Financing Your Next Startup As An Uber Driver

Have a cool startup idea, and want to get it funded? You could go the traditional route, blindly sending your pitch deck to every VC in Silicon Valley. Or you could follow investors on Twitter, hoping that through casual badinage you can win the hearts (and eventually, the wallets) of your startup's money source. 

Or maybe, just maybe, you should drive for Uber.

UberX Lowers The Bar

Yes, Uber, the popular mobile app that connects drivers with people who need a lift. Founded in 2009 as UberCab, Uber has become the go-to app for hailing a sedan in markets like San Francisco, New York City and London. And while historically Uber operators have been commercial sedan drivers filling time between jobs their employer provides them, Uber's introduction of UberX in July 2012 has opened the service to cars and drivers of all kinds.

This means that not only will you be picked up in a Toyota Prius or Volkswagen Jetta instead of a Lincoln Town Car, but you're also going to have a non-commercially licensed driver.

A Taxi Driver Who Really Isn't

Like the driver who took me from Palo Alto to Mountain View for a lunch meeting last week.

When I met my driver outside my office, I immediately said to him, "You don't look like a taxi driver." If anything, he looked like a typical Silicon Valley entrepreneur. 

Which is exactly what he is.

As we drove, we started talking about why he drives for UberX. It turns out that he's killing time while he waits for his non-compete to expire. Yes, really. (#onlyinSiliconValley) His partner didn't love him sitting around the house watching TV, so he tried to think of ways to productively use his time while scouting out his next startup opportunity.

Enter Uber.

On a good day, my driver grosses as much as $1,100, and nets perhaps $700 to $800. That's real money. Uber pays its UberX drivers 85% of the stated fare (According to Uber driver Peter Ashlock, it's less for Uber's full sedan service, in part because Uber also gives a cut to the limo companies that employ the drivers). So for my UberX driver, he took home ~$22 of the $26 I paid Uber. That adds up.

Driving For The Contacts, Not The Money

It's not really about the money for this UberX driver, though. As he related to me, he has managed to gather a wealth of contacts through his time as an UberX driver, including co-founders and investors for his next startup. While not everyone that gets in an Uber is a VC or executive, there's a hefty concentration of the very people my driver, or you, might want to connect with for a startup. 

And while most people probably prefer to network through other channels, my driver was definitely not typical. Even as a driver, I suspect he's well above-average. For example, rather than just sit at the airport and wait, he told me he checks flight schedules to see when flights from other Uber markets (Boston, NYC, etc.) are due to land. He figures there will be a higher concentration of Uber customers on those flights, and he's generally right.

He also scopes out ideal pick-up spots like the Four Seasons in Palo Alto: the hotel serves affluent customers and is within walking distance of virtually nothing, making it a near-requirement that its clients leave the hotel by rental car or taxi. He chided other drivers who finish a drop-off, turn off their cars and just wait for the next ride, putting little thought into optimizing their position to be close to the next likely passenger.

Funding Your Startup With Uber

In other words, my driver wasn't a typical Uber driver. Most probably don't make $1,100 per day, because most likely put less thought into how they approach their job. Similarly, most Uber drivers are unlikely to fund their next startup through passengers they meet while driving.

But this isn't for lack of opportunity. Uber is a great way to reach a captive, highly qualified audience. Rather than dream about your next startup, perhaps you should start driving.

Or doing something else outside the box. My UberX driver is indicative, perhaps, of what should be a trend away from traditional venture funding and the traditional routes thereto. If an UberX driver can get funding and co-founders while driving around Silicon Valley, so can you. Or maybe you have another idea. Just don't keep hiking up and down Sand Hill Road.

UPDATE: The original post incorrectly stated that Uber gets "roughly half" of an UberX driver's fare. That was inaccurate and conflated the pay received by an UberX driver, who contracts directly with Uber, and an Uber driver, whose employer (a limo company) contracts with Uber.

Image courtesy of Shutterstock.