Transitioning between different types of professional roles can be challenging — new expectations arise, and fresh ways of seeing the world are required to be successful. A few weeks ago, I interviewed Anjul Bhambhri of Adobe about how she transitioned from engineering into product, where she now leads the company’s customer experience cloud.
This week, I chatted with Toby Russell, the co-CEO of online used car marketplace Shift, which generated $135 million in revenue last year and has raised $293 million in venture capital according to Crunchbase. The company is targeting an IPO in 2021.
Online used car startup Shift adds another $40M, snags COO in road to IPO
While we have written a lot about Shift, we have written far less about Russell, whose career spans a model he calls “learn, earn, and serve.” He received a PhD in international relations at Oxford, switched to founding a startup, then served in the Obama Energy Department, before heading over to Capital One to lead digital and eventually rejoining his friend George Arison and Shift’s co-founder as co-CEO.
Across these roles, Russell has had to adapt to very different environments, and we chatted about those transitions, his lessons learned, and his approach to leadership.
The following interview has been edited and condensed for clarity
Russell: Danny, great to meet you. I noticed you’ve got a ton of international work as well, like a Fulbright over in Korea and even looked at the whole doctorate route as well. A kindred spirit in that one!
Crichton: Absolutely. But you, you finished your PhD.
Russell: Yeah, but I think that probably means you’re more practical than I am. I slogged it out, and you just drove right to the real world man.
Crichton: Haha perhaps. But bringing that up, let’s start by talking about how you survive in very different environments and thrive in them?
Russell: I believe in a life of learning, earning, and serving, Why? I think that it’s important to be able to develop your understanding of things, to be thoughtful, humble and grow. And then it’s also important to be able to earn, to provide for your family. But then periodically and frequently ideally, I’ll go back and serve and give back to the community.
Crichton: I’d love to start at the beginning. You began your career studying Russian affairs — what originally attracted you to that part of the world?
Russell: So it starts even earlier. I was born in the Midwest and I grew up in the southwest on the Mexican border. So I was a blonde-haired white kid growing up in basically what had up until, you know, a few decades ago, been Mexico in El Paso, Texas. And so as a white kid on the border, you’re very much a minority and you very much feel like the outsider. And so my journey has always been trying to look at things from the outside and learn them. I grew up speaking Spanish and then I thought, ‘Well, why don’t I try a different part of the country and move to the East Coast for school?’ And that’s how I ended up at Middlebury College.
As it turned out, my closest friend from high school and then my best friend and co-founder now here at Shift were both native Russian speakers and they were like, ‘Hey, you should try out Russian.’ So I was like, cool, that’s a non-Romance language. It’s challenging. It’ll be interesting and I want to continually learn, how do other people think?
Learning languages is a great way to do that because it’s not about saying the same things with different words, it’s about learning a different mental framework and then being able to restructure how you see the world through that lens. And so I began studying Russian and just kept running with it.
Crichton: What drew you to Oxford then?
Russell: I went to the UK because I didn’t want to necessarily be perceived as an American researcher looking at weapons proliferation in Russia. That just screams intelligence agent, and I didn’t want any of that. And so I basically went and was based out of the UK and got to go back and forth to Moscow, learning the organizational decision-making as well as the cultural and mental models that led to major decisions around arming other countries and changing the landscape of global politics.
Crichton: That’s great. Do you still use that sort of knowledge today with Shift?
Russell: Believe it or not, there actually is a pretty tight link there that you wouldn’t expect. It’s that classic liberal arts soft-skill of saying, let me learn, let me teach and then help others do based not on assuming we know the answer, but working back from the needs and the thinking of others, taking very much the outsiders view as it were.
Understanding how organizations move and breathe as well as understanding why people do and why people want and need the things that they need, is the core of what it takes to actually drive a product company.
Crichton: I’m skipping ahead a little bit, but you eventually started Taxi Magic (a pre-Uber Uber if you will). How did that come together?
Russell: Well, I was working at Boston Consulting Group, and jokingly, I kind of got tired of coming up with great ideas for other people’s businesses. And so I said, ‘Hey, I want to go do a thing. I’ll come up with a novel insight and actually execute on it.’ And so that’s where Taxi Magic came in.
George Arison and I and three other folks jumped in saying, ‘Hey, we believe that this mobile computing transformation is gonna have a huge impact. And in particular, it’s going to allow for a transformation of the way people think about how they get around cities and how they interact with ground travel.’ And so we had this crazy vision in 2006, 2007 that people would push buttons on a mobile phone, and they would be able to request a taxi to pick them up and then pay for that taxi electronically over the Internet with their mobile device.
Candidly, everybody told us we were crazy. We were, in fact, the first to do on-demand ground travel through an electronically requested mobile device. When the iPhone came out, we were like, ‘Whoa, it’s like it was built for the kind of thing that we’re trying to do.’ And so we launched Taxi Magic on that thing and it took off.
Taxi Magic: Hail A Cab From Your iPhone At The Push Of A Button
Crichton: How did things go from there?
Russell: Our problem was not believing that a regulated industry couldn’t change. Our problem was not pushing it far enough. So we saw Uber. Uber and Lyft came along one day. In fact, Bill Gurley came and did a deep dive on Taxi Magic, the stuff we were doing, put in a term sheet. For a bunch of reasons, our board didn’t accept that term sheet, and he went on to fund Uber having picked up a bunch of knowledge from us.
I think that we were a little early and we couldn’t assume that things like mobile phones would be ubiquitous. Whereas by the time Uber came on, literally just a mere two years later, Uber, Lyft, Sidecar — they began to be able to assume that everybody would have a mobile phone and they could create a proprietary dispatch system. We should have done that, but we didn’t. We were actually working through the existing taxi companies, the existing infrastructure.
Crichton: How did Taxi Magic end, and how did you end up at the Department of Energy?
Russell: So this is part of the learn, earn, serve. Although Taxi Magic didn’t become Uber, it did treat me well materially in the end there. And so I did have an earning event, as we eventually sold that company to VeriFone for the payments technology and it’s still operating today under the brand of Curb.
Back in 2008, the U.S. economy was in free fall, the largest downturn since the Great Depression and a new president had recently been elected, a guy named Barack Obama. And so in 2009, I had an opportunity to go over and spend time trying to turn around the economy. I know that sounds audacious and crazy, but if you’re living in the DC area and an inspiring president has just come into office and you have the opportunity to go make a difference in an economy that is in free fall, you say, ‘Well, I’m willing to spend time on that thing and do anything I can.’
I ended up running a $12 billion investment program over the course of like 18 months where we had to go from something like 30 to 150 staff across six different geographies, so it was just a tremendous startup-style movement of being able to do a whole lot really fast in an apparatus that wasn’t designed to do it. They said it’s got to be by a certain date because the nature of stimulus is that if it ain’t fast, it doesn’t count.
Crichton: And then you found yourself at Capital One?
Russell: So I was looking at a few different options then and I actually went and interviewed with a bunch of companies and came down to three. This is going to sound random, but Google; Groupon, which was really growing like crazy at the time; and Capital One Financial, which was on the cusp of trying to make a big transformation in the way they do things.
I was looking at it and I was going back and forth on it and this is going to be controversial and an unhappy thing to say, but I did not feel like as a non-engineer Google was set up to grow me as a leader. And so I went in and I talked to Capital One and they did actually have formal and informal leadership development. The founder of that company Richard Fairbank is just incredibly passionate about growing leaders, including business leaders, you know, folks who wouldn’t necessarily come in with an engineering degree. So the liberal arts type cats as well. And so I ended up doing that.
Crichton: How did your experience eventually connect with Shift?
Russell: Along the way, George and I had always been talking about starting another company and we were thinking about it ever since Taxi Magic and we’d been noodling, doing brainstorm sessions around ‘Hey what would be an interesting company to do next?’ And we would come up with three and narrowed it down to a couple.
And we really came up with this idea that each of us had had this bad experience in the auto buying and financing space. George had a bunch of trouble getting a lease that he was trying to get financed and he’s like, this thing is just broken. Like I go to a bank and the bank tells me, ‘I’m sorry I can’t finance your car. You have to go to a dealer.’ He’s like, ‘But I already have the car. I don’t need to go to a dealer. You’re a bank, right? You do loans, don’t you?’ And they basically said no. And it was just totally counterintuitive. We’re like, ‘I don’t get this. Why is vehicle exchange so difficult?’
And so we built Shift doing that, allowing people to exchange cars, peer-to-peer as the core concept, and we try to use technology and a platform to continue reducing or eliminating the middleman as it were. It’s a sort of a major innovation in both marketplace and fintech.
Crichton: When you think about the difference between Taxi Magic, and all these experiences in between, now you’re on the next startup, what were some of the lessons learned in between that informed how you built this company versus your previous one?
Russell: So one, user is critical and you have to constantly work back from user need. We got too wedded at Taxi Magic saying, ‘Hey, we’re not going to break laws and we’re going to stick with the existing infrastructure.’ Whereas Uber and those guys were like, ‘You know what, we’re just going to work back to the user need. We don’t care if we’re, you know, even if we’re frankly breaking the local law, we’re going to meet the users’ needs.’ I’m not saying that you should be a law breaker, but I’m saying you should not assume the existing infrastructure is the only way to do it.
People loved the app but periodically, when we would book a car, they pushed the buttons and they would say, ‘Hey, this is a thing that I want to use but the taxi wouldn’t show up.’ And that was kind of a deal-breaker for the user experience, and they would jokingly say ‘no taxi, no magic.’ It completely destroyed the experience. But they didn’t blame the taxi companies, they blamed us, until we began saying, ‘Wow, you’ve got to be able to control your user experience.’ That was a big one.
Second, I actually learned the importance of not just pure-play software. In the next generation of tech companies, I think we’re going to see a world whereby a lot more of what’s done is not just bits and bytes. It’s going to be bringing software to interact with the real world. It is a world where you need leaders that can integrate people, process and technology development in a way that creates a harmonized culture. A lot of what I learned at Energy and Capital One was there’s a real human and operational side to getting technology to have a material impact in the real world.
Crichton: Any other thoughts on your experiences and how they have shaped your approach as a leader?
Russell: If you don’t identify high performers and invest in them disproportionately and grow them as leaders in the private sector, you’re dying. If you do that in the federal government, you’re fired. It’s like, ‘Whoa, wow.’ I mean talk about just exactly the opposite philosophy on talent development.
Now there’s good reason in both cases for that. You know, there’s nepotism and real challenges in the government system that has caused that to reach what I would argue are bad talent conclusions. But the big lesson at Capital One was talent, it’s all about finding great people, articulating a strong vision and then as a leader, being a servant leader, creating an environment for those great people to be great.
I think too many people think that executive leadership is about telling people what to do. Executive leadership is asking people what to do, forming a vision that’s compelling and then getting great people and unlocking what they can do. Getting them connecting together and just running after the stuff that they’re passionate about. Learn, earn and serve.
Comment