🔑 Key Takeaways
- Entrepreneurs need to be confident and resilient in the face of uncertainty. The importance of options and time in making business decisions is highlighted. Joining Acquired's Slack community can provide access to insights and information from experts in the fields covered on the show.
- Despite a huge fall in mobility volume and profitability, Uber's discipline to cut non-core businesses, acceleration of Eats delivery service, and seeking the unvarnished truth has strengthened the company during the pandemic.
- Avoid overplanning your career, stay open to new possibilities, and seize every opportunity that comes your way. Success is a result of luck, hard work, and being open to change. Bet on people, not just companies, to build a loyal and successful team.
- Focus on supply-led growth and cross-marketing, optimize supply and demand sides, maintain focus, and execute well for success in the marketplace business like Uber.
- Uber's focus on building effective promotion without compromising customer experience, coupled with a merger of technical and marketplace teams, led to their largest customer acquisition channel. The company's open platform for drivers and self-regulating labor prices ensure balance in the marketplace.
- Uber's pricing is not controlled by the company, instead, the marketplace's demand and supply ratio determines it. Uber is a responsible end-to-end service wired up with all forms of transportation. The prices of Uber rides have increased due to inflation, increased driver earnings, and greater demand than supply. However, supply coming into the marketplace has now decreased prices year on year.
- Working for Uber is rewarding but challenging. Dara Khosrowshahi's success story shows that having a support system and taking a structured approach can help overcome hesitation and lead to a fulfilling career.
- Dara Khosrowshahi prioritizes helping his former company, demonstrating loyalty above personal interest. Vouch aims to leverage emerging technologies to create unbiased insurance products that can be deployed quickly, offering a 10% discount to new customers.
- Despite being a dominant player, Uber suffered setbacks including leadership issues and increasing competition from Lyft and DoorDash. However, by pushing for profitability, expanding beyond US cities, and serving suburban markets, Uber aims to regain its position.
- Uber is adapting to regulations and expanding their services to various initiatives, including transportation, low-cost hailables, and Uber for business, while also working with taxis and local businesses. They are constantly innovating to remain competitive.
- Developing and implementing simple ideas for great service can be challenging. Shareholder turnover can create opportunities for long-term players. Leaders must keep their teams focused amidst drama and pressure from investors.
- By sacrificing high vote shares and focusing on building a great company, Uber was able to secure $15 billion from SoftBank and eventually raise $20 billion before going public, leading to financial stability. CEO Dara Khosrowshahi's investment banking background helped navigate the crisis.
- Trust in your identity and core beliefs, even when the data is limited. Separating content and business, producing quality content, and focusing on relevancy can lead to success for a top global brand, despite tough competition.
- Self-driving cars still face challenges in safety and unpredictable use cases. It may take years before they become common, but Uber sees a future in a hybrid model where humans and robots work together for efficiency and safety, with a focus on expanding margins and minimizing costs.
- Uber's success hinges on prioritizing the earner experience and being mindful of the impact of platform changes on their livelihood. A duty of care exists when building a product that people make a living off of, and tech must not be out of touch with the real world.
- Uber's focus on providing the best earning experience for people worldwide, including those outside the elite, and using technology to connect with real people is what makes them stand out. Despite having a vast platform, they still have room for improvement to better support their part-time earners.
📝 Podcast Summary
Uber CEO Dara Khosrowshahi talks about personal growth and experiences along with company growth and focus on complementary businesses.
Uber has transformed significantly since its IPO in 2019, with revenues of over $30 billion dollars in the past 12 months and a focus on complementary businesses in Eats and mobility. The interview with Uber CEO Dara Khosrowshahi goes beyond discussing the company's growth to focus on his personal career stories and experiences, including the acquisition of Expedia during 9/11. The discussion highlights the importance of entrepreneurs being confident and resilient in the face of uncertainty, as well as the value of options and time when making business decisions. Joining Acquired's Slack community can provide access to insights and information from experts in the fields covered on the show.
Uber's Painful Pandemic Journey Led to Stronger Growth Pathway
The pandemic was incredibly painful for Uber, with a huge fall in mobility volume and profitability. However, it forced the company to adopt discipline and cut non-core businesses, leading to the acceleration of the Eats delivery service, which has been a great success. While the pandemic presented intense challenges, it ultimately strengthened Uber as a company. Moreover, Barry Diller, the CEO of QVC, taught Dara Khosrowshahi, Uber's CEO, the importance of seeking the unvarnished truth to make better decisions. Therefore, when Dara had to explain her model to Barry, she felt incredibly lucky to be in a room with him and recognized his impressive process. Overall, the pandemic was a tough situation, but it created a new and more efficient pathway for Uber's growth.
The Importance of Staying Open to Career Opportunities
Young people should avoid overplanning their career, stay open to possibilities and opportunities, and give their all when they get an opportunity. Being too attached to a career plan can lead to ignoring opportunities that don't fit the plan. Success is a combination of luck, seizing opportunities and taking advantage of them. It's important to go all in when an opportunity arises and exceed expectations. Keep your eyes open for changes as they may lead to new opportunities. The most successful people often bet on people, not on companies, and build incredible loyalty among their team.
Learning from Booking.com for Building and Growing a Successful Marketplace Business like Uber
Lessons from successful marketplace businesses like Booking.com can be valuable for building and growing other marketplace businesses like Uber. The importance of focusing on supply-led growth, particularly in a fragmented supply base, can lead to better optimization and higher conversion rates. Building up the supply leads to better liquidity in the marketplace, resulting in improved pricing, ETA, and demand. Using cross-marketing, like how Uber uses Eats to recruit drivers, can also provide a structural recruitment advantage. The execution machine for Uber involves tweaking inputs to the system to drive emergent outputs, and this takes time. Ultimately, successful marketplace businesses need to optimize their supply and demand sides, maintain focus, and execute well.
How Uber's Merger and Machinery Work Led to the Largest Customer Acquisition Channel
The merger of technical teams, marketplace teams, single earner team, and others allowed one technical team to focus on the demand side of Eats, making it the largest customer acquisition channel. The machinery had to be built to ensure effective promotion without compromising the rides experience. After three years of machinery work, Uber's margins are growing faster than the competition because of proprietary traffic. The compounding effect is working, and the Uber marketplace is attaining balance. The company believes in an open platform for drivers irrespective of economic fluctuations because earnings on the platform self-regulate. Prices for labor are set by the marketplace based on supply and demand.
How Uber's Pricing is Decided by Market Demand and Supply Ratio
Uber's pricing is not decided by the company but rather by the marketplace's demand and supply ratio. Uber is in the scale business, wiring up every form of transportation, whether it's people or things. Uber has a capable marketplace team of ML engineers who build systems that match price, and they work over an ecosystem of 2 billion transactions a quarter. The reason that Uber rides have become more expensive over time is due to inflation, increased driver earnings, and greater demand than supply. However, in this environment where supply is coming into the marketplace, prices are now down year on year. Uber is a much more responsible end-to-end service than travel agencies like Expedia, and with responsibility comes a bigger consideration set that includes regulators and governments.
Overcoming Hesitation to Work at Uber
Working at Uber is not easy but it's a cool and interesting space where employees really feel like they are impacting people's lives. Uber handles unique marketplace and pricing challenges, and their employees work hard to ensure smooth operations in real-time. When the opportunity to work for Uber came knocking, however, Dara Khosrowshahi initially refused but was convinced to change his mind by Daniel Ek. Going through a structured process, Dara met a board member from Uber, who started the recruitment process. Dara was hesitant about making the move but had an amazing support system in his chairman and friend, Barry Diller, who helped him with the PowerPoint presentation for his big day with Uber's board.
Dara Khosrowshahi's Loyalty to Expedia and Vouch's Focus on Innovation
Dara Khosrowshahi puts personal loyalty and helping the company above his own interest. He remains on the Expedia board even after stepping down as CEO to help the company through its journey to greatness. He trusts new leadership even if it means providing them with enough space to implement new strategies. Vouch sees expanding into new emerging verticals, such as generative AI, as an opportunity to develop entirely new coverages devoid of biases. They work with clients to rapidly develop solutions and deploy these new insurance features quickly, just like any other software. Acquired listeners can take advantage of a 10% discount on their first policy with Vouch. Uber is a company that is unique in terms of its impact on the ground and on the city.
Uber's Turnaround Story and Strategic Shifts.
Uber was a unique turnaround story as it was growing fast, had exceptional talent and a global position but had all the hallmarks of a turnaround as it was burning cash and experiencing boardroom and leadership turmoil. Despite being the dominant player, it was losing category position to Lyft and suffered backlash from the 'delete Uber' campaign. Although Lyft is a formidable competitor, Uber aims to build profit pools outside the US to attack the US and gain category position against DoorDash, which is currently a tough competitor. Uber's previous urban biases are a mistake as it neglected the suburbs, which represent a profitable market. Uber has made corrections by building selection and expanding rapidly into the suburbs.
Uber's Three Pillars and Evolving Business Model
Uber's CEO Dara Khosrowshahi shared their strategy to focus on three pillars: ridesharing, Uber Eats, and freight. They are adjusting their business model to fit the regulatory landscape in different countries, and expanding their services to new initiatives like transportation, taxi, low-cost hailables, and Uber for business. The separation of the tech stack allows Uber to offer fulfillment services to local businesses like Walmart. Uber is also working with taxis and building a technology blast dispatch to improve efficiency and acceptance rate in taxi markets. As an incumbent, Uber sees itself in the business of connecting vehicles and drivers. The realization of their original vision takes time and effort, but Uber is constantly adjusting and innovating to stay competitive in the market.
Overcoming Challenges in Building Tech Infrastructure for the Market
Building a tech infrastructure to fit the particular market is a challenge. Simple ideas may not be simple to implement to make the magic happen of pushing a button and getting great service. The turnover of a shareholder base can be difficult for a company, but it can also create an opportunity for fundamental long-only players. Stakes involved for the whole ecosystem can be immense with some having large portions of their endowment dependent on a private mark. Shareholders going after hyper growth may differ from growth that is profitable. Leaders must keep the team focused and believing amidst the drama. Softbank's investment in Uber was heavy, leading to a game of chicken among Benchmark, Travis and the founders.
How Uber Secured Critical Investment from SoftBank and Avoided a Power Struggle
In order to secure necessary investment from SoftBank and prevent a power struggle, all high vote shares of Uber had to be blown up and converted to low vote shares. This move allowed the company to focus on building a great company instead of who would have control. It was a high stakes game, with $15 billion invested by SoftBank and a possible Lyft challenge. The investment banking background of CEO Dara Khosrowshahi helped in navigating the crisis, but he had to quickly move on to the next battle. Despite early valuations of only $5 million, Uber was able to raise an astonishing $20 billion before its 2019 IPO, and has since been able to break even on that cash.
The New York Times' Bet on Quality Content and Subscriptions
The New York Times made an enterprise bet on quality content and subscriptions, despite limited data to support the decision. They were able to do so because they were sure of their identity and core belief in producing high-quality content. This bet paid off and helped them become a top technical publisher. The company's separation of church and state in terms of content and business was a fascinating aspect, one that is both a superpower and could be a weakness. The board agreed that The New York Times should be a top global brand for quality news, and they are determined to achieve that. The company's strategy of producing English language content that is relevant to the world has been a winner, although it's a tough business.
Self-driving cars and the future of transportation.
Self-driving cars face significant challenges in the last 2% of use cases, making it difficult to predict when they will become a material part of transportation. Safety is another concern, as society will have to determine the acceptable level of fatalities for autonomous vehicles. While progress has been made, it may take another decade for self-driving cars to become widespread. In the meantime, Uber is focusing on growing volume and expanding margins while minimizing take rates. They see the future of transportation as a hybrid model where humans and robots work together to provide maximum coverage and efficiency, while still prioritizing safety and minimizing costs.
The Importance of the Earner Experience for Uber's Future Success
Uber's future success depends on building the best platform for earners, which means being mindful of their experience and investing in it. The take rate must not be raised to a degree that takes too much of the service and harms earners. Uber has realized the importance of organizing the company around the earner experience, listening to them, and being more humble. When building a product that people make a living off of, there is a different duty of care. Uber is making efforts to optimize the earner experience, which is a new muscle for the company. Tech should not be out of touch with the real world and must consider the people that make the platform successful – the earners.
The Impact of Uber on the Global Workforce
Uber is the largest source of work worldwide, having 5.6 million earners on their platform. Uber's focus on creating the best product and earning experience for earners around the world, especially those outside of the elite, is what makes them unique. While the muscle Uber has been developing in the last 23 years is impressive, they still have a long way to go. The vast majority of Uber earners are part-time, but the scope of their platform is extraordinary, and it's everywhere. Using technology to connect with real people and provide them with a practical reality is what makes Uber a company to be proud of.