Uber’s Khosrowshahi on Delivering a New Uber

Uber’s Khosrowshahi on Delivering a New Uber

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Hate to start this lovely morning on a kind of unwelcome topic but let's talk about the economy. How are you thinking about the possibility of a recession and a potential pullback in ride hailing demand maybe even delivery demand as people's budgets get constrained. Yes a little sad that discussions on the economy are unwelcome now especially at a Bloomberg event. So I think there's there's lots of speculation as to whether or not we go into a recession or not. I'm not an economist so I won't speculate. Other CEOs are not having that problem. Yeah exactly. But you know we we get a

pretty live pulse of what's happening on the streets every day. Right. And in the cities in which we live. And at this point we don't see any signal of a recession coming. Now what's different about us than most companies out there is that just as you saw during the pandemic a shift from spend on services to spend on retail. That shift is now going back to services. And we are the definition of a service. Right. Moving around travels back et cetera. So I do think that our service is benefiting from the shift back. Certainly the reopening helps our mobility business. Our mobility business is growing at very very high rates highly

profitable. That delivery business delivery of everything at home continues to be strong. So at this point we don't see any signal whatsoever. We have gone through recessions in South American Mexico and Brazil in the past. And what you see during those recessions is that as a labor pool eases up and certainly we don't see signs of that yet here or in in Europe more drivers come onto the platform. And as more drivers come onto the platform the platform continues to grow. Service levels get better. So I think versus many other companies we don't have large large asset base. Our cost base essentially adjusts in a stronger economy. Our cost base increases as earners and drivers earn much more money in weaker economies. As you get more

drivers into the marketplace their earnings adjust as well. So I think we are relatively recession resistant if it happens. I certainly hope it doesn't happen. Right now the signal on the street is things are really strong and the spend on services continues to be quite rare. Okay. But you mentioned drivers. Now driver economics right now are under assault. I mean as we all know from filling up our gas tanks unless you have a Tesla or from those social media photos of ten dollars a gallon gas.

Yeah. You know that's hitting drivers. Now you have a fee to help drivers have a gas surcharge but you're sunsetting that on the delivery side. So what else can you do to help help drivers who are now finding the economics of driving for Uber aren't what they once were. I think the good news as it relates to drivers is that if if you think about a driver as essentially a small business owner the revenue side of the business looks really good. Right. And the while inflation is pressuring every business as it relates to driving now drivers we talked about last quarter drivers who drive call it 20 or more hours on the platform are earning in the U.S.. Thirty nine dollars over thirty nine dollars per utilize that. So the revenue side of the equation is looking quite healthy.

And while costs are up. Yeah costs are up. And no one's happy about gas prices right now. When you look at the driver PML the driver penile so to speak actually looks pretty healthy. And we're seeing more drivers come onto the platform as a result. I'm certainly hoping for lower gas prices. Everyone is but it's not affecting our business. Have you thought about preserving that fuel surcharge on the delivery side or extending it further on on the drive side. Well certainly on the mobility side at

this point we intend to extend it on the delivery side. A significant amount of deliveries come from bike scooters et cetera that isn't as directly affected by those kinds of economics. So you wrote a couple of weeks ago an email to employees who as it was widely circulated you said you'll treat hiring as a privilege and be deliberate about the pace but you didn't mentioned potential layoffs. And I wonder because other companies and some of your competitors are having to consider it

how you feel about layoffs at Uber. We don't think they're necessary at all. Right. The perspective of Uber is that in Q1 for example if you look at our gross bookings they're up 39 percent on a constant currency basis. We are one of those companies while our delivery business benefited from the pandemic. Our mobility business is absolutely

benefiting from the reopening. We talked about. Guidance of twenty eight and a half to twenty nine and half billion in gross bookings in the next quarter. Profitability increasing. BA da 240 million to 270 million. So the business is growing at a healthy pace. However with an uncertain environment out there we should be more cautious. You know there's much more uncertainty

as you look forward six to 12 months. And my message to our employee bases we're going to be careful. We feel really good about the business and the trends but let's not get carried away. And the environment is one that demands caution. And I do think that in a tougher environment the scale players. Right. Were the largest player on a global basis. We're the only player

that has the portfolio of go get. We have a platform advantage in terms of our riders turning into eaters are couriers turning into drivers et cetera. We have structural advantages over the smaller players. So while I'm not wishing for a difficult environment I think we will perform much much better than our competition and the environment. Okay. Well I mean despite the diversity that brings you stability the market has pummeled Uber and in many Covid every thought. Yeah guys are down I think about 40 percent this year. Now Lyft I think added additional equity compensation to its employees to kind of compensate for

its share price turbulence when you consider something similar at Uber. No at this point I think that if we execute well and I think a lot of companies out there you know they're dealing with their share price getting hit and they're dealing with fundamentals that are getting worse. Usually your share price follows your fundamentals. And from our standpoint our fundamentals are getting better. Right. For example Lyft is talked about leading into incentives to bring back drop their driver base especially on the West Coast as things open up in the West Coast. And our driver base for example if you look in the U.S. we

talked about April the number of drivers on the road being up by 70 percent on a year on year basis in the U.S. and Canada in May. That's accelerated to 78 percent. You're not seeing drivers leave the platform because I feel we're seeing drivers come into the platform because earnings are elevated. April the number of new drivers signing up to the platform was up 120 percent in May. That's actually accelerated to one hundred forty five percent. So the earnings possibilities out there the feeling of safety the number one reason why drivers were off the streets last year was because they don't feel safe. And I think now with

the health situation getting much much better vaccinations et cetera people are feeling safe getting back into the burbs and getting out. All of us are meeting in person. This is not a remote meeting and that's great for our business. Okay. Well Cindy you have a couple of constituencies. We talked about drivers. We talked about employees. Let's talk about passengers. Anyone who moved here today probably recognizes Uber has become at least in some cities at some times a very expensive ride. So what what is going on. And is Uber just now a more expensive ride. So it's the inflation is hitting everybody. Inflation certainly in transportation is is hitting everyone. Getting a buy a car is more expensive. Gasoline is more expensive. And

we're part of that. You know buying an airline ticket is much more expensive and we're a part of that ecosystem. Now I do think when we look at our marketplace we measure one thing cost supply such sessions. Right. Which is what how many sessions do people open up Uber app looking for an Uber against our supply hours. How much supply do we have. How many drivers do we have on the platform. And we're still in a situation where if we added 10 percent more drivers onto our marketplace the

marketplace would be much more healthy. So I do think that as we see our sessions increasing demand increasing and as we see supply increasing essentially the marketplace will start to come into more balance. You'll see less surge and you should see prices moderate year promising as a decreasing price over the long term. Yes price is going to come down and we're seeing the marketplace signal in terms of ISE are getting better search sessions are coming down and we think that's a good thing for a healthy marketplace. At the same time it's having no effect whatsoever in terms of demand. Right. Mobility demand

continues to be very very strong continues to grow. Our May trips were higher than April or May. GROSS bookings were higher than April. So the signal that we see on the ground is actually very strong that we're hoping it stays that way. I guess I'm just wondering if drivers are coming back. If mobility is coming back why your algorithm why the marketplace hasn't established that kind of balance that you're talking about and why prices haven't started coming down. Well the marketplace is establishing a balance right on a real time basis. But what we see is that demand is essentially fast. Demand tends to come back much more quickly and supply right. These are drivers who they might have been working at an Amazon warehouse. They might have been working at a Best Buy etc..

Changing the nature of work takes longer and we are absolutely seeing the number of drivers come onto the platform accelerate. But it takes time for that to catch up to the demand that really open up very very quickly as the market as the world up. Okay. Now in some cities there's a new kind of driver on your app. A yellow cab. Yes. Now I'm old enough to remember when yellow cab drivers and dispatchers were throwing rocks at your offices. And now Uber has brought taxis onto the platform in cities like San Francisco New York I think Italy and Spain. It's been there in Germany a couple other cities. So you know tell me a little bit.

Our taxi cabs do you do you think of them as a different product or a different price point to Uber. Well the yellow caps aren't on our platform yet but we certainly did a deal. The deals that were hard harder work on on the integration. So I think for perspective we've been working with Taxi for years and many of our international markets whether it's Japan or South Korea or Spain or Germany we have been working with taxi and really are worked with taxi is a win win which as taxi drivers get more demand higher utilization higher earnings. Cities get less empty miles in terms of taxis kind of you know going up up and down the street looking for a hail. And for us it introduces a new supply into the marketplace. So he really is a win for all constituencies. And for us the vision as it relates to Uber is essentially wire up any vehicle that's available for transportation of people or things and then get access to demand for transportation if you want to go from point A to point B. So taxi is another vehicle type for us. It will increase the

choice that you have on Uber. There are certain folks who like taking taxis et. And we think it will bring more business for taxi drivers. Were the best technology company out there in terms of building a software layer on top of the real world. And that that power is transportation. And I think you know the taxi partners that we've talked to are coming to realize that having the best technology partner out there with the greatest global scope and demand makes sense for everybody. And just to follow up the taxi fare in many cities is a regulated fare. Yeah. So where do you

see it sitting in the price options that Uber makes available. It really depends on the regulation on the ground. So for example in New York the taxi fare can move up or down dynamically based on supply and demand. And those are discussions that we've had with the taxi regulator in New York. There are certain are the markets where the fare is regulated and set based on time and distance. So it varies everywhere and we can build technology that essentially works on the ground based on the regulations on the ground. Okay. I want to talk about delivery. Bloomberg Live has been pulling its Twitter followers and we're gonna be bringing those polls up during the day.

So we have one now. What are you most likely to have delivered. I'm not sure we'll be able to see the results but I'm sure they are interesting. You guys have been expanding delivery of added convene. There we go. Convenience alcohol groceries. You said at the end of last year that delivery was about on par maybe a little larger than

mobility which was a fascinating benchmark. But I guess I've always wondered like how do you differentiate Uber eats you know to me and maybe I'm just a bad Uber customer. It's a little interchangeable. Sorry but to be frank with say door dash or sometimes insta car how do you think about the advantages you bring to this market. I think first of all a huge advantage that we have is a platform right. In that we've got hundreds of millions of monthly active consumers who are using

Uber all the time and they might be using the other Uber app. But sure. But if you're using the other Uber app essentially we have your identity your payment details. We know where you live. Probably. And so being able to were to use Uber and Uber eats becomes completely seamless. We've now introduced actually a loyalty program called Uber One where you pay essentially the same price that you do other loyalty programs the same price as a door dash dash pass or the GrubHub program. And you get free

delivery essentially and Uber eats as well as discounts on Uber rides as well. So if you think about the subscription program as as essentially content we have more content than anyone else. So I think that for us the. Big differentiation is essentially the brand. The technology that we built but also the fact that you can work across platforms in a seamless way and a membership program that drives discounts in a more uncertain world. For consumers who use one service or the other. I remember at a shop talk when I saw you last Emily Chang was interviewing you and she was asking whether Uber EADS was due for a rebrand. And I wonder if you thought more about that because it's more than

EADS already. Do you eventually unify the apps to get some of the leverage that you're talking about. We've certainly thought about it. Brand and we've done a bunch of work on it because listen we didn't get Uber EADS anticipating that you would get into grocery and all of these other categories alcohol etc. But we've seen that the brand carries and actually if you saw our Super Bowl commercial and a bunch commercials out there kind of make fun of the fact that you can use Uber eats to to to order grocery et cetera and they use it. We've seen our grocery business now is at a four billion dollar run rate. Close to 10

percent of Uber each eats customers. A customer who orders on treats now are ordering something other than food which we think is really exciting. Okay. The theme of our conference as I said earlier was is looking forward. So I want to hit a two topics that might be important for Uber future. The first is autonomous trucking. Now yesterday you announced a deal with of all companies whammo which you know not too long

ago you were at at legal war with a theme here. Yeah. Yeah. Making making friends out of enemies. But I guess the idea is to bring is to match their autonomous trucks with freight on your platform. Your first ISE. You know what. What led to this kind of remarkable detente. Well it's more than a design right. It's a deep partnership that we have with Whammo. And for us we have our interests are aligned right in that Uber essentially brings a enormous amount of demand for transportation of all things including freight as well. And just as we want every trucker wired up onto the platform if that truck driver happens to be a wonderful piece of software we also want that driver. Wired up to the platform.

Whammo is clearly a leader in the autonomous space and this is actually a pretty deep partnership with Way Mo where we now have we're going to have access to billions of miles driven as it relates to their autonomous driver. And if you buy a way mot autonomous truck now essentially we'll have a deeper integration where that truck will be able to plug into that Uber freight network in a seamless way and have access to essentially demand for transportation into that truck. So you can really drive the utilization of those trucks that are going to be incredibly sophisticated but also quite expensive.

The idea of autonomy has always been particularly dangerous for Uber because drivers are a huge constituency. I mean what is the future of for truck drivers. Do you think. Well I think that there's there's always a drama which is our machine's going to replace humans et cetera. And I think the reality is that machines you know automation essentially complements humans. And so what we see actually as it relates to trucking over a long period of time is a hybrid network of human drivers and autonomous drivers. The autonomous driver will take over the longest highway paths et cetera and the human drivers will probably take over the more complex routes or you know kind of hand over autonomy will hand over once you get close to city and and handle the local trucking that is more complex.

So we think ultimately there's going to be a hybrid network between humans and autonomous driver some for some period to come and a dispatch system that can intelligently dispatch to a human or to an autonomous driver based on the nature of that trip is a huge asset in that and that all. OK. We just have a couple more minutes. I want to get to two more questions. Short. Yes. The first is E. vs. You've made some strides. Migrating drivers in London. Yeah. Electric vehicles. You've also made some zero emission goals for the company. So what kind of investment and what plans do you have to bring these to your delivery and your mobility fleet in the rest of the world. So on the mobility side which is where we're focused on right now we essentially take we reduce our margin for a foreign trip in the U.S. for example someone who is driving in

the vehicle makes a dollar more per trip that comes out of our pocket. It comes out of our margin that drives adoption. Economics especially with high gas prices the earlier discussion that we've had so about 8 8 to 9 percent of km miles in Europe now or on these it's lower than that. In the US it's it's 2 to 3 percent. But in California for example we have a deal with Hertz for drivers to rent Teslas and Tesla's account for more than 5 percent of our vehicle Miles. In a number of California cities. So those numbers are starting to move up and we're putting the economic incentive into the marketplace to get drivers to switch over. OK. We have 30 seconds. Let's do a rapid fire. What are your plans for your stake indeed now that a to live in list in Hong Kong. Well once it lists over per design we'll look to dispose of that. OK. Will you ever order Uber employees back to

the office in the way that Elan did with Tesla. Not like Elon. We believe in flexibility and we've talked about 50/50 kind of a balance. OK. Last question. Who's your biggest competitor. Our biggest competitor is car ownership. Okay. Dara Contra Shah he would like to leave it there. Appreciate it. Thank you.

2022-06-14 05:51

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