Industry Disruption Brings Shaun Stewart to New Lab

Customer reviews and feedback play a significant role in the business of disruption, with the resulting community that is created becoming a significant driver of growth. The opinion of someone who took a leap of faith to try something new, who then vouches for the product or service has more currency than an advertisement.

Businesses are able to be disruptive when people adopt their products and services. As the new CEO of New Lab, Shaun Stewart is leveraging lessons he learned about communities and adoption curves from his time building businesses within the travel sector and developing autonomous vehicles. As a renaissance man for the new tech world, Stewart is now helping enable a community of startups to work together to build products that innovate and disrupt.

On Tuesday, February 12, 2019, Bloomberg Television’s Scarlet Fu discussed community, disruption, and the startup ecosystem with Stewart as part of the Cornell Tech @ Bloomberg Speaker Series at Bloomberg’s Global Headquarters in New York City.

Stewart grew up working in restaurants and hotels, and he wanted to pursue a career in hospitality and build and open hotels. He moved to Le Bouveret in Switzerland to attend the Institut Hotelier Cesar Ritz, and then, to New York to attend Cornell University, where he studied hotel management.

His career took its first turn when he graduated in 2002, right after 9/11, at a difficult time in the travel space. “A lot of opportunities that I’d been offered got rescinded – people were just pulling back – and so I took a risk and joined Travelscape,” said Stewart.

The startup was one of the first merchant models in the travel e-commerce space where people paid for their vacation up-front, as opposed to booking through a travel agent and paying at the hotel upon checkout. Around the same time, Expedia was spinning out of Microsoft; it combined the merchant model with a content play around the vision for an encyclopedia of travel, of which Travelscape was a part. He joined the supply-side team and went door-to-door trying to convince hotels to use this new online tool to distribute their rooms. His role eventually expanded to build sales teams in international markets.

While at Expedia, he met a friend of a friend who worked at Bessemer Ventures. They were considering an investment in Gilt Travel and wanted feedback on the business model and the challenges associated with building a product to sell distressed inventory. Stewart made a list of 10 items that worked for this business model in the travel sector — and those that didn’t — and showed that list to the founder of Jetsetter. Stewart was hired as VP of Sales & Operations. He became CEO after three years, and one year later, sold the business to TripAdvisor.

From Hotels to Homes

“The name Air Bed and Breakfast was because [Brian Chesky, Joe Gebbia, and Nathan Blecharczyk] blew up an air mattress and sold it online through Craigslist or some equivalent during high demand periods in San Francisco,” said Stewart. “What I knew about it was that it was focused on a younger, more price sensitive generation, and it was built by outsiders [to the travel industry].”

Airbnb became successful because of its unique business model. They helped people monetize their homes by renting out a room or the entire house, and while this became viral in urban areas, it didn’t work in the leisure markets because, as Stewart explained, supply and demand were incredibly different.

The leisure market was more professionally based. These rentals had to comply with existing laws regarding taxes, operations, and zoning – the Airbnb model had the wrong restrictions, terms, payments, and commission model, as well as an inability to distribute inventory.

Airbnb’s model didn’t work on the demand side either. The reality was that people accessed the leisure market for vacations because they wanted to spend time bonding as a family or friendship unit — and not seeing the world with strangers — which was the culture Airbnb was looking to create. A very different model to supply aggregation was necessary to succeed.

From Homes to Autonomous Cars

After spending two years building out the leisure market for Airbnb, Stewart left to join Google X’s self-driving car project and to help the company commercialize autonomous vehicles through an on-demand taxi service: Project Chauffeur, now known as Waymo. At the time, the technology was still early in the R&D stage, but was starting to progress towards commercial launches and viability.

A common thread between Airbnb and Waymo is that personal safety is critical to the adoption and growth of these autonomous vehicles, as well as to Airbnb’s business. Being in a driverless car and a stranger’s home can seem risky for first-time users, but after being exposed to a real-life situation – and having a very positive experience – one’s perspective changes completely.

People who used Airbnb for the first time would often continue using the service on future trips because the accommodations were larger and in better locations. Similarly, driverless cars obeyed traffic laws and behaved in a comforting, familiar way. Stewart regularly noted that passengers trying them out for the first time would start typing on their smartphones after just a few minutes into their ride. Creating a passionate community of users who embraced these products is what helped drive their growth.

Coming Home to New Lab

New Lab is located in the Brooklyn Navy Yard, a place once used to build some of the biggest warships, including the USS Missouri and USS Arizona – two enormous battleships. It is now home to more than 600 entrepreneurs working to develop frontier technology, scale their companies, and innovate and disrupt.

“These people need everything in their corner you can provide them, and what New Lab does is provide a range of resources and access that gives them a leg up and an increased likelihood of succeeding,” said Stewart. “I think what’s interesting is, there’s $6 or $7 million worth of prototyping equipment at New Lab – so 3D printers, lathes, CNC mills, woodshops, and metal shops – and when I first went there, I thought this is why people are here.”

While these resources help startups build their prototypes, the community is the real draw. There’s an instant network that anyone can access when they need assistance across so many different fields.

“They’re all so different that they don’t all sign NDAs,” said Stewart. “They prototype robots and let them roam around. They don’t cover the windows of their offices with black paper. It’s a completely open environment because it’s trusted and there’s a variety of fields and sectors so that people don’t feel there is a competitor next door.”

New Lab’s open environment of collaboration has led to a number of startups successfully combining their technologies, including one where solar panel startup Voltaic literally powered the keycode access for Jump bikes (which was later acquired by Uber).

Along with the community, these startups benefit from New Lab’s assets that include government and corporate programs that enable pilot opportunities.

“They’ve helped people test their sensors in downtown Brooklyn, they’ve negotiated pilots in Jeju Island in Korea for some of the member companies, and they don’t do this for gain,” said Stewart. “They do it so that the New Lab brand continues to grow as a place you are more likely to succeed if you build your company in this environment and ecosystem than anywhere else.”

Only about 15% of the companies that apply are accepted. To date, there are more than 130 companies at New Lab that have a product, and potentially a prototype or pilot. They may have raised a seed round or have angel investors, but they are not required to take an investment or accept a certain valuation from New Lab.

“What we look at is certainly how you fit into the community – are you competitive? Is it a technology or a sector of focus that would be additive to what we’re doing?” said Stewart. “We want it to be good for the world.”

You can watch the entire discussion below: