francisco. By 2014 Lyft had spread to over 30 cities, and Uber to more than 230 cities in 50 countries. By 2014, when it was registering one million rides per day, Uber was valued $40 billion. In 2015 it hired most of Carnegie Mellon University's lab for self-driving cars. By the end of 2017 it was valued more than $120 billion and it was recording 15 million rides per day by three million drivers in 78 countries of the world (notably absent was China, where Uber-copycat Didi ruled unopposed). By the end of 2018, Uber had 3.9 million drivers around the world and was the most valued "unicorn" in the world .

Startups like Airbnb and Uber turned a very physical business into a purely software business. For example, Uber combined Amazon's cloud service, Google's Maps service, Twilio's messaging service, SendGrip's email service and Braintrees' payment service and didn't own a single car, but by 2015 it became the biggest taxi company in the world. Similarly, Airbnb was the largest "hotel" chain in the world but didn't own a single hotel.

SnapGoods, founded in 2010 in New York by Ron Williams and John Goodwin, facilitated lending and borrowing household items from cameras to toasters.

The sharing economy was born during the Great Recession, when people were busy saving every penny they could, and the whole idea was ironically reminiscent of the way things worked in the old days in communist countries like the Soviet Union, when you simply flagged down cars going in your direction and offered money to be taken there.

A demonstration of how powerful the users could be in shaping a service came in 2013 when Google decided to acquire an Israeli company to replace its Google Maps service on smartphones. Freemap, founded in 2006 by Ehud Shabtai (renamed Linqmap in 2008 when Uri Levine joined and later renamed Waze), was a community-based traffic and navigator application for smartphones that was able to provide live information about road and traffic conditions thanks to feedback from its users. Waze was inferring traffic conditions from the speed of its users, and it allowed users to report accidents and even police cars. Google Maps, the most popular mapping software of all times, was a static service, that relied on hired hands to doublecheck the accuracy of its maps. Waze was a highly dynamic service, capable of adapting to continuously changing circumstances. The difference was that Waze was driven by the users, whereas Maps was driven by a Google team.

Jack Conte (a musician, disc-jockey and filmmaker) and Sam Yarn founded Patreon in 2013 in San Francisco, a crowd-funding platform for artists and musicians where people could support their favorite "content creator". By the end of 2014 patrons were contributing $1 million per month to Patreon's artists.

click here for the other sections of the chapter "The Selfies (2011-16)"
(Copyright © 2016 Piero Scaruffi)

Table of Contents | Timeline of Silicon Valley | A photographic tour | History pages | Editor | Correspondence