We have our next guest ready to join us live in the TVPlam. We have Travis Kalanick. He is the CEO of Cloud Kitchens. Welcome to the show, Travis. Great to meet you.
Appreciate you coming on down to our studio, our humble boat. Great to meet you.
I'm just down the street.
Yeah, that's right. That's right. Yeah. We actually started the show in downtown LA at the Jonathan Club on Figueroa and so I think we were even closer then. Still not far. How are things going? How's life?
The building doesn't stop. I mean, I don't know how much you guys... I've just been in hiding. I've been doing this. I run a company called City Storage Systems, which was basically about the future of food, a conglomerate operating in about 30 countries. The whole idea was, can you get a meal that's prepared and delivered to you so efficient that it starts to approach the cost of going to the grocery store? Because if you do, you do to the kitchen what Uber did to the car. So I've been doing that since 2018.
Yeah. And after just the intensity of Uber in terms of being in the public sphere, dealing with a hundred headlines every day, deciding what you do or the actions you take based on what the New York Times is going to write.
I was like, I would like to... That's a tough way to run a business. It is very tough. So, I was just like, I got to wake up every day and sort of just get to work and build. So, I went under the radar.
Did you think of this as like stealth mode? Is that the right term?
We've been in stealth mode for eight years. And that's like till today. Employees were not allowed to put the name of the company on their LinkedIn. We have thousands of employees.
Okay. So today what happened was is like for my company and I just got out of all hands and then came right here is we went out of stealth. Now City Storage Systems is like a hilarious name. It's like the most generic name that no one will ever know. Business Corporation of America. It was on purpose. And it worked.
It was like we had two choices when we launched.
My sort of normal instinct was, remember it was only seven, eight months after I left Uber when I started this. And the mission is infrastructure for better food. We have hardcore real estate assets. We buy the assets. We do construction. We sell restaurant tours on a delivery-only location. I have a software stack that's like... I've got a robotics company. I have a marketplace for corporate lunch. Like there's a ton of stuff going on.
Oh yeah, that's right. That's right. Of course. Yeah, it's great.
Okay. So, I forgot what I was saying. So it's just a very different business from Uber. Some people would leave that company and be like, I'm going to start the exact same thing. I got the playbook. This is what the Uber guys when I left were a little bit worried about. We're talking about 2017, 18. They're paranoid. So my instinct was okay, I left, it's seven months later, I'm going to name my company Super. You leave a company called Uber, you call it Super. I'm like, call it Gigas. You go from Uber to Super. You're like no, that cannot be a thing. And so I did the opposite. Full underground, full stealth. Put the toothpaste back in the tube, the genie back in the bottle and build. Literally thousands of employees and it's like a vacuum of information, full lockdown. It's been great building. But today we sort of came out and we renamed the company. We renamed what we do. We call it Adams.
But we started a new company at the same time. And so let's just say like physical AI and robotics, action and movement through the physical world. Of course, on the food side, we already have all the things I just talked about. But think of it as... I'm trying to get the mission like we're... I'm so riled up. Yeah, it's so fresh. But basically it's... yeah. So I'll leave it at that. Let's get, we can get rolling here. I'm like super caffeinated on four hours of sleep.
I love it. I love it. How much harder... in many ways I think building in stealth for so long made a lot of things easier, right? You're not running your business based on headlines or thinking about what headlines are going to come. What are the ways in which it made it harder? I imagine there's a lot of talent out there that wants to go work at the hot company that's in the news constantly. I'm sure you got the benefits of people maybe opting out of that path and saying, 'Hey, I just want to come in with you and build and I don't care about the hype and I don't need every recruiter hitting me up constantly because of whatever's on my LinkedIn.' But what were the kind of key challenges and why was now the right time to come out and start to get loud again?
So like first, I mean 100%. So imagine every recruiter has to be outbound. Every salesperson has to be outbound. There's no inbound. That's where it starts. You get good at your craft when that's what you have to do. Like I believe we have some of the best recruiters in the world because of it and one of the best recruiting systems. Now they leverage. Okay, you're working with Travis, former founder of Uber. Like there's leverage there. But then you have a name like City Storage Systems and it's like, so do you guys just have these boxes sitting in parking lots? Like what is this? And that's sort of like the reason it's different now is because look, number one, lots of time since the Uber situation, from having to live that life. But two is the world is different. Like in 2016, 2017 the world of let's call it business press was just beginning to say business is politics but people didn't know it. They're like if New York Times says something everybody just treated it as the gospel like it just must be true. And if they say something bad it must be true. I believe everything I read on the internet as an example. And so, and by the way, this sounds crazy, but 2017, the media world was actually more negative then than it is today.
And I think partly because of even shows like this, right? It's like, let's bring some optimism to the party. Can we get excited about what the future looks like and what's being built?
And that's the difference between today and then. And so, when you go 95% of all press is negative. You're like, why engage? When the world is used to business being politics, let's just say, and if I thought of my favorite politician and say, what does the internet say that's bad about them? And it's like an insane amount. What does the internet say that's untrue about them? And it's a ton of stuff. And you go, well, that's how they're going to think about our company, too. That's how it's going to play. We're now desensitized to that stuff. And now we can get back to optimism and building and not be so worried about, you know, 95% of the media just being negative.
Sure. Yeah. I mean, this was pre the whole trend of going direct, right? Like Lulu, I'm sure you met at some point, basically coached a generation of CEOs on you know you just can't if you want to have any control over how people perceive you, you need to tell... you have to counteract with like a story not like a statement and the boilerplate official statement just doesn't entertain people as well as a full read, a long read. And it's also guys like Elon owns Twitter now, X, right? Pre-post is like a massive difference in the mix of sort of ideas that can get out there. And again, you're allowed to be optimistic about things where maybe before everything had to be negative and sort of...
You talked about the initial idea of naming the next company Super. That would have in many ways, I'm sure, turned into a basically a spite company. Where you're just in this case like kind of taking the high road was I'm just going to be quiet. I'm going to do the years and years and years and years of just like chewing glass, building up this infrastructure, getting to scale, getting to thousands of employees, getting to operating globally before you even poke your head up again, which I think is to any of your former critics, that's to me that's taking the high road basically.
Yeah. And what you get when you create a culture around that is you then build a culture of builders. You build a culture of people that want to build and do not need to be famous when they do it. Which basically means emotional intelligence. Now there it's a human nature. I want to be acknowledged for the things that I do. I'd like the things I build to be seen and I'd like somebody to know that I did it. And so this is when you cut against sort of the core of human nature. And we sort of went all the way. And so we have a very high EQ culture, but like it is like you have to go the extra mile to recruit, the extra mile in sales, etc. Again, the world's different. LFG.
Are the laws of physics of the different businesses slightly different? I'm just thinking about your career arc with like Red Swoosh is enterprise communications. You're in a very particular industry. Uber is a consumer company. Now you're working on something that looks... you probably run into like real estate developers. It's like a different industry, different community. Has there been adjustments and what's different? What's the same? Like what can you just be like a good business operator and power through and what do you actually have to learn about the new industry?
Look, I think probably the biggest one is when you go from consumer to... because I have a... I mean when you go from consumer to B2B, the number one mega challenge that you must master is called LTV to CAC. Yes. You could make that argument on consumer. But when you have a sales funnel that starts with I'm going to talk to customers and I have to make LTV to CAC work versus like my LTV to CAC is the app store. It's a whole different ballgame. And LTV to CAC with a sales machine, especially if you go small business, this is like life in hard mode. And talk to anybody who's crushed it on SMB. Like those guys are special individuals who've made that happen because life in the SMB B2B world is no joke.
Yeah. So talk about moats. I feel like Uber's the greatest example of network effects and runaway scale. What did moats look like at Red Swoosh? What were you thinking then? And then what does it look like now?
So like nobody knows what Red Swoosh is. That's all good. So guys, I started a company in 2001 that was let's call it BitTorrent meets Akamai. Yeah. Sold before BitTorrent existed. Yeah. Okay. That's crazy. You click on a link and you can pull from other PCs that already have that file or that video stream, but it looks like the internet. That's basically what it was. The first four years, no salary. Wow. Yeah. Had some famous investors. Mark Cuban was on the board of Red Swoosh. So before that, Scour was Oitz and Ron Burkle. That was the company before that. Oh. Oh, I bet. I was confusing too. Yeah. Anyways, so there's a network effect there once you get the CDN up and running. That company wasn't meant to be and I willed it into being and I sold it to Akamai for like I think it was like 19 million bucks and probably to this day is still the happiest day of my life. Okay. It was crazy. I cleared 3 million and I was like praise the Lord.
Okay. So then Uber very obvious moats and scale economies. Like what does this look like with Adams? What does this look like in both the food delivery kitchen model, real estate model, but then also where we're going in autonomous robotics.
Look, if you look at where moats are and really you're looking for network effects in different places, right? So right now I have these facilities. There's 30 restaurants in each of them. Picnic is like a perfect example of this, right? You order from your office, looks like Uber Eats or DoorDash. You get a hundred options except all the meals are coming out of my facilities. There's one courier that brings a hundred orders at a time, but it's on demand and it's personalized for you. And we've got enough facilities near here that you can basically get anything. And so who's going to... who can play ball? Yeah. Like you got to have the real estate. That's a freaking moat. You have the network effect now of like what if I sell every floor on every tower meaning every office floor is on this and I in all of these floors that means that one courier can bring a hundred orders. By the way I'll have five couriers going to a single office with 500 orders hitting every shelf and you get notified when it arrives. How if you even took one floor you would be like sad because your economics are going to be screwed because you don't have the efficiency or the operational depth to make it work. Yeah. So there's network effects of a building. There's network effects on a facility with kitchens in it. But then there's the moat of like we own real estate. Yeah. Okay. So like if you want to compete with us, go buy a hundred million, billions of dollars of real estate in every major city in the world and then we're going to go head-to-head.
Yeah. Talk about capital.
Yeah. The other... I don't know exactly what bucket this falls in, but just the moat of you would have to be absolutely insane to compete. But people were like this is how I remember the Uber versus Lyft battle was Uber was doing so well and then all of a sudden a whole bunch of VCs were like I want a piece of that and I didn't get Uber so I'm funding the...
But I'm saying in the context of Cloud Kitchens and City Storage like even though people generally figured out what you were up to, right? You did have to share some little things along the way or you buy this company or...
You got to go to a website and say what is a delivery-only location, what the hell is that. And so somebody had to know. But even then we're like we're going to say the cross streets of the facility not the actual address like these are the little moves you do to be stealth, you know.
In when I look at the new site and how everything's positioned, a lot of it feels insulated from all the changes and progress that we're seeing in AI and in many ways accelerated because you'll get a lot of the benefits of AI progress and progress in robotics but you're moving physical atoms around the world and in an era where you know you can generate any piece of software fairly quickly, this feels like you've been kind of planning for this type of technology progress for...
Sounds great, dude. I love that. I love it. Yeah, dude. This big all in the plan. Let's go, dude. Look, I think it's always been the plan. A meal that's efficient, you know, so efficient, it starts to approach the cost of going to the grocery store. A meal that's prepared and delivered to you. That's real. You must do automated production of food. You must do automated delivery of the meal. I call that autonomous burritos, which is why I'm moving into this making this move on atoms, which is okay. We're still doing the food thing, but then we're adding mining and transport.
Okay. Mining being like more efficient mines for Earth's industries or on transport, it's just robot wheelbase for robots.
Okay. Because if you're going to do specialized robots, not humanoids, but specialized robots, they need to have wheels. Okay? Right? I like to say like if you saw the Beijing humanoid Olympics or whatever and the half marathon and you're watching a humanoid cruising. I'm like, dude, could you imagine if that thing had wheels? That'd be crazy. So like humanoids have their place, but there's a lot of room for specialized robots that do things in an efficient sort of industrial scale kind of way, which is sort of where we play.
I want to go back to capital wars, lessons from capital wars, when these play out because we're seeing this AI... Were you the OG because or when this capital war kicked off, were you looking to lessons from the '90s?
I mean, look, you can always say there was the guy before. Okay. Like, you know, Rockefeller was the OG and then before him was it like the Medici? I don't know. But I was the goat for a period of time and now I'm a baby goat. Yeah. And that's okay. And so then one day the baby goat will grow up again. That's fine. It's going to be fine.
I just mean like this idea of like you have a network effect, it's growing and then you see a bunch of venture capitalists started throwing money at like the second place and there's this debate over catching up and like how do you what moats do you retreat to in that moment? Like I feel like that's the lesson from the Uber story that gets missed amid all the random drama is that there's actually like a very interesting financial war happening and it played out very well for you and I'm wondering like what level of confidence you had. What did you do strategically to set yourself up for success?
It's a super interesting thing because of course all the AI guys are playing that game right now which is the ability to attract capital. The capital wars becomes a strategic weapon. Capital becomes a strategic weapon, which means you must be the best at getting capital in order to win. And we realized that early on in the Uber days, of course, that's happening times 10 in the sort of let's call it the digital AI wars. And look, the last round of funding that I did at Uber, we were like a 70 billion, you know, I don't know, it was like a 60-70 billion pre. Let's see that. Yeah, when that used to be a thing. Now like, oh, that's small stuff. But we had four rooms. This was how we'd fundraised. We had four rooms in our New York office. Okay. Booked for a week. Mhm. With an hour and a half slot on each. Yeah. So like for 12 hours in a day. Four rooms going in parallel. I was in...
Are you bouncing between it?
No, I'm in the $250 million and over club. Okay. That's one room. And it goes all... there's all these other rooms. The fourth room is like $25 million checks. Okay. Okay. There's a guy who works for a guy who works for a guy who works for me who's doing that room. Yeah. Okay. And then but we're oversubscribed. So we started putting multiple investors in the same room. We're like dude we're just out of slots, dude. Like let's go. But what it means is it's about the system. It's about the system for sort of acquiring that capital at scale and super efficiently. And what it means is that storytelling that we did, anybody in my team could tell that story. Let's say on the strategic finance team could tell that story and make it happen. And that was a big part. It was the story. That's just like of course is like if I'm pitching it people like holy [__] let's go. Yeah. Then there is making it scalable so that there are 10 different people in a company that can pitch it at any given time. Yeah. And that's when you take it all the way. And then there's like even auction dynamics of how you would do it. We would basically once they said they were interested, we would then give them a piece of paper. It was like digital, but it was like you need to fill out this table which is this valuation, how much money you want to put in, this valuation, how much money, this much money, this valuation, how much money. And then we would aggregate the demand.
Yes. But like done way better because you don't... respect of the bankers. But like... Yeah. I was in charge of pricing. Sure. Sure. And so and then you're like, 'Oh, we're trying to clear $5 billion that takes us to this price.' We would tell all these guys, 'Hey, your price isn't big enough because you don't make it under the curve.' Yep. And then they would move their price. Yep. And then that would change the curve and you would do it again.
Do it again. Makes sense. Were you bringing new investors to private markets at that time? I feel like if I go back to Facebook, I think they IPOed around 50 billion. You're doing a $70 billion raise. There's a lot of different... It's a completely different shape of investor. What were those conversations like?
Look, I like... in some ways I have to give some credit. This was an era where this was happening. You had like the Fidelities of the world and other guys that are moving in. Yeah. I have to give credit to Drew at Dropbox. Oh, he was like the first guy in that game. Yeah. And you know, Drew and I meet up and we, you know, and I'm like, flex. I'm like, dude...
You're like, this is our little safe space.
Like Chesky at Airbnb. That was the crew that was doing it in the 2010s and sort of pushing the boundaries of what it meant to be like people didn't even know what private equity... what is a private... what is private equity. Yeah. Now we're just like yeah private equity, that's VC, it's the same thing. But back then private equity is like I do leverage buyouts. And so you're bringing private equity, mutual funds, those guys into the game in a way that didn't exist before. Now it's just old hat.
Have you coached any of the AI founders? I was going to ask the exact same thing. Culturally, like that crew that you just described, most of them have been on the show. It feels very different aesthetically than what we're dealing with today.
Um, yeah, but I'm sure Chesky's pumping up Sam. I love these guys. I love them all. That's so interesting. Look, the times when I get hit up are usually when the [__] is about to hit the fan or it's actually hitting the fan. They're like, 'Dude, somebody needs to call Travis immediately. He'll know what to do.' So my phone's like one of the crazy wildest things going down or like here because that's when I usually get the call and I'm so underground. Yeah. Yeah. That's what happens. But like I should, you know, I should give a, you know, I know these guys. I should give them a call and be like, 'Dude, we should let's cook.' I still think we probably did things better than anybody that some of those things probably are still better than anybody even today, but obviously the check size much bigger.
