RILEY Newman, a former head of data science at Airbnb, set out in mid-2017 to raise a venture capital fund that would invest in a multitude of tech trends.
But he quickly realised that potential investors were not interested in that kind of fund. Instead, all they wanted to hear about were his former Airbnb colleagues and whether they might start their own companies.
"It was, 'Yeah, all that stuff is fine, but Airbnb, right?'" Mr Newman, 36, said. "Airbnb was where we had a competitive edge on the market." So he and his partners at Wave Capital adjusted their pitch: They said they were creating a fund to invest specifically in Airbnb employees who were planning to leave the company to become entrepreneurs. It worked. He and his partners quickly secured US$55 million and now are preparing to make a flood of investments after the US$31 billion home rental startup goes public sometime in the next year and employees cash out their shares.
"We know they are planning to start companies," Mr Newman said of Airbnb employees, adding that in the last week alone, he had heard from four who left to pursue their entrepreneurial dreams.
Everyone else in Silicon Valley seems to know it, too. As Lyft, Pinterest, Postmates, Slack and Uber - among some of this decade's most prominent startups - get ready to list on the stock market, investors are preparing to write cheques to a new generation of companies created by their workers.
It's part of Silicon Valley's often-incestuous circle of life. The startup world projects a meritocratic image, but in reality, it is a small, tight-knit club where success typically hinges on whom you know.
In this model, employees of tech startups frequently leave the companies once they have been enriched by their firms' initial public offerings. Then networks of alumni from these companies - called mafias - support their peers' new businesses with hiring, advice and money.
The cycle goes back to at least the 1950s, when Fairchild Semiconductor, one of Silicon Valley's earliest successes, was started by a group of disgruntled Shockley Semiconductor employees called the Traitorous Eight.
Decades later, early employees of PayPal, known as the PayPal Mafia, are more famous for their successes after leaving the company - many of which they collaborated on with one another - than for their initial breakthrough in digital payments. The group includes Elon Musk and Peter Thiel, as well as the creators of YouTube, Yelp and LinkedIn.
Silicon Valley is now anticipating new mafias connected to Uber, Airbnb and their brethren after the companies go public.
"It's going to trigger a massive explosion in entrepreneurship," said Howard Lindzon, an entrepreneur in Phoenix who invests in five to 10 venture capital funds a year. He said he particularly wanted to put money into funds with connections to the Uber and Airbnb networks.
Venture capital firms are already hiring former employees from Uber and other IPO-ready companies to get a foothold in their networks. Some of the fiercest recruiting has been of Uber executives, with venture firms including Sequoia Capital, GV, Javelin Venture Partners and Redpoint Ventures all adding former employees from the ride-hailing firm to their ranks.
One recruit was Andrew Chen, who worked at Uber as head of rider growth and left the company last year. He has since joined the venture firm Andreessen Horowitz as a general partner and hosts quarterly dinners for Uber alumni turned founders.
Mr Chen, 36, estimates that two dozen venture-backed startups have come out of Uber so far. Andreessen Horowitz has recently invested in two, which have not been announced.
"Those are the prime startup investing opportunities," he said.
The problem is that venture firms might create a brain drain from the likes of Airbnb and Uber if they keep luring the companies' workers to start new companies. Talent, after all, is a precious commodity in Silicon Valley.
Jonathan Golden, who worked as a director of product at Airbnb and who joined the venture firm NEA last year, said Airbnb was fine with his plans to invest in former employees. He said he had discussed his intentions with Airbnb's chief executive Brian Chesky before he left the company in 2017.
"I'm not actively trying to have people leave Airbnb," Mr Golden said. "But if someone is going to leave, I want to be supportive of them, and Brian is supportive of them as well." Nick Papas, an Airbnb spokesman, said: "We're always sad when talented people move on, but it's been great to watch so many of our former colleagues succeed." Uber declined to comment.
In February 2018, Dan Hill and Michelle Rittenhouse, long-time Airbnb employees, felt the entrepreneurial itch and quit. They had a general idea to start a company that would make it easier for people to donate to charity, but not much else.
The details didn't matter to Wave Capital, which wanted to invest in them. "These are people we know can build great products," Mr Newman said. "They know us, they trust us. We know them, we trust them." Within a few weeks of leaving Airbnb, Mr Hill and Ms Rittenhouse had secured US$2 million - including from Wave Capital - for Alma, their newly formed company focused on philanthropy.
Entrepreneurs typically make dozens of pitches over several months to raise financing. But Mr Hill said the relatively quick fundraising for his startup was not a surprise.
"We already had a strong relationship," he said. "So when we pitched the idea for Alma and our initial plans, it was an easier conversation."
How will Silicon Valley's new mafias be different from those in the past?
The Uber and Airbnb networks are part of a generation that pioneered the on-demand "gig economy" and everything that came with it. That means many fought real-world policy issues in cities, as opposed to primarily dealing with the digital world.
"There are just not that many places to find people who have seen that kind of scale," said Ryan Graves, Uber's former senior vice-president of global operations and a member of the company's board.
Each city that Uber, Airbnb, Lyft or Postmates expanded into created a new set of operational, regulatory and business challenges. Regulators balked. Rival business operators resisted. Neighbours protested. And people abused the platforms, over and over.
Uber managers ran each city like a mini-startup. "If you were the general manager of San Francisco or of Atlanta, you were the CEO of your region," Mr Chen said.
"It led to a really entrepreneurial approach from everyone." NYTIMES