Acquired - Uber CEO Dara Khosrowshahi

0:01So I came up here. We scheduled this time to record. What are we talking about today? We haven't talked about Uber in a while. Mmm, that's right. A lot has happened since we did the IPO episode. It's been, what, four years? That is crazy. All right. Yeah, let's do it. I ordered some food. I hope that's okay. Oh, yeah. Maybe we can eat while we... Oh, dear. Is this on order of reeds? Oh, yeah, that's me.

0:32Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert Um, David Rosenthal. And we are your hosts. Today's episode is an interview with Uber CEO, Dara Kazushahi, where he joins us from the acquired home studio in Seattle. And it's been a while since we checked in on Uber. They've gone through quite the transformation since our 2019 episode on IPO day. In the past 12 months, they've done over $30 billion in revenue up from just 10 billion two years ago. And that's not TMV. That's revenue. That is revenue.

1:36And they have two businesses, as many of you know, that complement each other nicely in eats and mobility, and they've divested anything hardware international or that's too far in the future or speculative. They're even doing something we couldn't imagine at IPO time, which is profitability. Now, it's very modest at this point, but we wouldn't have dreamed Uber could even get to break even back when they burned. David, what was it? Three billion dollars the year before the IPO. Yeah, I think it was the most capital burns before an IPO by any company in history up to that point. Well, today's discussion, of course, is partly about Uber, as we're alluding to here. But as David and I evolve the interview format, we're putting more of a focus on Dara as a person and sharing some of his craziest stories from throughout his whole career. So this is a candid conversation that dies into moments like buying Expedia right when night 11 happened.

2:29how he first met Barry Diller at Allen & Company, and what the financial mechanics are actually like of replacing Uber's entire shareholder base, or close to it anyway, almost in its entirety, since joining the company. Yeah, not to mention the Uber CEO recruitment process, which I don't think Dara's talked about anywhere else before. No, I don't think so either.

2:49Well, if you are not already in the Slack, you totally should join so many smart folks commenting on episodes and bringing new information after we record that we didn't find in the research because many of you work in the fields that were actually covering on episodes. So, you can join at acquired.fm-slack. Listen to our other episodes on our second show, ACQ2, like a great episode we just did with Jake Saper from Emergence on AI Motes in B2B SAS.

3:18and without further ado, this show is not investment advice. Dave and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only on to our conversation with Dara. Cheers. Dara. Cheers. Welcome to acquired. Thank you very much. Happy to be here. Appreciate you swinging by the home studio on your way home from Expedia board meeting. Is that right? Yes. Have that go.

3:45I can't tell you. That's the right answer. That was a good board. Actually, Expedia is a good place to start. For folks who don't know about your pre-Uber background, you were the CEO of Expedia from 2004 to 2017, is that right? 13 years. 13 years. It was a long time. And when you became the CEO, your previous role was you were at IAC with Barry Diller, and you guys had bought a controlling interest.

4:14In Expedia, you took it private. It was at Microsoft with Rich Barton. He spun it out. It went public. You made a bid to take it private. I think over two tranches, there was a controlling interest and then a full buyout. Yeah. We bought Microsoft's stake. Microsoft decided it's non-core. We bought Microsoft's controlling stake. Expedia was a public company, but we had a control position. Then at some point we decided, hey, let's bring in the whole thing because we loved what Rich and Team were building.

4:44So, this being acquired and us wanting to dive into a story, there's one moment in particular that was pretty insane. The term sheet was signed for IAC to buy Expedia before September 11th, like earlier in 2001. The deal hadn't closed yet. I think there was some kind of material adverse change clause that allowed- That clause, they called it, yes. You were allowed to pull out of the deal. Yes, yes. I mean, what could be more material than- September 11th for travel. But you guys didn't like take us through Yeah, we didn't and we knew we had the option to get out. Yeah, and at the time You know, one of the values of an option is time value, right? You don't want to exercise an option before the last moment that you can and Rich called I think Barry at the time and he said listen September 11th happened

5:40business obviously has fallen off cliff We think it'll come back, but I don't know And he said the place is pretty unstable now because no one knows whether the deal's gonna go through or not go through there's this mac laws So if you want to get out like it's fine, which is very confident. He's a great entrepreneur. It's fine if you want to get out But just like let us know you know if you which which way you want to go God, he's good. And he's really good. Which really, he just, to your point about time value, he just wants you to make a decision and say, oh, it'll be fine. I can't imagine that if you're the company, everyone's like, what's happening, right? There's a future. Companies thrive on certainty, on kind of rhythm, et cetera. And it was a tough macro position to be in. And then the micro position of what's going to happen next video. So I can imagine what he was going through.

6:31So we got together as a team, the IEC team, and all of us were kind of talking. And, you know, there's no clear decision to be made there, but Barry respected what Rich asked for. And I remember they were like, having all these debates. And I think it was Barry who said it. He said, you know, if there isn't travel, there's a life. So, like, you know, if we're like, look to each other, we're like, let's go for this. Let's do it.

6:59and right after that meeting Barry called, Rich and said, game on. No changes to deal at all, like exactly as- No changes to the deal. It's like, we're gonna do this, but Barry, his passion is travel, right? And I think he was right, which is just when you're in the center of the storm, it looks like, oh my god, life is gonna be over, but things revert to norm. I mean, you look at like the pandemic and everyone's looking for all these long-term changes and everything reverts to norm.

7:26And I think that was the wisdom at the time, although when you're in the middle of craziness, it sure doesn't feel calm. But after that, we said we're in. It got rich stability that he wanted. And in hindsight, it was a genius decision. Did you ever think you would then live through another moment like that over the last couple years? No, I like this one to be finally the last one. Never want to go through something like that again. But it made it made us stronger as a company. Ultimately, good for your brother past couple of years.

7:54Yeah, I think the pandemic was incredibly painful in that sitting together as a team, 85% of your mobility volume, which was the profit driver of the company falls off a cliff. And other CEOs, you know, they lost a ton of business, but most of these businesses were profitable. We were losing two and a half billion dollars and then it just got way worse. So it was a very tough situation to be in and we had to cut.

8:24a lot of overhead, we had to cut out businesses that we thought were core to the business. You really had to bet on what's core, what's non-core. But it was a huge accelerator as it relates to our eats delivery business. And I think that discipline and hindsight has been great. But I wouldn't want that as that shouldn't have been the kind of feedback. Before I let David bring us to today already, let's go back down memory lane. So how did you meet Barry Diller?

8:54So I met Barry Diller when I was an analyst at Allen & Company, which was my first job out of college. It's an investment bank in New York City, specializes in the media and entertainment sector now, much more tech. They've made the pretty cool transition, and I was a lowly analyst. And I got assigned to this deal where Barry Diller, who at the time was running QVC he was a COQC which was home shopping and he had run Paramount and Fox studios before that correct Param first and then he ran Fox for Murdoch and Then he decided he wanted to be his own boss and at some point John Malone I think had control of QVC and Barry got the job to runs QVC and have control because he wanted to be his own boss and

9:45who can blame for that god to be in the room with those two characters as they're negotiating it was golden for a kid like me and so at the time some the rest stone who was running viacom had come to an agreement to buy paramount pictures which was Barry's old home and Barry thought that he was getting a steal so he decided to go after paramount in a hostile tender offer to come in as kind of a third party bitter and it was a huge move because paramount was bigger than QVC, you know, so it was like the minnow swallowing the whale. Swallowing the whale. Yeah, it's like a cap city's cap city's exactly exactly and I was the analyst on the deal and

10:34It was a whole kind of bidding process, you know, Barry would bid and then Redstone would bid up, etc., there was multiple steps. There was a big court case that was pretty important in terms of did Barry have the right to come in and actually bid on this thing and break apart a negotiated deal. The person who I worked for, the VP, etc., she got sick.

11:02And so I had to kind of step up and work with Barry directly like making these pictures to Barry. You're still a couple years out of college at this point? I was like two, three years out of the college. And at some point, Barry's like, you know, there are all these complicated numbers that you put together. And Barry wanted to know like, who is the person running these numbers? And he's like, I want to talk to the person running the numbers. Herbert Allen comes and he's like, print out your model. Barry wants to talk.

11:32So I got to print out my whole LBO model, bidding model, et cetera. What are you feeling at this point? Like holy shit. But, you know, the only question in my mind was, when am I gonna get fired, right? It's like, this is a disaster and analysis is not supposed to talk to a CEO. But like in hindsight, I've seen this patterning with Barry, which is he wants to get the real stuff. He doesn't want a version, an edited version of reality.

12:01because then it's just an edited version. He wants to go to the source and he wants to know like, they're these numbers and I'm making at the time one of the business decisions of my professional life based on like these pieces of paper who's responsible for this and I want them to explain it to me. So for me it was like you know crazy luck but it was also it's part of Barry's process which is get the unvarnished.

12:28truth because that helps them make better decisions. But then I met him and I remember thinking, hey, if there's ever a person that I want to work with, I want to work for that person. Do you think there was something about you and the way you presented that made her balance believe that you would be customer ready and you could go and speak to one of the biggest media moguls of our time?

12:55You know, Herb was a big believer in betting on people and not hierarchies, et cetera. I don't know, honestly. I remember the advice that he gave me is bet on people, not in companies. And that was a patterning that he had through his old career. He was very loyal, found a good person, and then would bet on that person. And Barry's the same, which is like, he'll throw a young person off the deep end, and you'll either sink or you swim. He's selective in who he throws off, you know, what deep end, et cetera.

13:24but both of them were willing to give opportunity outside of like regular scope or regular process, et cetera. And it shows. You know, they build incredible loyalty in terms of the people who know them. How did you find your way to Allen in company? I know I'm just like pulling at threads, going backwards here a bit. I was, it was a very considered decision, which was I studied engineering at school and I actually had an engineering management job lined up at a paint factory.

13:53And then I fell in love with a commodity trader in New York City. And at the time, I'm like, I need a job in New York City. What kind of job can I get? And it was investment banking. My brother worked there. Still works there, right? Still works there. So I got the job and...

14:09Chase the woman of my dreams and broke up with her six months later, but you know, I got a job at Alamed Company for a good career. Well, I have a written there, I think you know, because you'd be running a paint factory otherwise. That's a very good point. I owe it all to her. But based on observing you and your history and everyone else in your family, it would become like a paint factory that would then like buy all the other paint factories that expand up and down the stack and then figure out how to add like 15 other businesses and it would become this like beautiful conglomeration of something. I don't know. You know, you could be right or I could have just gotten totally lucky by falling into Allen and Company. I really do think it was just things came together and everyone's career who's successful, it's a combination of luck and opportunity and taking advantage of the opportunity and I think I just got lucky. So that's like a nice thing to say. There are a lot of other people that could have lucked their way into an Allen and Company job and then not turned it into

15:06An incredible performance with one of the most important people, where your model needs to hold weight, which is very diller in that exact crucible moment in time. What do you say to young people when they sort of ask you this question about how much does luck have to do with it and how should I be the most prepared and how can I seize opportunities when they come up? I think I always tell people that the most common mistake that I see in young people is that they overplan their career. And I go.

15:33I want to do extra. I want to be vice president. I want to make so much money by a certain time. And when you overplan your career, you know, there's this human bias, which is to look for signal that agrees with the plan that you have and ignore it. Everything else that doesn't agree with it. So my advice for young people is like, don't overplan. You never know what opportunities are going to come up. I plan to stay at Allen and company my whole life. It was my place. My brother wound up being there.

16:02But being open to possibilities being open to opportunities and then when you get that opportunity Going all in, you know, like it's just don't hedge if you're gonna be in something go all in and Do what's required of you and then like 50% more like blow people away And then you know tomorrow maybe something else comes up and you'll get there, but like while you're in you go all in But at the same time like keep your eyes open because you never know All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, LaGora, the agentic operating system that is redefining how the world's best legal teams work.

16:45Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. LaGura took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm.

17:11for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Lugora's bed here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

17:40And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early LaGora numbers essentially speak for themselves when they have a head-to-head pilot with their top competitor they win 70% of the time LaGora now has over a hundred thousand lawyers on the platform from 1200 legal teams in 50 countries and crazily they went from one million to a hundred million in ARR in about 18 months truly insane numbers and that is the real test

18:33Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at logora.com slash acquired and just tell them that Ben and David sent you. All right. So we're going to catch back up to that Expedia era. 13 years, you have a Pretty wild competition with booking.com and I think you learn a lot of lessons from watching booking, just crush it. Top line, profit margins, rate of expansion, everything about it. Booking built a hell of a company. Incredible. When you're on the Expedia side of things and then you get a fresh start at Uber, how do you take those lessons with you and what did you learn? God, I learned so much. Booking was an execution machine and

19:32Their focus when we talked about focus was hotels hotels hotels and Expedia was much more it started with air Right and hotels was to some extent secondary and so I think one of the lessons is like hey go after the larger market and if you're a marketplace business Go after fragmentation of supply which is if you think about hotels there's so many more hotels in the world than there are airlines so I think they focused completely in the right area and built a global business first. And just were an absolute execution machine. The other area was that Expedia was probably more focused on building demand, kind of consumer demand, brand, et cetera. Booking was more supply. And especially the states, nobody knew what booking was. Totally. Totally. But for them, it was about building up the hotel supply. And as you built up the hotel supply, every hotel became

20:30another piece of data that you could market through Google or MetaSearch and if you have a hundred hotels in a market and you spend that to 200 hotels in a market that market is also going to convert better so not only do you build kind of a new segment of demand but then if there's a search for you know hotel and niece niece becomes better product and convert more if it can convert more you can get more traffic from Google etc. They play that optimization game like no one else. And for me, the biggest lesson as I came to Uber was Uber's marketplace business. Very, very fragmented supply base, right? It's 5.6 million drivers and couriers who are earning on our platform. And a few million restaurants? Yeah, close to a million restaurants. And for us, our growth is also supply-led. So if you think about post pandemic and one of the reasons why

21:30I think generally we're doing really well and gain a bunch of categories, share versus lift coming out of the pandemic was because we really focused on bringing those drivers back to the platform, building our service, et cetera, and it was a supply-led way of building the business, which definitely was learning that I took from Booking.com. With Booking, you can build a market of, say, a geography for hotels and then use that to build a vertical. You can do the same thing at Uber.

21:59in a way that your competitors on both sides of the business can't, right? Because you can cross market. Exactly. Rides and eats. Exactly. And especially in the US there's a much more crossover between couriers who deliver food and then drivers who draw people. There's a much larger crossover and we can actually use eats almost as a recruitment tool. In that moment when someone says, I am interested in earning money.

22:28you know, gig money on demand, et cetera, with all the flexibility, freedom, et cetera, the faster you can get that person earning money, the higher the conversion rate. And because of eats, you don't need to get your car inspected. You know, there's a lot of steps, additional steps, background check, et cetera, that's required for driving. Those steps don't necessarily need to be completed to deliver food. You can get people into the food ecosystem they can start earning on the Uber platform, and then you can upsell them into additional opportunities, driving people, shopping, etc. It's a structural recruitment advantage we have in terms of building up supply, and as you build up the supply, the liquidity in the market case gets better, you know, surge comes down, pricing gets better, ETA gets better, your ability to price gets better, and the demand shows up. So...

23:24Everything you just said, that's always been like the story. It seems like in the past few years though, especially relative to your competitors, it's actually become more of a reality. And I'm curious maybe you talked about booking being execution machines. What is the Uber execution machine looked like since the pandemic to maybe make that more of a reality? Well, I think that there's always a delay between inputs and outputs.

23:54right, which is you you can start changing the inputs in terms of how you build a system, etc. It takes a while for the outputs to become emergent. We did take a big step post pandemic once it's got the size to merge all the teams together, the technical teams together, the marketplace teams together, a single earner team, etc. When East was small, it needed its own dedicated teams because if you had one team doing rides and eats like all the attention we'll go to rides. Once we combined the teams, that allowed one technical team to really focus on the demand side eats is the recipient. So the ride's business has most of the audience. And generally, we move more people from rides to eats. So it's an almost free customer acquisition tool for eats. It's your largest customer acquisition.

24:52channel for eats, right? Yeah, we get more new customers from a rise than we do from Google, Meta, Instagram, you know, all of these other channels come by. It's pretty nice to own your idea. It's crazy at a quarter of the cost. So it's like, it's a proprietary channel and it's cheaper. And then I'm surprised. Do you do like charge internally for? Totally. Totally. It's an even advertising business, right? So it's an ad unit like any other. Exactly. Exactly. And so, and We have to start charging each other for plugs on it. We can tell you a little bit about internal pricing methods. You know, all of it sounds great, but the fact is that whatever pixel that you put on the Rides app to promote eats is taking something away from the Rides app, right? So there's a bunch of experimentation that had to be done, which is what are the right surfaces? What are the right messages?

25:49how do you target it, how often do you target it, etc. So there's a bunch of machinery that you have to build to do this stuff successfully and for the benefit that eats gets to be significantly larger than the detriment that rides gets and to not get in the way of the rides experience. You know, like, you don't want to screw up that experience. So to the question of like, why is it happening now is one It looks great on paper but then to build the machinery to actually do it effectively takes time. And then, you know, if Eats has this new customer acquisition source every year, new customers for Eats account for less than 10% of the business of the overall business because it's a big repeat business. So in year one, hey, is it nice? Yeah, it's nice. But it doesn't really show up to investors, external investors.

26:43But then once, you know, it's the saying compounding as the seventh wonder of the world, the eighth wonder of the world, what's happening now is the compounding is happening, right? So we've had like three years of the machinery working. So one year may not be noticeable, two years may not be noticeable, but three, four years, what we're doing is essentially our margins are growing faster than our competition, because we have a bunch of proprietary traffic that's coming over. And then on the right side, There's proprietary supply coming over from Eats again compounding. Is it still that supply acquisition cost is bigger than demand acquisition cost for you guys? Yes. Yes. I mean it is we are a supply led business at this point. Probably two years ago we could have added 25% more drivers and careers into the platform. They would all be like super busy instantly.

27:35Right now our supply generally is growing faster than demand because it's capturing up to demand and the average driver who's on the platform is Working more because the experience is better earnings levels are are pretty are really good So at this point probably supplies still trailing demand by you know 5% or so But the market place is now getting to a point where it's balanced, but it's that compounding that really starts working I was reading through the most recent earnings and you have a chart where on average over the last five years or so drivers make more money per hour. If we entered some economic environment where a whole bunch of people were out of work and they wanted to become Uber drivers, but that would make it so that the average earnings across the whole platform would plunge because you have a whole ton of new drivers coming on. Would you guys sort of gate it and be like hey, we want to make sure that we don't sort of flood the supply side of the marketplace.

28:31No. Because one of our core philosophies is this is an open platform. And if your background check comes in okay, et cetera, then you can have access to earnings opportunities. That's a core belief for us. The economics take care of themselves, right? When you look at mid-cycle, long-cycle, if earnings come down on the platform, then it becomes a less attractive platform to drivers and they will do something else. There is this counter-cyclicality about our marketplace.

29:01which is during really good times, it becomes harder for us to recruit drivers. So the cost of supply goes up. So while revenue and growth bookings are growing and unit volumes are strong, our supply base becomes more expensive. During softer economic times, you get more drivers coming into the platform. ETAs come down, prices come down, the price becomes cheaper. So actually our unit volumes Accelerates. So if you look like our Q1 unit volumes, their Group 24% versus 19% and Q4. So we accelerated, you know, trip growth, which is not something that you see at our scale, but it's some of this stuff working out. Right. So it's sort of the invisible hand of the market theory that sort of self-regulates this for you. Yes. Not a theory. It happens.

29:49It's just a very cool experiment. Economists like to talk about things in theory, but you actually have one of the largest data sets in human history of people doing work and other people consuming services. If you ask our top economist at Uber, he would say that we actually don't control the price to the consumer. That is actually the spot price for this kind of labor.

30:18the marketplace sets based on the supply of labor coming in and the demand for transportation. And so there's this people say like Uber setting prices, he'd say, we're not setting prices. The marketplace setting is on price. So what do you do then? You have to have some levers at your disposal. You're getting a lot more profitable.

30:37I mean, certainly, I think in 20, whenever we did the IPO episode, Uber had lost like close to $3 billion the year before going public. You said in the episode that it was the most that a company had ever lost before going public in history. Yes. I don't know if that's true, but a tribute to Ben Gilbert at the top. But now we're a magnitude that's true. Depending on what profitability metric you look at, you guys are a break even or slightly positive business and increasingly getting more profitable and looking like a self-sustaining business. So what can you do then if you aren't in the business of deciding what a ride should cost? Well, I think we're in the scale business, right, which is we essentially wire up every form of transportation of whether it's people or things. And, you know, it's increasingly people and then shared taxis, et cetera, right? There are four and a half million taxis in the world.

31:32who would imagine that Uber would be working with taxis, but we're going to wire up every single taxi in the world, right? And then on the curbs and the cabbillesses and the flywheels. And by the way, we work with them, right? A lot of times we will connect through them as intermediaries, again, to wire up these taxis. And then we've gone from food to alcohol to groceries, et cetera. And then we have our freight business as well. So the more we wire up, I'm sorry. You have boats now. We have boats in Mickey Mouse. It's pretty cool. We have boats on the Thames too. If it moves and it carries people on things, we're going to wire it up and make it available on demand. That usually brings in the demand for transportation, et cetera. And then it's like math. You have to do it in a more and more efficient way. I think one of the secret sauces that we have is we have a very large and capable

32:30marketplace team. These are ML engineers who are building out the systems that match price all of this connectivity. And when you're working over an ecosystem of two billion transactions a quarter, the data sets that we have, the experimentation that we can do in terms of what's the most optimal match.

32:58How do you price, et cetera? It's just a bigger database than anyone else. So every year, when I can't speak to our competitors, are matching and pricing, but every year, matching and pricing probably improves by 5% a year. So you improve the marketplace throughput by about 5%, everything else being the same. And that's a free growth. And when it's on top of, you know, called 120, 130 billion dollar run rate, it gets big, and again, it's compounding like every year this machinery gets better. So then, just to make sure I'm understanding right, the reason why, because you talk to anybody and they're like, you're like, oh, what should I ask Dara? And they're like, ask them why Cooper's more expensive than they used to be. And I'm like, because it's a good business now, but actually, I don't think, it sounds like that's not actually the right answer, that the reason rides have gotten more expensive over time is A inflation, but B,

33:53just that there is more demand for those rides than there is supply to serve them. Correct. The cost of labor has gone up. I mean, how much you have to pay for any kind of blue collar job. Everybody's talking about it, right? The bunch of retailers, we're having trouble hiring enough people, restauranters, et cetera. And then it did become more expensive to bring drivers into the Uber ecosystem. Earnings expectations have gone up. And by the way, I think that's a healthy thing, right?

34:22if you kind of step back, you know, the increase in salary and wages for blue collar jobs hasn't kept up with the salary of like tech workers or, you know, capital, et cetera. So I think the catch up is a really healthy catch up. That is the reason why Uber is more expensive now. Now in this environment where we are adding supply faster than demand because it supplies really coming into the marketplace, prices in Uber now, year on year are down.

34:50So I'll give you a bit of your part in San Francisco. This morning was the cheapest it's been in months. So pretty cool. Well, it specifically not thank you. Thank the invisible hand at work. Thank you, Mr. Market. Yes, exactly. How has the complexity of Uber relative to Expedia matched up with your expectations coming in? So there's complexity in terms of all of the stakeholders that you have to think about. And that's like it's a difference between chess and like four dimensional chess. It is like Expedia, travel agency, your bringing demand to your supply base, et cetera. And then you have to think about the travel ecosystem with Uber. Uber is like an incredibly important service to the cities of the world. And also Expedia, you weren't.

35:43Providing the service yes, you are a we were demand market place layer. You're not operating the airplanes exact you're not you know making up the hotel rooms exactly you know the drivers are providing the service right but it's we're much more responsible and to end but you know you're responsible for your customers we have a very very important responsibility to driver and career community these over 5 million people who are making an earning or making kind of a side earnings on Uber, and then the responsibility in terms of regulators and governments, et cetera, that consideration set is just, it's so much bigger. So from that standpoint, it's tough but also really interesting and satisfying in some ways. Were you ready for it? Was I ready for it? Yeah. No. I had no idea. Is this one of those? If you knew you wouldn't have done it, but now you've done it, and so all this value has been created and great.

36:42I'm so glad I did it. It was a friend of mine. I was like, hey, are you having fun? I'm like, no, I'm not having fun. I love it. Your job is too hard. It's not fun, but it's so cool. It's such an interesting space. You really feel like you're having impact. Everyone at Uber, we always talk like, you don't come to Uber for easy. You don't come here for an easy job. It's complicated. It's hardcore.

37:11People worth their asses off, but like you love it. And it's not fun. Like any fun, but people love being at the company. That's something I didn't know. And then the dynamic real-time nature of the marketplace and how we balance the marketplace and the pricing, et cetera, is unique, right? It's Thursday night. There's a Taylor Swift concert, all hands-on deck. We got to figure things out of that operational nature, but how dynamic and fast it is? It does a Uber HQ plan for Taylor concerts ahead of time, was there happening? Yeah, I mean Uber HQ doesn't, but there are office teams on the ground. Yes. And they're the heroes, like they're on the ground, city by city, work their ass off, and they are kind of where the rubber meets the road, so to speak, to use a transportation metaphor.

38:07David asks this interesting question that I want to dig a little bit deeper on, that were you ready for it. What kind of diligence did you get to do on the opportunity when this job came on the market in the national news in a very prominent way? In a very short time or a little bit? When did you first get contacted about it? How did you enter the Uber orbit? So I was reading about the news just like everyone else was, right?

38:36All over the place and it was it was make way everything going on at what led to it you know the battle between Travis and benchmark and all that stuff it was it was fascinating as an observer I never ever ever ever imagine that I would then play a part and a headhunter call me About this role. So not a board member directly a headhunter headhunter and Hannah called me. It was a structure process. I'm like, no way. Like, no thank you. Goodbye. Happy and Seattle. Yeah. 13 years. I got my play center. WinBee. Yeah. I love working for Barry. Like it was, I was good. This is fun. Yeah. And then we, exactly. It was fun. And then I, I was at the Sun Valley Conference, the Allen Company Sun Valley Conference and having drinks with Daniel Eck.

39:34And he's like, all right, you know, did you get the call from a headhunter about the Uber job? I think you'd be perfect for the job. And I didn't know whether a headhunter, why the headhunter called turn out Daniel. I'm like, dude, why would I ever do that? Like, I'm happy. Like, why would I ever jump into that mess? So Daniel gave the headhunter your number. Yes. And I'm like, no way. No way. And he looks, he looks at me like with those like, piercing Scandinavian eyes. It's like, Dara, since when is life about having fun? It's about having impact. It's important. Like, you can do this. And I'd had a couple of drinks and the alcohol was flowing and we were having fun and my wife says, like, yeah, you can do this. I'm like, yeah, I can do this. So the next day, I called the head hunter back and I said, let's talk. And the next step was for me to meet a board member and we had dinner.

40:33And he was very charming. And he kind of started the recruitment. It was pretty cool. And how long between then and when you accepted the job? God. I think it was about two months. It was over the summer. How did he keep it secret? Nobody knew. I told him, I said, listen, upfront, I have a job and it's a great job. So the nanosecond that my name shows up in the news.

41:04I'm out of here. So I just want you to know like the nanosecond that shows up in the news. I'm out of here. But I had to be realistic that it could show up in the news. It's amazing that it didn't. So actually at that point, I called a Barry because I couldn't put there in a situation or myself in a situation like I work with him 13 years, probably 20 years that I see. And then even before as a banker like he and I have an incredible relation. I always like so much to him.

41:34I couldn't take the risk of his seeing it in the press. And, you know, the consequences of that. And the loss of trust. So I called him up as a Barry. And I don't call me about Uber. I'm going to talk to them. And he's like, you're having crazy hung up on me. I told that's also like, oh my god, I'm going to get fired. And nothing dead silence.

42:03You were going to get fired because what was Barry going to do? Like step in and be CEO himself. He wasn't going to. I didn't know. We worked together for a long time. Call him the next day. He said speaking is a chairman of Expedia. It would be a real mistake. But speaking as a friend, I understand why you're interested. I would be too. How can I help? And that's the definition of who he is. You know, because We weren't in the news. It was like we gossip about it. It's like, oh, did you hear like Meg is this? And so it was a fun thing that we gossiped about, but he actually there was a point in time when I had to make a presentation to the Uber Board. This was like my big presentation and I heard that the other candidates were coming in to present as well. So this was a big day. And I told them, I think it was a Saturday or Sunday that I'm coming in making presentation. He said, show me the presentation. It was a PowerPoint. So I showed him.

43:05PowerPoint. And he actually helped me in the PowerPoint. He's like, this is good. This is good. You have to add this page. Uh, so it's just, it shows you the kind of person he has, which is he put friendship in that case over his own business interests. Maybe it was sick of me. I don't know. But it was calculated. Yeah. It just shows you that that is true personal loyalty. Yeah.

43:29And there's an element to it, too, where if he got to collaborate with you wanted, then there was a chance you would stick around on the Expedia board and remain a friend of the company even though you're not in the seat. Yes. And I still am on the board. It's, you know, I love the company. But it's weird being on the board as a former CEO. Like, it's a strange experience. Did you do anything to prepare for that? No. Like, usually my life is like stumbling to something on the figured out. You're also busy, dude. Yeah. But it was, I want to stay on the board. I wanted to help.

43:57You know, the company's going through its own journey now, so hopefully to greatness. Did you consider, I mean, this sort of famously was an issue in the Microsoft transition and has been an issue in the Disney transition. Did you consider, hey, actually maybe it would be better for the company if I didn't serve on the board just to give enough space for new leadership? I talked to Barry about it and it's ultimately up to him, right? And I think he decided that he wanted me there and I try to be helpful, but I think it's absolutely right, which is it Yeah, the job of the new CEO to some extent is to be the CEO and do something different from the old CEO, like that's definitional. And the, you know, a little bit about that. Yeah, exactly. There could be hesitancy at a board meeting, et cetera, because the old person's there, you know, and so that it was, I think on a net net, I trust that Barry's judgment, it does feel weird sometimes because I've moved off, but it's working.

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46:47All right, so back to the reverse diligence question. Yes. What did you get to learn about Uber and, I mean, to directly ask, did you get to talk to Travis? Like, did you get to talk to any of the sort of departing leadership? Well, I talked to Travis a couple times. I talked with Ryan and Garrett, who were the other founders. I talked to a couple of other board members. I did financial diligence, et cetera. And, you know, for me, it was ultimately about the opportunity. It's such an important company.

47:15I was tell people like I like with three things right it's Do you work with people whom you like and you can learn from? Can use an individual make an impact and then is the place or the company that you're at Going to make an impact. I wasn't sure number one, but I was a CEO so I could build my own team And as it turned out there been like great folks there who have stayed who were there before me and then new folks like You know Tony West and Nelson Che that we brought etc so the new teams like combination new and old which is great and definitely As a leadership team we can have an impact on Uber and Uber is a company that it's unique in terms of its impact on the ground on the city so it all checked off and the financials You know, it was still a really young company So the financials for me Yeah less than that probably

48:09It was just about 10 years ago. There you go. You know better than I did. I imagine you had to have been feeling like, God, if we can make this work, the opportunity here is just like... Absolutely. You know, alternations are hard. Tech turnarounds are especially hard, but I think Uber had a global position, a talent pool, a brand that was absolutely exceptional. That was just going through really, really hard time.

48:39It was a verb. Yeah, exactly. And so that was actually the advice that my dad gave me. Like when a company who's a verb asked you to run it, just say yes. I'm like, all right. So sometimes you can overcomplicate things. And it's like, hey, do you want a tick shot? I want a tick shot. It's so funny. You say turnaround. I literally, it never occurred to me that you could construe Uber as that. But it might be the only turnaround in history where it was growing incredibly fast, had 10 billion of revenue had some of the smartest people in the world working at it. Had all this momentum, of course, burning money, catastrophe in the boardroom, catastrophe in the sea suite. So it is a turnaround in that sense. And it was losing a bunch of share to lift, right? Right. So that was, yeah. Delete Uber, yeah. Moments, et cetera. So that was a tough thing, which is you're burning a bunch of cash. And at the same time, you were

49:36losing category position to, you know, what's a tough competitor and a strong brand. Tell me if you agree with this statement. In the US, you no longer really have a formidable competitor in ride sharing, but in food delivery, you have a tremendously formidable competitor. I mean, lift is stronger than people give a credit for. Yeah, it's definitely going through tough time. I mean, the new CEO is, you know, he's like, moving. He's making moves. He's super aggressive.

50:07We'll see where that ends up. I feel way better today than I did five years ago. But I wouldn't count them out. Lift is such a great example of a story. We see over and over again and acquired. It's never over till it's over. It was over. It was over for lift. Yeah. And then it was not over. And now they're having a tough time. We'll see. But DoorDash is a tough competitor. DoorDash is larger than we are in the US. We are focused on keeping share in the US, and then gaining a bunch of share outside the US, and then over a period of time using the structural advantage, you know, one, build profit pools outside the US, use that to attack the US over a period of time, and then use the structural advantage that we talked about in terms of customer acquisition over a period of time to hopefully gain category position against DoorDash, but they're a tough competitor. We respect them.

51:01We don't like it, but we respect that. Is there something in particular that you think they've done? I mean, when I think about them, I think about what you were saying about booking them, just like being an execution machine. I'm curious from your perspective. I think it comes to these company biases, which are pretty important. They made a bet on the suburbs, and they made a bet on selection, restaurant selection. Uber was an urban company.

51:29We operate in the big cities transportation, etc. The business in suburb is much lower. So we want to leverage a customer base that was an urban customer base. So we went after the urban restaurants, etc. And Uber was about cheap and fast. So if you think about it, if what you're trying to do is optimize for speed, let's say delivering 15 or 20 minutes, the radius of restaurants that you can deliver front is smaller. So you make a sacrifice in terms of selection.

51:59in order to optimize for speed. As it turned out, one, the suburbs in terms of food are bigger than- A lot of families in the suburbs. Yeah, big families, et cetera, big demand, et cetera. So we, because of our urban biases, we didn't look at the overall market where like what's our market, how can we leverage our demand, et cetera, that I think in hindsight was a mistake.

52:24And this is like a 2013 to 16 decision that everyone's still sort of living with now. I mean, now we've corrected that. Yeah. But listen, it was, I was running this same playbook 2018, 2019 too. So I don't want to blame it on, oh, this is, you know, it was happening all along. It's just like, usually you focus on the things that you're good at. And we are really good at urban and we're really good at fast and cheap, right? And we now are much more focused about building out selection.

52:53As we built out selection in urban centers, our category position versus door dashes actually, quite constructive, really strong, we are looking to break into the suburbs and there we got some work to do. And the suburbs are a very, very strong position. It's kind of their profit pools, right? And then we're building our profit pools outside and international. And, you know, kind of the battle is happening in the big city. Yeah, it's interesting.

53:22I would imagine the suburbs there are so much more weighted to food delivery than rideshare. Totally, yeah. Totally. Now we are expanding rideshare into the suburbs now and it's a pretty fast-growing part of our business so maybe we'll get there over time but definitely it wasn't early aim of the business. We now specifically are aiming in certain suburbs and you know you have to build out your career base, your restaurant supply, demand, so all of it has to come together, which is difficult and Dordash has done a good job. Yeah. It's not the end of the story though. I'm curious, there's so much of this strategy that if you connect the dots looking backwards and to use the Steve Jobs parlance, it just makes so much sense. This expanded nationally, leveraged the fact that you're sort of the leading global player, generate cash, use it to compete domestically.

54:13Eats, feeds, ride sharing, which feeds, you know, you can sort of use this flywheel. We haven't talked about freight yet, but I'm curious, like, of the three pillars today of ride sharing, Uber Eats, and freight, and divesting everything else, all the autonomy, all of the self-driving cars is autonomy. Well, so you guys divest all the international bikes and scooters. Yeah, planes, right? Yeah, we're a beetle. Elevate, yeah. Elevate, et cetera, yeah.

54:40What of today's strategy was in your pitch to the board when you were joining a CEO and what is an emergent thing that's happened while you're in the seat? So the pitch to the board was really different in that it wasn't about strategy. It was about operations and how you take the business to break even and profitability, etc. Right? It was it was presenting myself as a mature operator and my track record at Expedia.

55:10I think now things have changed, which is we have become much more focused on those on those three segments. And if you look at rides, we have a number of growth bets, which is there's this base business UberX, which is like going to be 50% of our growth. Then about 15% of our growth are international countries where the business model as we had it wasn't legal. So the attitude of time was, well, if our business model is legal, then like, We're not coming in until we're invited in and we took a different tack which is well what business model is legal and let's adjust our business model to the country versus have the country adjusted the business model and once you're in you and you build trust within a country and you build a voice etc maybe then the business model can change over a period to benefit you know drivers couriers etc so like

56:05We're in Germany, we're in Spain, we're in Japan, we're in Korea, we're in Turkey. There's a bunch of countries that we're expanding into, with tweaks of the business funnel to make sure that we're expanding into those countries the right way. And then there's a whole host of new bets that we're making in terms of transportation, taxi, which is huge, low cost, halibals, two wheelers, three wheelers, Uber for business, health transportation, all of these different segments.

56:33That whole kind of the new best portfolio will be 35% of our growth. So if we do it right, we will 50% of our growth will come from these new initiatives that really didn't exist. And then on the each side, obviously it was about food and kind of the general expansion of that business, but it's really about getting into the other categories, getting into grocery, liquor, et cetera. And one of the parts that I'm super excited about is we've always had kind of call it an integrated offering. If you think about eats, there's a marketplace offering. You come to Uber Eats and Eats is bringing a demand. And then there's the fulfillment of that demand, right? My bringing wine here and delivering it, right? That's by the way. That has nothing to do with demand necessarily, but it's a fulfillment. These are two separate businesses that got stapled together. Exactly. So we have now we're separating the tech stack.

57:29Right, so that now we can offer, we can go to merchants to say, if you all marketplace great, but if you want fulfillment, we can offer you fulfillment in a separable way. So for example, Walmart isn't in our marketplace because they're Walmart, they have an incredible brand, et cetera, but they use their fulfillment services. And more and more that our vision is we essentially want the local grocer to out Amazon, like every single local business can deliver same day, which is better the next day. If we can connect that to marketplace, that's great. But that can also be a separate part of our business that can grow and thrive. It's so funny how much of this goes back to the original 10 years ago, 15 years ago, vision for Uber. It just takes so long to realize these things. It does. I mean, it's complex. It looks great on paper, and then real life is a lot more difficult, right? Are there activities that you've thought about where you

58:26you used to need to do something different or counter position the market in order to be successful where now you sort of look around and you're like, actually in this area we're the incumbent. So there's a different strategy that we need to lean into as an incumbent. Our working with taxis was an interesting twist, right? Which is to some extent, they have been definitely the competition or we have been the competition or the challenger to those incumbents.

58:54at some point we became much bigger than taxi. But in the end, if you remove yourself from the emotions, et cetera, we're competing against X or Y, we're in the job of wiring up vehicles and drivers who want to drive people to places. And that includes taxi. They're four and a half million of them. And if you take the hypothesis, which is the days of old where you wave your arm to wave a taxi down, things are changing.

59:23Then it was a move that was obvious. But at the same time, like the beauty of Uber's, when you get into the actual challenges, like for example, we launch Axi, and the way that we match generally, Uber is one to one. So, you hail for an Uber, we will match you, we'll make an offer to a specific driver, driver says yes, driver comes pick you up, et cetera. What we found in taxi markets is that when we wait the one to one match, If we weren't integrated into the taxi meter, and that's something that we will build over a period of time, the taxi might be full, but the acceptance rate of the taxi was much, much lower, and we didn't know why. And if the acceptance rate is lower, you might wait for a long time to get matched, because we're going to send offer, offer, offer, offer, before you get a match. So the team built a technology blast dispatch, which is instead of a one-to-one match, it's a, you know, we'll make a dispatch of 10 different tassies.

1:00:20one of them accepts. This is just like the old taxi dispatch. Totally. There's a pick up 54 Lannards free and someone says, Joey says, yes. I got that one. Yeah, I got that one. So like what's old becomes new, what's new becomes old. But what's been interesting is there's a simple idea, but then building out the tech infrastructure to be able to fit to that particular market becomes a challenge.

1:00:47But also, it's an opportunity, which is now for some of our competitors to copy that. One is it's taking a lot of tuning to actually get that experience to be excellent. There are some markets where we're mixing demand. You know, you might click for an Uber X, a taxi might show up, right? Is that a good thing? Is there a bad thing that improves marketplace liquidity? And things that seem very simple on the surface to actually make the magic happen of pushing a button and a car shows up in five minutes and you get great service.

1:01:17It's actually pretty difficult to build on the ground. It's really cool. That is cool. I have another sort of corporate structure question that I'm curious about. I think you guys between when you took the job and today turned over basically the entire Uber shareholder base. I'm sure there's some people that still hold their shares from those early days.

1:01:41What is that like at the scale of a $70, $80 billion market cap company turning over a shareholder base in its entirety? Very painful. It was the displacement in terms of shareholders. It was tough, right? And there's a certain cohort of shareholders going after hyper growth, et cetera, especially in this marketplace where it's much more about discipline growth, profitable growth, et cetera, that that Change over has been difficult, but we now have a set of shareholders like the Fidelities of the world capital, Morgan Stanley, et cetera, that have the capacity to own a lot of shares way more than they do today. And there's a consistency about it. As we keep delivering, they keep upping their stake, and we're now seeing a stock price that generally is working.

1:02:35But I'll tell you, when we're in the middle of it, it was tough. After the IPO, after the lock up, stayed Travis sold all his shares. And those days, like those were not- That was days. That was probably 15% of the company. I remember it was 15%. It was a lot. There were moments when you remember that stock prices are a function of supply and demand.

1:02:58And when 15% of a company's outstanding shares hit the market all at once or two percent or two percent or what yeah, right like that's I mean that like I think in hindsight I think it was a good move by him because it created separation you want to move on and So I in hindsight I respect what he did and in hindsight like I didn't see it at the time. I was like pissed Right? And we were panicking. Oh my god, Travis is selling. What does that mean? Etc. And you know, there's this everyone wants to create drama around Uber. So it's difficult as the leader to keep the team focused and believing because it's very easy to keep score based on the stock price and the stock price is definitely moving in the wrong direction and Travis, you know, whether you like them or not, you respect them. He's a really smart person. He's a founder of the company. Like that was tough time. But

1:03:53I think we're now in a good place, which is the shareholding is moving from either some of the startup folks or hedge funds to fundamental long-only players who hopefully they'll be shareholders for the next 10 years. One of the things that we heard from many people as we were researching that time period was just the immense degree of the stakes involved for the whole ecosystem. Like this went beyond just the drama in the press. That's one level, right? But, like, the number of university endowments who, through the venture funds that were invested in Uber had large portions of their whole university endowment that were dependent on the private mark of Uber. And, and fund of funds where compensation had already been paid out as if this was a liquid security, but it's not a liquid security. And sovereign nations.

1:04:50That were not dependent, but paid attention to this. Were you aware of that? Did you feel that? Oh, yeah. Obviously, benchmark and Travis were in this power struggle, but there was this heavy feel like when you talk to the benchmark folks, there's this responsibility, which is this was one of the hits of the century. This is a category defining company and investment.

1:05:18and benchmarks had a lot of goons, but this one was a great one. And while I wouldn't say it was a probability, there was a much harder than non-zero possibility that it could all go, it could all go poof. So I think that was a very, very heavy weight on benchmark and some of the other startups, et cetera, which led to...

1:05:45all the events that ultimately led to their bringing in a known outsider. Those are some heavy decisions to make. I was in there, I was at the tail end of all that drama. But then you had to deal with the shareholder-based turnover, which was the unwinding of that expectation. One cool kind of, it wasn't cool at the time, but one really interesting kind of dynamic that that played out when I got in was There's all this stuff happening like it's had to go to London TFL. They revoked our license and they had been a data breach and we had to deal with that and just like it was craziness, right? And at the same time soft bank was looking to invest in the company, right? And this is the vision fund days and You know soft bank the only way they came in was heavy like there was no Let's talk

1:06:43And the issue that we had to deal with was one where benchmark and Travis and the founders, they all had high vote shares. And they both wanted to control the company. And if you sold your shares, they would flip into low-vote. So there was this game of chicken, which is Softbank wanted in. And in typical masa fashion, it was like, hey, if you don't let us invest in you, We're gonna invest in that pink company, right? And it's billions of dollars. And so we had to get soft bank in and they want to invest in Uber because it was a top brand, had top tech, etc. But the same time, none of the shareholders wanted to sell because there's this game of chicken, whoever sold might lose control, etc. And so we had to go around to all of the high vote shareholders and we literally had to like get everyone to agree

1:07:42to blow up the high vote shares. I think it's actually the only time when tech company like they blew up all of the high votes. And so every like we literally had to go shareholder shareholder and like Ben said he would say yes and George like everybody. And if anyone said no, none of it would work. And you know South Bank would go to game to you know Club Pink which would be a disaster. So that was a really interesting kind of This it was like all or none right and in the end we got everyone including Travis benchmark everyone agreed to essentially switch over high vote to low vote and that one it got soft bank in but it stopped the power struggle because then no one could control the company and that was actually real secondary benefit which is then it became like How do we build a great company versus who's gonna get control and who's gonna have more impact that that like we did it for soft bank?

1:08:40But in hindsight, it was a really important move, which is, okay, no more board control. This is no longer going to be control company. Let's go build. This was an $80 billion prisoner's dilemma. Because if anyone said, actually, I'm going to move in my own self-interest here. Actually, long-term, it was a very, very big deal. Everything would have blown up, and you might have had a lift who was getting category position against us.

1:09:09with a $10 billion investment from South Bank. It was actually, I think, 15. And some secondary and some primary. Wow. It would have been, like that would be, maybe it would have been life or death, who the hell knows. And any Uber had raised the most money of any company. And he started up at that point. It was just, it was a very, very high stakes game. And it was, we had a deal person cam who liked it.

1:09:38heroes work like just Talked to everyone and then he would like kind of bring me in as a nice guy and you know sail the nice things and but you know in the end in the end like it worked It was a big move and everybody everybody converted which is pretty awesome Wow, this is like a little bit echoes of you know some to Redstone and your early, you know a good training right like I love the Operating side of the business attack, etc. Like that's a stuff that I love but I have to say that investment banking background that I had helped, like even the concept of, hey, how do we get out of this issue? The way to get out of this control issue is everyone blows up the shares and I'm friends like, wait, like that will work? We're like, yeah, like that could work. Show me about that. No, they're like going after like star and a call people. Wow. It was awesome. It was cool. Humility is great and all but, you know, were you proud of yourself when that went through? No, because the next day there was another crisis. Like it was like,

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1:12:20So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com slash acquired and tell them that Ben and David sent you. I'm very curious about how you operate your Twitter account. On the one extreme, there's like an Elon Musk type, uh, operating a Twitter account, whereas there's only one Elon Musk type operating. There is a type that there are. Yeah. It's, it's a singular point.

1:12:47There is one in, I don't know how many MDOs they have, but one in some 100 million data point of tweeting whatever comes to your mind no matter the consequences. So much so that he bought the company. Yes. And then on the complete other side, there's like Barack Obama and Tim Cook. And I'd say you're like one click in from the Barack Obama Tim Cook. And I'm curious like consider that compliment. Thank you. Like you definitely operate your public persona.

1:13:15with sort of a head of state grace. And I'm curious if you ever think about letting it fly a little bit more. Do you have a full drafts folder? Like, do you ever wish you'd express yourself a little more? The word I really think. Twitter feed. Do you have a burner account? So I tweet mostly myself. There's some stuff that folks say we did this. It's me. I'm gonna have someone running the account. And, you know, I mix it up with some personal stuff and then some business stuff because you want to keep it entertaining. But at the same time, I'm not using Twitter to express myself. I'd rather have a long form of discussion like this. Like this is to me much more interesting. And so Twitter, tweets can be taken out of context, et cetera. So I'm not there to stir the pot. So maybe that's what comes out in terms of my Twitter persona.

1:14:09I'll take a ball mask or a clean ass. Yeah, that's quite a compliment. All right. Next, we're kind of in like a lightning round here. So next random lightning round topic, you were on the board of the New York Times. Yes. What are some of your biggest learnings from being involved with that company? It was definitely my favorite board to be on. It was a really interesting time at the New York Times because they were really becoming a top technical company in terms of being a publisher. It's at a pretty extraordinary learning organization and they want to be as like the tech person and I was coming from Expedia and optimization, all that stuff. And their capacity to learn, like a super traditional company, capacity to learn was pretty awesome. One of the fascinating parts about the company and it's both a superpower or it could be a weakness is total separation of church and state in terms of content and business.

1:15:10Right so like when I asked well What's the cost of certain kinds of content and then how much traffic you know? Can we have the connection between cost the content and traffic? It was like no you cannot ask that question because the content is separate So it's it's just a fascinating organization and the bet that they made on subscriptions was amazing It was not obvious because the advertising business was much bigger at the time but it was it Enterprise bet based on a core identity of the company, which is we believe in quality content. And I thought that was one of the most impressive bets because it was totally non-obvious at the time. Like all every single news organization, et cetera, was advertising, advertising. This is the bus feed days, right? It was quick content, et cetera. But I think that bet that they made in quality was very much a bet on their identity that wasn't

1:16:11backed up by data and certainly wasn't backed up by their financials, but the company went all in and they really benefited. Do you think that could have happened in a company that wasn't family controlled? Did that have something to do with how they could make a bet like that without the data to support it? Yeah. I think they're very sure of that core, the quality of the content that they're building and that allows them to make those kinds of business bets because then they know that the content is going to win. Absolutely. A little bit like Netflix too. It's like quality content. Focus on subscriptions. Now they are going to the advertising, right? So you can't have a forever strategy or be so dogmatic as to not to understand that market's change strategies have to change at the time, but it was absolutely the right bet at the right time. Well, I'm curious how much this was an explicit boardroom conversation. The times also made a very explicit bet on scale.

1:17:09of quality content. You could argue maybe Wall Street Journal, but other than maybe them, maybe, maybe the post, maybe nobody else has aggregated quality content at scale. Globally, you know, people might think of the political stuff or the new stuff, but like the New York Times company covers every vertical, every geography has at least twice as many reporters employed as any other news organization in the world, I think.

1:17:39How much was that a discussion in the boardroom? There was absolutely a view of the management and the board agreed and have to be careful because it was a boardroom and it's confidential, etc., which is if there's going to be a top global brand for quality news, that should be the New York Times. Why would it not be the New York Times? They're very clear out about that and they're quite determined.

1:18:06to achieve that, and I think they're doing a great job. Yeah, and it's interesting, right? Like, the company's called The New York Times. And yeah, it's a global, you know, it really was a, in a way that, you know, in video and with Netflix, I think it was a more, an easier leap to make for news. I think it was a really unique leap that the Times made. Well, it will be interesting to see, which is they, you know, Netflix is building like Korean content that then extends globally.

1:18:35New York Times isn't necessarily doing that, right? It's English language content. That is relevant to the world, but is probably relevant, especially international, to a sub-segment, right? It's higher end consumers, et cetera, who can afford the price. But again, it's been an absolute win ever strategy and it's been a tough business. Yeah. I mean, there's a graveyard in the middle between the independent publisher with a low cost structure and the New York Times, and there's not much in between. The middle is where you go to die. Yeah.

1:19:05More lightning round. I remember hearing in 2013 that it was cool that I was in 2013 because 2014 one year away was going to be the year of self-driving cars. And here in 2023 is next year of the year? How close are we? Oh, that is an unanswerable question. It is because there's the last 2% of use cases, the tail use cases. It's unknowable what it'll take to get.

1:19:33past that last 2%. And there's this pretty interesting philosophical question, which is, how safe does a robot have to be in the US? I think there are 40,000 deaths as a result of car accidents. Let's say that robot cars are 10 times safer. So let's highway accidents are one of the top two or three causes of death in the United States period. Period. So like something 10 times safer. Yeah. If you're 10 times safer.

1:20:03fast forward, 25 years from now. Who knows what I'll be? 4,000 deaths a year. So a little more than 10 a day. And if you have four companies that are responsible for the marketplace, five companies, and they're 10 deaths a day, like a good day is, hey, we only have one fatality. That's a good day. It's just, I can't imagine that. And so there's this, Well, does it have to be 10 times better? I don't think it's good enough. Does it have to be 100 times better? That maybe that's not good enough. So like, from a societal standpoint, of course, if it's 100 times better, we should go forward with it, but that'll mean there are 400 fatalities a year, one every single day. And I don't know how society would deal with that. Society is very, I don't call forgiving, but like they understand humans are human and humans make mistakes.

1:21:00I think you must have experience with this already. We had this unbelievably unfortunate circumstance in Phoenix, and it caused us to completely redesign how we built for safety first, etc. Ultimately, because of the pandemic, we decided to get out of self-driving, which I think is it was a good decision because our core skill set is like building this demand that we're connecting demand to supply in a dynamic way, et cetera. And we now get to work with a bunch of partners and like Waymo's a partner or Aurora's a partner, et cetera. So we get to work with a much larger ecosystem. But I think the question of that last 2% and then what is society ready? What safety will society underwrite to? Those two questions are for me unanswerable. My instinct is,

1:21:55that you will see small scale, continued experiments kind of get bigger over the next five years, but it's going to take a good 10 years for it to be a material part of our network or transportation at large. But that's a guess. I'm curious too. Also, I want to ask, given both your job and you and I both live in San Francisco, something crazy has happened in the past six, eight months that like, it's now happening.

1:22:24In San Francisco like we went from a for 15 years everybody's been like yeah self-driving cars that's happening tomorrow and like yeah, yeah, yeah, yeah, but like Have you ever taken a ride and why I haven't yeah, but like every day you walk down the street like there's cars going by with no driver in the sea It's pretty and it's it's become just so common place that like I don't even think about it anymore, but then friends come visit and they're like whoa What's going on here? Yeah, but still like the the service for certain originations and destinations it works the pickup, you know, again, it's okay for a human driver to double park for a pickup, not okay for a robot. So there's like, again, when you get into the detail, if you look at our rideshare service, for example, if a fulfill rate, which is the percentage of times someone asks for a ride and then there's a car available, if that's less than call it 98%, that's like all hands on deck, like it's a disaster. So like we are available all the time,

1:23:22everywhere, et cetera, and there's a lot of work that goes into that. For any singular, right-chair provider to provide that kind of coverage is going to be really, really difficult, which, while ultimately, we think the better solution is for the Waymos of the World, the Roars of the World, et cetera, mobilize to work with us so that you have this kind of hybrid transition state where you can still have this 98% coverage everywhere, no matter what weather it is, et cetera.

1:23:51But we have this smart kind of switching layer. Sometimes humans should come pick you up, sometimes the robot should come pick you up. But the transition is going to take a while. But it is happening. It's cool. All right. Last lightning round question, and then I have a closing segment. If you could only own Uber Eats or Uber, the transportation business, which one would you rather own? Also, Eats is a transportation business. It's just transportation.

1:24:20You can't ask me that you're like choose between your children like is it George or is it Donnie like come on you can't be serious You could own a business in the 20% take rate or a business with a 30% take rate which one would you rather own? So I will answer someone seriously, which is high take rates are dangerous. So our job as a company is to grow volume as much as we can as fast as we can and make your shareholders happy enough. Minimizing the take rate, which is taking as much of that dollar and giving it to drivers and couriers, like last quarter, gross bookings grew 22% or so, which is really good. The money that drivers and couriers, including tips made on the platform, grew by 30%. Higher. And at the same time, we were able to expand our margins brief.

1:25:22free-casual positive. So, like the design spec that we're building is, how do you torture the organization? Because sometimes it is torture. Like, watch every single nickel on dye being incredibly efficient and everything that you do. Automate everything, get fraud out of the system, et cetera, so that you can actually operate a business at scale at the lowest take rate possible. Like talking about booking.com and one thing that we learned. When I started Expedia, Expedia's take rate was 25%, and bookings take rate was 15.

1:25:51And over like a torturous 13 years, we took Expedia's take rate from 25% to the teens. It was like 17, I think, or so when I left. And those are like pure margin dollars that you're taking out. Like there's no goodness that comes out of it. And so it's just really hard work to do. And as a result, we're pretty hardcore, which is any quarter I can deliver anything on the bottom line.

1:26:21if I can move my take rate up a little bit. But it's too easy, it's too tempting. And so we're very hardcore about like, nah, nah, we gotta keep take rate below. And you gotta do the hard work to be able to take rate below. So I'd say I take the 20% take rate business. Like it's more lasting. The growth can go on for much, much longer. Yep. I asked in a tongue-in-cheek way, but I completely understand that.

1:26:44It's the NZS capital thing. It's the, do you want a business with? Bill Gurley wrote that blog post years ago about the rate too far. Right. Yeah, exactly right. You build more durability by leaving more on the table for your ecosystem partners. Or maybe more accurately, you make yourself too vulnerable if you. Yeah. And it takes just to know the room, right? It's like what's it saying, uh, fat pigs get slaughter, right? Yeah, yeah. Uh, pigs get fat hogs get slaughtered. Yeah, exactly. And like you can't.

1:27:14You don't want to put yourself in that position. It's very tempting. It's very, very easy. There's just temptation, obviously, this quarterly kind of treadmill, et cetera. And there's like you can make someone happy by increasing take rate and throwing it to the bottom line and we really, really culturally try to resist that notion. Cool. Well, the last segment that I have here is giving you the floor. You know, we're at the end of a long form.

1:27:39podcast. So anybody that's still listening appreciates nuance. And so if there's something that you feel is often misunderstood or that you want to say to people that are willing to let a long-form argument soak in, what do you think is misunderstood about the company or you or the industry or this time that we're in right now, really anything you want to talk about? I don't know if it's misunderstood, but it's certainly something that's top of mind for us is that we ultimately the future of the business as it stands now depends on our building of the best platform for earners and it goes to like the take rate, right? If the take rate goes up too much, then we're taking too much of the service, et cetera. And the fact is that I think Uber was guilty of taking earners for granted because when I first came in and for much of the company like we were in a state of oversupply, we had too many drivers

1:28:37it goes to end instead of gating them, et cetera, we just didn't really invest in the driver experience and the career experience the way that we should have. And then the way that we organized the company around the earner experience was pretty standard in terms of a B to C business, right? There's a team, you know, there's a team that runs the Uber app. There's a team that runs the eats app and the team that runs the driver app. And you do all the typical stuff, which is analytics and measurements and AB test, et cetera, in order to Optimize throughput in the marketplace, et cetera, but like as we step back, you know, we don't AB test What the 401k match should be for employees? Right like it was equivalent some of the experimentation that we were doing on the earner side is like, you know, yeah, should we match a 3% or 6% and let's look at employee turnover Cool experiment. Maybe you could optimize but when you're building a product

1:29:37That people are making a living off of or are earning money that they have to earn with there's a different duty of care and The amount of time that they're spending on the app most of the Uber employees myself, too like Order rides all time order eats all time, you know, you get in get out etc But a driver will be spending four hours five hours six hours with the app every single day so The consequence of all of this coming together and our building for drivers, the way that we essentially build for consumers, which is pretty cool and techy, et cetera. One is the P95 experience. Usually you build, you don't look at P50 because average is lie, and then you look at P95. Well, that's the worst experience. Well, the probability percentage. Yeah, the probability percentage is, drivers, an average driver who's driving a week, experienced a P95 circumstance.

1:30:33every single week, multiple times a week, because they spend a lot more time on that. So there's been a pretty important culture change of the company, which is like higher duty of care, actually slowing down in terms of how we build for earners, being a lot more humble, listening to them, their experience, et cetera. The fact is that when you have 5.6 million earners on the platform, there's this marketplace, which is, it works for some earners and it doesn't.

1:31:03Right, so there's always going to be 10%, which is like half a million people who are not happy with experience. We got to make sure that 90% are and we're getting more people who like the experience into the platform. But because of where we came from, it's actually pretty new muscle for us to like build this earner experience. And I do think like as I step back and I think about like, what am I going to be proud of at the company and like there's a lot to be proud of in terms of turning around the business like the team that we built and the service that we built I think there's a sense which is like tech is out of touch with the real world and it's a lot like tech is you know you're building for the virtual world and and Uber is unique in that it's a technology company that like built for the real world and the impact that we have especially as it relates to earners is like it's real people and so

1:32:00What I would be most proud of, one is there's a practical reality which is if we build a company that has the best product and experience for earners, we're going to win long term. But if we're that technology company, that's very much connected, not with the elite, but with an earner base and the broad population, not just in San Francisco, but all over the world, that's a company to be proud of.

1:32:27But at the same time, it's like, I think that the muscle we've been developing in the last two to three years, we have a long way to go. Is it the largest earner platform in the world? Yeah, I think we're the largest source of work anywhere by far, and growing pretty fast. That's a crazy statement. Yeah. Because the largest companies who, like even if you just look at employees, companies that employ people employ max, like two million, max, yeah. Yeah.

1:32:57and Uber has how many earners on the platform? 5.6 million, you know, as of the last quarter, it's growing. That's a lot of earners. What is the federal government employee? It's like on par with. It's got to be on par with that. Now, the vast majority are white part time. Yeah. But it's still the scope is pretty strong there. Wow. And it's everywhere. So cool. Well, thank you, Dara. You're very welcome. It was a pleasure. I'm glad you're treating me to the wine.

1:33:24Well, no, I mean, you treated us and I'm glad you decided to stay after dropping it off. You gave me a good tip and I'll work that. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the...

1:33:51Crazy speed of today's AI world. Shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers, and how fast you can use that signal to guide what you shipped next. This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

1:34:22So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. Oh, David, that was a blast. So fun. Funny. It's like you were just here next to me in Seattle. And now you're there in San Francisco, the magic of the internet. I'm really missing that delicious wine that Dara brought us. I know. Listeners, you tell us if you liked that bit or not or if it was too campy.

1:34:52If you want more of David and I, we recently did an episode on my first million, and it was really fun. We went behind the scenes of acquired, and we sort of talked about acquired business, our journey, turning it from a podcast into a business, why we think the podcast works, and listeners, you might have your own ideas, but where our differentiation is in the market of content out there today, and that was just a blast. Sam and Sean are really fun to talk to.

1:35:19If you are interested in hearing that you can click the link in the show notes to specifically go to that episode or search any podcast player for my first million they also did episodes recently with couple friends of the show David Senra from the founders podcast and actually David one of you and my favorite youtubers yes Doug Demiro in the car category for anyone interested in cars is such such a nice guy yeah Check out ACQ2. It's our interview show where we talk to folks who are on the cutting edge of what's next figuring out things like where is the defensibility in AI for B2B SaaS companies, or our interview with the CEO of Angelus talking about how they're deploying AI at their company. I know AI is a buzzword, but it is just dominating how every company is making moves these days, and it's great to talk to the protagonists who are actually in the arena right now making all of these moves.

1:36:15So that's on ACQ-2. Check out the Slack. It's what we're talking about this episode and every other acquired.fm slash slack. And if you want to come closer into the kitchen and be a part of what David and I are building here, become an LP acquired.fm slash LP. Current benefits include, once a season, you guys will pick an episode. Y'all picked Lockheed Martin, which is shaping up to be one of our biggest episodes ever. So thank you and I had a blast researching that one. So thanks to our LPs.

1:36:42And David, we get a schedule and LP call here. Yeah. It's month or so. It's got it on the books. Yep. With that listeners, thanks so much, and we'll see you next time. We'll see you next time.