This Week in Startups - Katerra’s collapse, Bill Ackman’s SPAC merger plus Uber CEO Dara Khosrowshahi | E1226

Episode Date: June 4, 2021

Jason covers the bankruptcy of the Softbank-backed construction startup Katerra, Bill Ackman's Universal Music SPAC, then interviews Uber CEO Dara Khosrowshahi about portable benefits for independent contractors, the expanding UberEats business, local commerce and more!

Okay, everybody, it's a big show today here on This Week in Startups. We've got a transportation startup on the program. It's called Uber and the CEO, Dara, is here to talk all about it. This Week in Startups is brought to you by Squarespace. Turn your idea into a new website. Go to Squarespace.com slash Twist for a free trial. And when you're ready to launch, use offer code Twist to save 10% off your first purchase of a website or domain. LinkedIn jobs.

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SoftBank-backed Katara is shutting down. And I think this is an important topic for two reasons. One, I want to talk to you about overfunding of startups and the problems that can cause. And then I want to talk to you about a new concept I have been discussing internally, something I call slingshot startups. And these are startups that got set back during the pandemic. But like a slingshot, they got pulled back. and all that energy built up.

And now that the reopening is happening, they are moving again, but with more velocity. Sometimes you have to step back to go forward. Let's start with Katera. If you don't know, this is a vertically integrated construction startup. What does that mean?

It means they tried to make construction work better, faster and taller, etc. So the company was founded in 2015. The CEO was Michael Marks who ran Flex Electronics from 92 to 2005 before working in private equity. And the concept was pretty basic. Offsite manufacturing with on-site assembly. So you make a bunch of parts and then you put the home together. Almost like a kit car, if you think about it. And maybe over time, using software and accurate planning and design, they could reduce time and build

costs. And they focused on large-scale buildings like apartments, commercial offices, etc. They raised $2 billion. And if this all sounds familiar and it sounds like, wasn't this the same problems we work had, well, the largest investor was SoftBank Vision Fund. If you have a vision and you want to go big, like Masayoshi-san has been doing, you have the risk of putting so much energy capital and jet fuel behind the rocket that the rocket blows up on the landing pad or just goes off in a crazy direction. Like we saw with WeWork and like we see now with Katera. Katera is just totally blown up. WeWork seems to gone off target, but maybe they can course correct if they make it to escape velocity. So the information did a great story and just outlined exactly how apparently

mismanaged the firm was. That's Katera we're talking about here. Obviously, we work also mismanaged. And we're going to get into why that happens. After COVID hit, Katera was hemorrhaging money according to sources. And this was because of delays, increased material costs, etc. And to artificially boost revenue, according to this story, Katara exaggerated updates on certain apartment renovation projects. Now, exaggerated updates, this could be one of these how you frame something,

so to speak, and it might not be outright lying, but exaggeration can be framed as a lie. This is very important for founders who are listening, especially when you're selling securities. You want to be as honest, upfront, give as much data as possible to investors,

employees, shareholders, and the broader stakeholders in a company. You never, want to exaggerate or polish or massage the truth because massaging the truth for one person might be fraud or lies to an organization like the SEC or investors, right? And typically the outcome will determine that. If you massage the truth and you have a big win, you're a hero, nobody's suing you. If you massage the truth and you lose your investors money, now you're in court.

Now the SEC gets a tip from one of your previous investors who feels very. bad that you exaggerated, or some people might call it faking it till you make it. They claim employees use the fake updates to frontload revenue by millions of dollars in financial reports given to investors. So when I see this, my take on this is the information got this from investors who were very upset by what Katera was doing, and they took the most negative, least charitable position on Katera's behavior. That's what I'm reading into this, because how else would the information get this?

When something blows up and you got hundreds of people on the cap table, it only takes one person to say, you know what, I feel wronged. I'm going to give this information to a journalist. And that's how these things go down typically. Katera hired a law firm to investigate this internally, according to the story, and the CEO and co-founder Michael Mark stepped down in May of 22. It's likely the board fired Marks, who knows. But there's no indication here that Mark knew of the misleading financial reports.

Most people would say, you're supposed to know about that. But, you know, I can tell you, in a company with... thousands of employees with hundreds of millions of dollars in investment or billions of dollars in this case. A lot of times the CEO gets abstracted from a reality and you have people feeding you information and sometimes you get disconnected from the ground truth in your business. This is why I always look at bank statements or ask people to tell me how much cash is in the bank account.

I'll look at the bank statements or credit card charges as they happen. Why wouldn't you do that, right? Sometimes you've got to get into the weeds as a founder. and other times you have to delegate a little bit of both. Trust but verify is always in order. So in December of 2020, Katera told investors it was running out of money. Softbank injected $200 million in what's called a rescue financing. This wiped out the stakes of other investors.

In other words, it was a cram down probably pay to play. Yeah, I think that's the term a lot of people will use, which is we're going to make all the equity and the company worthless, but you can buy new equity at this incredible price. you pay to play. If you don't pay, you're wiped out, but everybody had the opportunity to put more money in. So this is where you could have had a fracturing of the loyalty within the company. The existing investors feel wronged. They feel like they were lied to. They put a bunch of money and now they're being told their equity is wiped out and the only way for them to get new equities to put money into a company they feel has not been honest with them. Can you see how this

is a bit of a prisoner's dilemma? They're going to wipe out your equity. as an investor, can you understand how this would make bad feelings? This is inside baseball, but this is what really happens. So you get all these bad feelings. The company goes from a $4 billion valuation to less than $400 million, according to letters sent to Katera shareholders and in the information story. So apparently a lot of hurt feelings with other investors, so I'm guessing they leaked all this information. And according to an anonymous source, be careful with these, obviously, because anonymous sources are relied on far too much for stories by journalists. And it frequently, they're wrong or they have massive agendas, but they say the SEC is also investigating

Qataris false front loading claims. Who knows if that's an active investigation or if they confirm they received information? I think the SEC doesn't actually tell you, based on my experience. They don't actually tell you what's going on. They'll do a document request, is my understanding from attorneys. I know who work in the space. They'll just say, give me all the information. That doesn't mean there's an investigation. It means they want information because they just want to check things out. The shutdown announcement comes. and Katera, which had 8,500 employees before cutting it down to 2,400 after numerous rounds of layoffs, sent an email to the remaining employees on June 1st, Tuesday. Following a thorough review, I'm quoting here, of strategic business alternatives.

Katera has determined that it must wind down the majority of its U.S. business operations effective immediately. Unfortunately, most of our U.S. employees will no longer be working for Heterra in the near future. That means you're fired, by the way. Just say you're fired. An executive told employees on a video call, they didn't have money to pay severance. or unused PTO, a person who attended the meeting said, again, an unnamed source, who knows if that's true, who knows if that's speculation. If they don't pay those things, then I believe the board members and the CEO and folks like that could be on the hook. So there are specific laws and specific regions about factory shutdowns and the notice you have to give employees.

And this is called the Warren Act, W-A-R-N, I believe. and this requires employees to provide employees with at least 60 days written notice of plant closings and mass layoffs. The purpose of the advance notice is to provide the employees with transition time, enable to find alternative employment or to enter a skills training program under the Warren Act. Mass layoff is a reduction of force within a single site of employment that results in unemployment loss during any 30-day period of either 50 to 40-9-day employees that represent one-third of a total active workforce at the single site. or 500 employees or more. So you get an idea.

It's basically if you do a plan closing, you've got to at least give people some warning. And if you give them notice, you don't have to give them severance. It's just giving people a heads up here, common courtesy. And for a company that raises billions of dollars to not give that common courtesy, it's just lame. From websites and online stores to marketing tools and analytics,

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forward to having you on the pod, Anthony, to take a little victory laugh. Okay, let's get back to this amazing episode. Now, I don't speak for Blockable, but I am an investor on the board of that company. and they were constantly being told, and the market was constantly saying, can't be Katera, they have so much funding, why are we not raising all this money like Katera? And I think if you're in a slow-moving industry like construction, education, healthcare,

no amount of fuel is going to allow you to drive that train faster. In other words, the rails of the railway system are capable of a certain speed. You can put a high-speed train on the railroad tracks for Amtrak and it will go flying off the rails. You operate in the real world as a founder.

You cannot go 300 miles an hour on tracks that were designed to go 60 or 70 miles an hour. It really is that simple, folks. You know, just watching, you know, other founders practice good financial hygiene, give good, honest updates regularly to your investors, reach out when you need help, and do things properly and take your time.

Product market fit takes time. And I think what a lot of people learned in the construction space specifically, and I know Blockable learned this, was you can't just fix the product. You can't just make a better mousetrap because that mousetrap then has to be laid somewhere. And that is called a city or a town or a state or a country. And those regions and geographical regions have regulations.

And they have local boards. and people will, Nimbis will fight against and Yimbis will fight for. And then there are people who own the land and there are developers. There's many stakeholders in this ecosystem. And so Blockable decided they would be the developer themselves, not just sell the units to developers. They were going to actually, and they are owning the properties that they're building. And so, you know, we know there's a housing crisis.

We know there's technology to make homes in factories and then deliver them to sites and that that works much better. And the homes you build inside of a factory are perfect. they can be cut by lasers as opposed to in the field with like a straight razor, what do they call it, an Xacto knife when people are cutting sheetrock in the field. Imagine everything being modular and you're not building bespoke homes and every home is different, but you're building Legos and you just stack those Legos as you go. That would be much, much more efficient because the 100th, the 500th, and the 1,000th and the 10,000th home

would get better and better and you get the operational efficiency. So building the 10th home is going to be 10 times, better than the first, and the hundredth might be 20% better. You get the idea. You get all of these great economies of scale, and you get to learn in the field how that unit behaves in terms of the HVAC and, you know, how energy efficient it is. So these are all wonderful innovations, but I think what we'll see, and this is what I want to end here on, with Katera, and this absolute disaster and burning of shareholder money and apparent mismanagement and classless end where you stick it to your employees,

which I'm sure the severance packages for the senior executives were locked in and they were watching the bank account and making sure they got theirs. I'm almost certain of that. I would bet donuts to dollars. I don't know what that term means, but I like donuts and I like dollars.

I would bet donuts to dollars. If I win either side of that, bet I'm in good shape. So I've been thinking about slingshot startups. These are startups that got paused during the pandemic. And when you pause, you reflect. and you cut costs and you go through every single line item and say,

what can we cut out here? And then the energy built up consumer demand. So we have a company called Neighborly, N-E-Y-B-O-R-L-Y.com, and they rent space for off-site meetings, birthday parties, etc. Now, in a pandemic, nobody can do gatherings. So they were shut down 100%. CafeX, you know, doing coffee in airports. Well, airports are shut down.

And then you have Uber. Nobody can take rides. And you have blockable, modular housing. can you be in the field building stuff? I think they were somewhat affected. But if you look at neighborly, now after the pandemic, sadly,

all these retail stores open up because storefronts went out of business. So that adds inventory. And then neighborly also has everybody coming back and saying, you know what, I missed my 50th birthday, our book club got paused.

Let's start this up again. Let's yolo into the roaring 20s. So more people are going to book and so they have more inventory, more supply, and more demand. Amazing. CafeX. Oh, okay. People are concerned about touching products and everybody's into cash lists

and everybody learned how to order on their phone. Okay, dokey. CafeX, no human. And you get to serve the coffee without touching anybody else's hands, without anybody sneezing in your coffee, God forbid, or any, you know, kind of hygiene issues. And people know how to order on their phones and set up their, you know, Apple Pay or Venmo or Cash app. Wow. And then think about this. people are not coming back to work and they don't want to work as baristas. They don't want to work as Uber drivers. They don't want to go back to teaching.

They want to work from home. Okay, if people don't want to be baristas, it's fine for a robot to make a cup of coffee for you or give you an iced tea and a bagel when you're at SFO. So I think this is a really interesting lesson for everybody. I know for me, I have really been thinking about this and I had a lot of tough conversations with founders. You may have heard that I'm pretty blunt and candid

if you've listened to a thousand episodes here. Shocking, breaking news. Jason is candid. Anyway, the candid discussion I had with people was Cockroach mode. We need to cut all expenses to zero as quickly as possible and survive the pandemic. And then after the pandemic, let's see if we thrive.

So, you know, really interesting, I think, what happened with Katera. And just real quick, Bill Ackman, who announced the largest SPAC ever is buying 10% of the Universal Moosey Group for $4 billion. People seem to be disappointed about this. He picked like a really safe, smart, easy play. You know, as you know, music libraries are worth a lot and Universal Music Group. They own Bob Dylan's catalog and Lady Gaga, Taylor Swift, Billy English, the weekend, Queen, the Beatles, yada, yada. And now they just print money from Spotify now. So I know that Sean Parker was rumored to be buying them a decade ago. But here it is. Now it's going to be public. They made $9 billion in revenue according to our research here in 2020, 4% growth,

but with 1.6 billion in profits. You know, it's five times revenue. People were kind of disappointed in this because a lot of people buying SPACs are looking for things that are big tech, big ideas, not a catalog,

which is kind of like buying a bond, right? Basically, you bought a bond. I think people were thinking Bill would be able to do something really creative or interesting instead of something, you know, boring like this. And, you know, maybe he could get Starlink

to spin out of SpaceX or Stripe or Robin Hood. People were speculating all kinds of interesting companies that they could have taken public. And they've been holding this for six months. So their money was tied up in a flat spec, and they could have done more with it. So Contrary in short, which is a Twitter handle, says P-S-T-H-dipping on news.

It's targeting a growth, profitable business, and not a fraudulent EV, FinTech or Space Travel Co. I would say the fraudulent EV thing is accurate. FinTech, I think, is such a strong space. I don't suspect there's fraudulent, FinTech out there that I've seen in the SPAC groups. And space travel, I mean, that is a moon shot. Get it.

But space travel is a very real thing. I mean, I don't think anybody's going to debate that rich people will pay 50 bucks, $50,000, $50,000, which to a rich person is like spending $50 bucks, I'll be honest, for somebody worth $100 million, spending $50 or $50,000, kind of the same for them. And so to go to space for $50,000 or $250,000, it's a once-in-a-lifetime YOLO experience, no big deal. But let's get to the interview, a start.

up in the transportation space is back on the program. That company is Uber and I might have been the third or fourth investor in that company. But today we have the CEO Dara Khazra Shahi on the program and so much to discuss, but great to have you on the program, Dara. Happy to be here. I think you got started with Uber a little bit earlier than I did. Slightly. It's pretty cool. Yeah, slightly. It's pretty cool. You know, it's, there's so many ways to go with this interview. But I thought we'd start with the most top thing. Everybody's wondering about wait times. I'm here in Austin right now. Wait times were like, it was an Uber Uno, as we used to say in the early days of Uber. I got my Uber in one minute.

But there are scattered reports in cities of 15 minute wait times, which for the record is like a third of the amount of time you would wait if you called car service in Los Angeles or other cities. But we have trained people that you can get an Uber in one to five minutes in a city and now it's back up at 15 minutes. doing with that? And what's the strategy there to get back down to the elusive Uber Uno when it shows up? And you see them across the street. That's when a beautiful thing happens. So we are on our way, but there's no question right now as we're coming back from the pandemic. Demand has returned much faster than supply. And the way I like to talk about, demand is a fast-to-wich muscle and supplies a slow-to-wich muscle. The supply of drivers and couriers always adjusts, you know, as any market it does to demand, but it just adjusts more slowly.

And then we're leading in because, you know, we could, we could let things go and between surge and pricing and driver earnings, which are really high. Like, median driver earnings are 35 to 40 bucks in most cities right now per hour and completely flexibly. 35 to 40 bucks an hour reminds me the early days of Uber when it was just black. And that was, just so we're clear here, that the national federal minimum wage, I think, is $7 an hour. So we're talking about five or six times the minimum wage. It's a good time to drive for Uber. And of course, you've got complete flexibility, right? So usually under normal circumstances, the market would take care of itself.

Supply and demand will get balanced. But we don't want those kinds of wait times. We don't want these large surges that you hear about once in a while. So we're actually leaning in and really getting the word out there as far as drivers and the earnings opportunities and how great they are. And we are seeing drivers come back to the platform and the wait times are still not where we want to be. They're still longer than kind of perfect. Like usually you want to get them to four or five minutes on average. We're above that.

And pricing sometimes is above that because of the supply demand. balance, but all of the directional movement is in the right direction. The wait times are coming down, prices in general are normalizing, and we're pretty confident in the back after the year. We'll get to kind of the old Uber that you're used to, right? And for me, like the lesson is really cool, which is that the way that technology moves, these experiences that you rate it as magical, like push a button and a car comes, right? When they become normalized, expectations go up so much, whereas like a magical experience, used to be a magical experience

when you invested in Uber. Now it's like if you push a button and your car doesn't show up in five minutes, you're like, what the hell's going on? This is, you know, why am I waiting more than five minutes? Exactly. So we want to get back to acceptable and best of breed.

And we're on our way, I think. Growing your business takes more than offering a popular product or service. It's essential to have the right people in place to ensure your company operates smoothly and has the potential to expand. LinkedIn jobs helps you find the best candidates for free. Hiring is definitely part of my strategy here at launch.

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and management tools. That's all just done inside of LinkedIn. Easy peasy. Lemon squeasy. When your business is ready to make that next hire, find the right person with LinkedIn jobs. And now you can post your job for free. Just visit LinkedIn.com slash twist. Again, that's LinkedIn.com slash twist to post a job for free. Terms and conditions, of course, apply because they're giving you a free job posting. Okay, let's get back to this amazing episode. That's a great segue into drivers, which we didn't know this, but I guess, you know, this stimulus and extra unemployment is creating a certain condition where, hey, if you want to get people, able to come back to work. It has to compete against maybe some of those unemployment benefits or some

stimulus, and that's obviously running out. But of drivers, I'm curious today, how many are looking at flexibility as the most important part of working for a ride-sharing company or a delivery company, because it does seem that office workers now are demanding flexibility. And many are saying, you know what, if you want me to come back to the office five days a week, I might look for another option because I kind of enjoy staying home. How many of the drivers, just ballpark, are changing the number of hours they work meaningfully week over week? So flexibility is by far, by far the top feature in terms of if you're a driver or a courier. That is why people work on our platform because essentially they can choose when, where, how they

want to earn. And by the way, they can be promiscuous. They can work on multiple platforms as well. It is by far the number one reason. Now, what we are hearing from drivers now is the number one reason why they are hesitant about coming back to the platform is actually safety, right? Like, we've been through a year and a half of the virus. Not everyone is vaccinated. I'd say on average, our drivers vaccination rates are a little bit lower than a rider. vaccination rates as well. And so safety is the number one concern. Once we get past safety, they know that they've got the flexibility, which is really cool.

That's like check, most important thing. It's awesome. And then third is, hey, are my earnings opportunity is going to be there? Because early on and during the pandemic, sometimes drivers experience, hey, I've got to go drive 15 minutes. Just like we don't like to wait as a user. Drivers don't like to drive too far or, you know, take too much time. for the pickup. So pickup times were long. And drivers were saying, hey, am I going to get the earnings opportunities? The earnings opportunities because of demand are absolutely there. They're arguably better than

they ever have been. So now things are moving absolutely in the right direction. But flexibility is like, flexibility is king. That's what drivers want. If you were forced to be full time, you would lose that flexibility and you lose that ability to be promiscuous and go from service to service, if people worked for one company, if they had to work for DoorDash Lift or Uber or any company, and they couldn't work for the others, then they would be doing shift work, which means they would have to show up at a certain time, check in, and then check out eight hours or 10 hours later. Does any driver ask for that to have a shift? That seems like something they would not be interested in?

There's a minority of drivers, and I would describe it as 10 to 15 percent, who want a full-time job, want to do it full-time, and would rather be employees. I mean, but, and so that is real, but it is a minority of drivers. Listen, the way that I like to describe it is, if you're a barista at Pete's, right, making coffee, you can't decide all of a sudden that I don't feel like showing up for morning rush. And, you know what, on the way home, I'm going to go work at the Starbucks. because it's closer to home, and I'll come in whenever I want, and I'll leave whenever I want, right?

Pete's needs you there during rush hours. Pete's going to need you there at a particular store at a particular time, because if they're employing you full-time and playing you a salary, they've got to underwrite your productivity, right? And so for us, for example, we need more drivers during rush hour in city cores, but drivers can elect to make that decision whether they want to, you know, work then and there or not. And that is the tradeoff in terms of flexibility. And the other tradeoff, which we think is pretty cool too, is that drivers essentially,

we get a commission, right, off of driver's earnings. So the better driver you are and the more experience you have driving, your earnings go up because you understand the trips of the trade, when to drive, where to drive, et cetera. And essentially, our interests are aligned. for a full-time employer, you essentially can afford to pay the utility of the average employee, you know, plus some premium because there's some added value. But essentially, there are going to be some employees who are to, you know, you don't pay them enough because they're much more, they create much more value than the average employee.

And then there's some lower than average employees that you're lifting up with our system. Essentially, drivers or couriers make what they put. into the system. And there are great drivers and great couriers. And there are some not so great drivers and not so great couriers who then decide to self-select to do something else. So that's one of the cool things about an open system. You essentially earn relative to your productivity as well.

But the flexibility is by far the most important factor. Yeah. And now if you look at it, there was this whole concept that if Uber drivers or lift drivers or door dish drivers or any ride-sharing drivers were going to be classified. these employees, what about hairdressers and real estate brokers and freelance writers? I'm in the media business. A lot of the same publications that were giving ride sharing companies a hard time, my friendship bankoff runs Vox. My understanding is they had to cancel, because I had some of those writers, they had to cancel every freelancer in California because if the freelancer worked over X number

of hours, now it triggered full time and it caused chaos. So they just opted out of that market. So So where is the United States as a country? And obviously Uber and DoorDash, I think, are kind of having to navigate this most of all. Where are we with this archaic system where either you're full time or you're a freelancer, but with this caveat, if you're a freelancer and unless you're got a really great lobby or you're an elite freelancer like a real estate person, you can have freedom. But the people maybe who are starting their careers can have freedom. It seems incredibly un-American to me that people can make their own choice.

But putting that aside, is there a third way that's better? That's what we always talked about in the early days of Uber, was there has to be a third way here because that would seem more equitable. Maybe if somebody works over 20 or 30 hours, I know you've been revving on this pretty hard. And that's actually that third way is what we're trying to shake now. And to a large extent, that was what Prop 22 in California was all about, which is how do you retain the best of both worlds, right? The really cool thing about being an ICA is you're your own boss, you're the CEO of yourself, and you get to be totally flexible based on when, where, how you work,

and based on productivity. There are good times to work, right? There are good ways to work as well. But how do you combine that with some of the, I think, important elements of, you know, call it traditional work, which is a safety net protection, health care coverage, et cetera. And that's what, you know, we call it IC Plus. Actually, in the UK, there's a third designation. There's IC, there's worker designation, and then there's full-time employee. And worker is essentially an IC plus pension benefits, some vacation benefits, et cetera. And in the UK, we have designated drivers, essentially workers. And And now we are in the process of having discussions really on a state-by-state level because the needs, every state's needs are different and these are workers, you know, in the state

to hopefully come up with this third model. Flexibility of an IC, the freedom of an IC with protections, whether it's minimum wage or a fund for health care or other benefits as well. And I think, like, it is the better way forward. It takes time, you know. government sometimes moves slowly, but by design. But I do think this is a better way forward and we're pretty optimistic. Yeah, independent contractor status with maybe if I hit a certain benchmark, is there a certain

benchmark you're thinking because I think the average number of hours for full-time employment is 2,000. Pretty easy if you want to do this at home, 52 hours a week, 40 hours, 2080 is the number of hours per year. So if somebody did 1,040 hours, that would be half time. therefore they could get half the benefits as a full-time person. This doesn't seem so difficult for even need to comprehend. We're actually not looking at a benchmark because to some extent, what do you pick,

20 hours, 30 hours, 40 hours? I think those are, you're just kind of picking it out of your head. We're really indexing, right? Which is if you work 20 hours and 90% of drivers, for example, work less than 40 hours, right? Like that's the vast majority of drivers, the vast majority of couriers. work far less than 40 hours, but basically you index the benefits based on how long you work. And the other, I think, cool idea is you pull together the hours that you put into all the platforms, hopefully.

It's an idea called portable benefits, which I think is really cool, right? Which is, hey, if you, if it's just based on how long you work for one company and how many hours you put into Uber or DoorDash, etc., that's one solution, and that's, and it's not a bad solution. I think that's some are going to go in that direction. There's another concept, which is portable benefits, that if you work 10 hours on Uber, let's say 10 hours on Lyft, you actually get benefits worth of 20 hours so that you retain that freedom to work with multiple platforms. I think both ideas are good ideas and hopefully, you know, depending on a state by state level, which is the right idea, we'll go forward that way. Yeah. And I think people are forgetting that you are

100% dependent on drivers. There is no business without drivers. It's in your best interest. In fact, I would think it's your obsession to make this a better opportunity for them than other opportunities they might be presented. Am I correct in thinking that your competition is people working at a Starbucks or a Target or a Walmart versus deciding to be an IC or an IC Plus? Totally. Totally. And drivers are our customers are our customers. We have a driver app. We run that app just like we run our rider app. And it's in our interest to attract the customer to give them a great experience for their earnings to be excellent, for the flexibility to be there, and then for them to stick around.

And our competition is exactly what you said, the warehouse, Amazon warehouse worker or someone who might work at Starbucks, et cetera. And what we offer is flexibility. I've spoken to so many drivers who, you know, I remember one was a, she was an actress and her mom got sick and she had to take care of her mom and she's like, this is a pretty cool gig. And now she's an actress and she works on Uber as well. I rode with a driver who during the day, she'll drop off her kid, during the day she drives people and then in the afternoon picks up her kid and hangs out with her kid and delivers for Uber Eats. Like these kinds of, these kinds of, of stories with the impossible with other full-time jobs, and they're possible. So it's a, it's not for everybody, but there's a self-selecting group of people who want the freedom and want the flexibility, and we've got to be there to give it to them. Are you launching a new product, developing a new prototype? Maybe you're rolling out a new campaign. User testing lets you see, hear, and talk to your customers to understand how they experience your brand, products,

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at scale. We talked earlier about getting used to something in society like low weight time for a car to transport you somewhere. People forget 20 years ago, there were people who needed to make money this weekend because somebody got sick. They missed a rent payment. Credit card was due. Maybe they don't have a big savings

and their car blows the transmission. I grew up in this situation where my parents had to have the car pushed across the street from side to side because they had to wait to have the money to fix it. This happens to people. And Travis's early idea was, you push a button, you can work. You just think about what an amazingly meaningful contribution

that is to society as a safety net. Forget about a welfare safety net and people getting free money, UBI unemployment. How about people are empowered? They can press a button and if they needed a little extra cash, a little extra chatter in their pocket, they can get it for what their need is at that moment. Do you feel sometimes people underappreciate this massive innovation? I think totally, but I would also say that we do need that safety net. So the one negative that I've heard about Uber is sometimes when you get started, it's, one, it's tough. You kind of don't know what to do.

And sometimes your earnings aren't as strong as you think that they should be. And you kind of don't know why. So I do think that what Travis created was this incredible, like, free market system as it relates to labor. Yep. And free markets have their weaknesses, right? And part of the weakness is that people fall through safety net. And just like our free markets, you know, we talk about inequality.

And to some extent in our system, the averages are excellent, the flexibility is excellent, but there are some people for whom the system doesn't work. And we've got to do a better job. Hey, here's what you can be doing better. Or we know that you didn't make much money this week was a bad week. Here's some extra to help you get to the next week, et cetera. You know, also being self-critical, I think the system works really, really well for 80%, 90% of the participants. There's 10% that is not working as well as it should, and we've got to make sure that we put the effort into the 10%.

Yeah, but it doesn't work for that 10% is it because they're in a region where there's not enough liquidity in the market and they can't get enough rides. And that's just a function of, hey, you know, Uber just doesn't work as well in these rural communities because the time between homes, just to get to a home to pick somebody up might be 40. minutes. Yeah, usually they're working in the wrong place or they're working at the wrong times. And we just have to be more prescriptive and helping them out. And listen, sometimes you get unlucky, right? Sometimes you'll be waiting at the airport for 45 minutes and you get a ride that is 15 minutes along. And that sucks. You know, frankly, that sucks. So I think those are the edges that we can take off. And just like in our markets, you know, the capital markets are, you know, beautiful in so many ways. They don't work for others.

And I think, you know, Uber and Lyft and, you know, Uber Eats, we've created this incredibly free-flowing and liquid labor market that anyone is welcome to, right? Like, anyone can come into the system and come and earn as long as, you know, you pass a background check and you have a decent car. Anyone can come into the system and start earning. We just have to do a little more on making it work for everybody. Even if you have a last name that's Greek or Iranian that's hard to pronounce, you still get the job. I mean, exactly.

There was a time people forget, there was a time when if you showed up with the last name like the you and I have on a resume, people, you might not get an interview. And when I had Jason McKay, my mother's maiden name, I got a lot more interviews than when I had Calacanis says my last name. Let's talk a little bit about Uber Eats. This has been just a stunning, stunning growth, a billion dollars a week. was the run rate last I saw. And people may or may not know this, but there was a time when maybe some board members, maybe some folks in the press said Uber Eats is a stupid idea. It's taking away the focus from Uber.

They should be a pure play. Just do Lincoln Town cars, the highest profit. Maybe Uber select, but get rid of pool, get rid of UberX and get rid of Uber Eats. don't do anything but the most profitable part of the business. You held your ground and kept doing Uber Eats. And that, in fact, during the pandemic, showed we were anti-fragile. So maybe your thoughts on having this two-pronged business, which does take two different skill sets, I would think, or are there some overlap? I think that it's, there's actually a decent amount of overlap.

And listen, early on, it was difficult to fight against the grain and hold on to. Uber Eats. The person who I'll give credit to is Jason Drogey, who kind of had the idea and built it. And he was convincing enough and he towered over me. So he kind of intimidated me into making sure that I supported Uber Eats as well. But listen, it was, you know, much about it too? Sure. Sure. When I came into Uber early on, like, I didn't even think about Eats. I was thinking about the business, the mainline business. And Eats, all of a sudden was this discovery. And, you know, just as any new CEO would do, I gave myself 100 days, let me figure out

what's going on. But I was so impressed with the work that the Uber Eats team had done with the growth rate of Uber Eats. And just like rides, it's a marketplace business, but it's a three-sided marketplace, right? You've got eaters, you've got stores, restaurants, and then you've got couriers as well. And a lot of the logistic capabilities, the most. mapping, the real-time matching, the real-time pricing, all of those capabilities that we have

built on the mobility side are very much applicable to the delivery side. The person who's running delivery now, Pierre, was the number two on the mobility side. So it actually building these two systems, there's a lot of common technical elements amongst the two systems. And what we have demonstrated, we were pretty late to the Eats game, right? But we have actually now, We're the biggest player globally outside of China. Like you said, we're at a billion dollar per week run rate. And boy, it got us through the pandemic. I mean, I would be, I think a very, I feel very differently coming out of the pandemic were not for eats.

And I think now we're in a position where the mobility business is coming back. We have a great problem, which is we don't have enough demand. We don't have enough supply relative to our demand. and the Uber eats business now, it is at a completely different run rate. And both sides of the business, you can argue, are going to be huge hits going forward. Yeah. And the entire driver network gets to have two different options in, you know, if people are going back to offices, we'll see, you know, they might want food delivered from that 11 to 1 o'clock hour, which, by the way, happens to not be commute time. So the same drivers, if they want to grab a couple of extra hours delivering, how many drivers do both, like on a percentage basis?

I mean, sure it depends on market, but... It depends on the market. So in the U.S., where you have the greatest overlap, for example, in a London or Paris, most couriers are driving scooters. So there isn't that much overlap between drivers for people versus drivers for food. In the U.S., you had probably pre-pandemic, it was 10 to 20%, then it went up because during the pandemic, you had a lot of drivers who found earnings opportunities with eat. It was 20, 30 plus percent. Now it's going back down because the earnings opportunities and driving people are higher than the earnings opportunities in terms of driving food or driving things. So shifts.

And that's a really cool thing about our marketplaces. You know, it's constantly shifting between supply and demands and the interactivity dynamics between the two are always changing as well. So another like misinformation kind of virtual signaling moment that kind of happens. with Uber and delivery of food was some cities wanted to set a limit on how much you could charge, not even knowing that you hadn't yet gotten the business to profitability or maybe just in the face of not even admitting that, you're losing money on every ride. And that's, you know, you're essentially the person benefiting from that is the restaurant and the driver and the consumer.

The person losing is Uber, which is trying to build a business, obviously, and in the long term that should make sense. But you, correct me if I'm wrong, also offer people they can use Uber Eats, a restaurant, and bring their own driver. And then how much they have to pay Uber if they bring their own delivery service? Usually 15%. Yeah. So, I mean, that is the headline number that sometimes people quote, right?

As, oh, Uber or DoorDash, some of the others charge 30%, sometimes 25, sometimes 20%. What they don't say is, the. majority of that goes to the courier, right? There is a cost to delivery. And the majority of the restaurant commission goes to the courier. And our take at Eats historically has been about 10% net of everything. If you look at everything, kind of, if we're a marketplace business, that's actually a pretty low take. And we think long term, what we've told investors is probably our nit take is going to be closer to 15%. And I think that is, you know, you can call it fair or unfair, it's a very fair take rate compared to other marketplace type businesses.

And I think it'll be a sustainable model. So sometimes people do things, you know, reflexively, but long term, usually you get to the right answer. Yeah. And it's very interesting. It's the same people who are arguing drivers should get paid more. And then when drivers do get paid more, they're blaming Uber or DoorDash for paying the drivers more because it's coming from the restaurant.

What people don't realize is delivery is not cheap. There's a human being involved with. carrying your food to you. There's going to be a cost here. The other thing that I think you don't get credit for is these are drivers who have driver's licenses and who are paying taxes and who have been verified. When I was in the restaurant business growing up, that was all an underground economy. And people were not getting paid even minimum wage. They were getting paid two or three bucks in cash from the register to deliver something and whatever they got in tips. So if they made $5 a delivery, $7 delivery, and if they had three deliveries at night, they made $20. And if they had

10 deliveries and it was a good name. They got good tips. They made 50 bucks. That's how it worked in Brooklyn back in the day. This was an underground economy. This is an above ground, really professionally run economy. And we're bringing these folks into the banking system, et cetera, you know, and I think that's an additional benefit as well. Oh, wow. And listen, the tips, as you said, are on top of earnings as well. And it is what we found certainly in the pandemic was there was a big part of our population that needed to help. And I think we kept an awful lot of restaurants in business, and we created a lot of earnings opportunities for couriers and drivers. So we got to do more. But I think between that and the activity in terms of giving free rides for people, for medical

workers, you know, fighting in the pandemic, free food for them now, free rise to the vaccines, etc. I think we're doing our part here to kind of be the kind of company that you can be proud of. Yeah, I mean, it's been exceptional, your leadership and tightening things up and changing, I think this overall perception that Uber was a Marauding company. I think you've done a pretty great job in that, to be honest. But when you, when we look at vaccination, how do we think about vaccination in drivers and in customers? I just went to Madison Square on for the Knicks games. you had to show proof of vaccination. But the Uber I took there, no vaccination, no cards.

Now that you're seeing people using vaccine cards, is that something you're thinking about for drivers? I know you've got a driver shortage, but if I said, I only want a vaccinated driver, could I pick that in the app, or are you even thinking about that? Or do you think the pandemic's just going to work itself out? You might as well write it out rather than customers and drivers having to opt in to stay there vaccinated. We're definitely thinking about it.

Typically, what we do is we take our lead from the CDC or kind of the health authorities and their advice. Sometimes private companies don't recognize that they're not, you know, we've got to recognize that we're there to serve the public, et cetera. So I think for now, we've got our mass policy in place, you know, roll down your window, et cetera, and we've seen that that's a safe environment. If there's advice from the CDC that says, hey, you should do something else, we'll certainly take it. But our philosophy has always been we want a safe and open system that's open for anyone who wants to get from point A to B and is open for anyone wanting to earn money. And we're not at the point now in terms of vaccination percentages where, you know, we would say, hey, you've got to be vaccinated and which could exclude a certain percentage of the population. But we're definitely thinking about it. And it's something that we're going to revisit.

I wonder, you know, you have a driver stimulus. I think you're giving people spiffs or bonuses for coming back on board or doing rides. I wonder if, you know, you showed up with your vaccine card. If you got an extra $100 in your account, that wouldn't motivate folks. Yeah, yeah. I mean, right now we're just offering free rides to get vaccinated. And it's especially targeted against the younger crowd. You know, you and I don't belong in that crowd, Jason, but the 18 to 35 crowd.

Like they, I don't think feel bad. particularly vulnerable. And that's a pretty big audience for us. So we're working with a White House. Essentially, we've got, we're taking their data, who's got vaccine appointments ready, where can you walk in? And essentially, you get a free ride to and back, you know, for two vaccinations. Amazing.

That, I think, is a pretty cool drive to help. And then, you know, we'll be creative about other solutions as well. Yeah, I think there's such an amazing opportunity for, you know, as Uber really contribute with the free rides for vaccines and delivering and saving these restaurants and keeping them in the game, keeping them solvent to have some sort of notation of who's vaccinated in the system or, you know, and an opt-in system. It doesn't have to be like you can't work for Uber or DoorDash or Lyft if you're not vaccinated, but it could be, hey, there's a subtle opting in and that has some benefits that come with it.

Let's talk about profitability. There has been this concept that, oh, this business can never be profitable. we both know that's ridiculous because there have been various cities in Uber's history that have been wildly profitable. There have been various categories of rides that have been wildly profitable. And even in the money losing days, I divided at one point the loss for the quarter with the number of rides. And I think it was 50 cents lost if you went across rides. And I said to myself, if you made every ride 50 cents more, you would not lose that many rides. So how are you doing with this sort of path to profitability?

I know you put out their Q4, I think, of this year getting towards profitability. How confident are you in the profitability of the core rideshare business? Obviously, ETS is going to be a lower margin, but it seems like it's quite probable that that also will hit profitability. Yeah, I'm very confident. And we talked about hitting profitability sometime in the second half of this year. I think people sometimes forget that the mobility business pre-COVID was profitable and actually have 30% EBITDA margins. and had paid, was able to pay for 100% of our corporate overhead. And it was really our investment in the Eats business pre-COVID that was causing the losses, right?

And like you said, there were some people who criticized us for that because we could have been a profitable company had we not invested in Eats pre-COVID and the debate would be gone. Now, fast forward to a year later, thank God we invested, whether we're lucky or smarter, a combination of both. Thank God, we use Eats and lost money on Eats because now it is a huge part of our business. And with our Eats business, you know, the way I look at it is the run rate quarterly losses are about $200 million as it relates to Eats. When we merge in Postmates, that'll be about 50 million of synergies. And the Eats run rate now on a quarterly basis is $12.5 plus billion. $1% of that is $125 million. So we're now getting at scale where we absolutely need mobility volume to come back because mobility

is the big profit generator for us. And that's why we're leaning into supply to make sure we have enough drivers out there to drive mobility profitability. Assuming we succeed there, and I'd say so far the signs are good, then we can also move each, you know, on a positive profit path while reinvesting for growth. because the potential there is still huge. And, you know, we're pretty confident it's all going to come together in the second half. So I'm looking forward to getting that debate over with.

And then, and then hopefully the debate will become on how much growth we have ahead of us, which I think it'll be a good conversation. And you've also simplified self-driving. That's been spun out. Vertical takeoff and landing. That's been spun out. And I think trucking also. No, trucking is still part of the business.

Uber freight. Yeah, Uber Freight is a part of the business. So that means Uber Freight must be doing phenomenal. So you kept those two cards in the deck. So tell us about Uber Freight and how that's doing. Is Leor still running it? Yes, Leor is still running it. So he's a former Google exec is known for being a killer.

So that's a reason to keep it. But how's it doing as a core business? It's still great. And the way I describe Uber Freight is, you know, in the olden days, when you wanted to call for a taxi or car, you had to take your phone and you had to call a dispatcher or a broker, right, who would then call the car and take a huge margin. And essentially, that's still happening in the freight business and 80, 90 percent of the freight business. People are calling these brokers and they're calling their trucker friends and putting it together, et cetera, and taking these giant margins. and we are simply, and a bunch of the original Uber engineers who built kind of the original system,

we are essentially taking that offline process. We are digitizing it. Now, it's a much more complex process, right? Lots of bills going back and forth. But essentially, the trucker experience is much, much better. They get paid faster. They can see all the loads. They can pick and choose what load they want to take.

they can take routes out of keeping closer to family closer home and for shipper they just see so much more inventory in terms of the availability of truckers etc and ultimately because we're connecting these two marketplaces we take a lower margin which creates more liquidity in the marketplace and you know you get the network effect that you're associated with with uber which is more riders meant more demand for drivers more drivers more drivers meant a better you know etia et cetera same thing for shippers and truckers. More shippers, more demand for truckers, more truckers, better service. And the whole thing goes.

The liquidity happens. Yeah, liquidity happens. Pricing happens. We get to take down margins. Everybody's happens. Truckers actually get paid faster, better, et cetera. Their experience is better. They rate, you know, pickup depots.

How long did I have to wait, et cetera? So all of the elements that made Uber what it is incredibly special. We're essentially building for freight. And, you know, the signal that I see in that business is just dynamite. So we got some of those really expensive bets off the books, tightening up ship, smaller footprint of a company, profitability within sight, all fabulous. But you did a little bit of acquisitions. You went after Grubhub, Drizzly, and PostMates, you got two out of three.

Yes. You even tipped your cards a little bit. Hey, maybe cannabis is now legal in a lot of states. The NBA is letting players consume if they want to. It's legally delivered in California and many other states. And there's, I guess, Meadow and other companies out there who do this delivery. We do delivery. Seems like we're in the delivery business.

How do you think about the three acquisitions that you went after and the two you got? Maybe we can go through each one of those. And then also this sort of one hanging out there of cannabis. Yeah. So I think the cool thing about our footprint is I actually think the footprint of the company is bigger because of the delivery business, right? The delivery business, when I was thinking about how big the company can get, you know, you kind of draw some paths as it relates to how big mobility can get and delivery can get.

And delivery got so much bigger faster that when we step back and said, hey, like, what are the opportunities? We just got this giant opportunity that happens to be like right in our backyard. So like, why go and take a moonshot when the moonshot like right next to you? And like, you just have to step over, right? And so with delivery, we said, hey, let's define delivery as much bigger than food. This is delivery of all local commerce. And for us, we can become the company where any place you want to go or anything you want to get to your home, we can offer that to you. We understand your identity.

We know where you are. We've got your payment details. We have a membership program. And kind of the vision is just like Prime owns, you know, next day, we want to be the next hour company for you. Next hour, go anywhere, next hour get anything. And that can include food. It can include grocery.

It can include alcohol. And, you know, if cannabis becomes federally legal, et cetera, that's something that we'll look into. We're looking into pharmaceuticals. The categories that we want to get to are fast and frequent, right? What are the categories where you're going to have high frequency so that we become kind of a habit? And what are the kinds of items where you want delivery fast? And food is definitely there, groceries there, you know, pharmacies there.

There's some other categories that we're looking at. And I think the majority of the growth is going to come through organic growth. But we will go out there and buy companies when we can accelerate that growth like Post-Met. and or a category that we're super excited about or a management team that we're super excited about and that's Corner Shop and Drizzly. Ah, yes, Corner Shop. Explain to people what was appealing about Corner Shop.

Corner Shop is, you know, the Instacart of Latin America. They started in Chile, a small team expanded in Mexico and now in Brazil, just the dynamite team who grew up not in the land of plenty. They didn't raise hundreds of millions of dollars. So they got the system and the product right without a lot of capital. And essentially now they have built a terrific grocery product. And we can put that grocery product in front of our audience on a global basis.

So it's a little bit of the best of both worlds. It will cost them hundreds of millions of dollars to introduce them to the kinds of size or the audience scale that Uber has. We can instantly put them in front of our audience. And it's already a great mature product. So this means there's, I don't know, 500 skews that people consume very regularly, whether it's soap or toothpaste, deodorant, milk, whatever it is coffee. You can narrow that skew list down to things that are essentials that are frequent, as you said, frequent and fast.

And then this could become, essentially, you might pick off a lot of the Instacart orders or Amazon Prime orders that would come to my house. Yeah, listen, the grocery online penetration is way behind. where food penetration was. The grocery market is just as big. There's an overlap between prepared grocery food and restaurant food as well. And we're working with big grocery partners. You know, we got a partnership with Carfour in France, et cetera.

It is, it really is. Instacart has built a great product in the U.S. We have the international global audience. So we think we can get out there very, very quickly. And again, we offer corner shop the Uber audience, which is second to none. So in order to build a business like that and go up against Amazon, Amazon had this incredible ability to tell the market, you know, don't expect us to be profitable, expect us to just be, you know, $1 profitable or $1 not profitable, but we're going to go for growth and expansion.

Do you think the market is going to allow you to do that now that, like, and it would be this sort of great irony, you kind of tighten up the ship, you get to the point where you hit that break-even mark, are they going to let you invest in building out this essentially one-hour Amazon? thinking of Uber as the one-hour Amazon is mind-blowing in terms of the scale and potential of the business, and it really does open up a lot. I think if we prove ourselves in mobility, and then we prove ourselves with Uber eats and food, and we show, I think mobility, there's no doubt in my mind, we're going to show the market. It's only about getting the driver supply back, and we see good signal there. If we show that we can get eats from losing, you know, close to 200 million to

break even as well, I think the market. market will start getting it. Listen, Amazon, they were doubters about Amazon, right? In the early days, like it wasn't smooth sailing. Yeah, like, you look at the stock chart and it looks beautiful now, but there are lots of ups and downs. But once they prove themselves, you know, once, twice, twice, three times, people started believing. And I think we've got the opportunity to prove ourselves with mobility, with delivery. And I think there'll be a group of investors to say, you know what? They did it twice. They're going to do it again with grocery and then with freight and we'll get into that next category as well.

So we got to execute, but I think the stage is set pretty well for us. It feels really nice, actually. Now, as we get to wrap, because I know you're busy and appreciate your time. Pool as a product obviously doesn't work during a pandemic. An Uber pool as a concept, to my memory when Travis was conceiving of it as a product, was, had a multifaceted purpose. One was, this would be better for the environment. Then also, it would be better for cities in terms of congestion.

And for Uber, and it would be good for drivers because there would be this never-ending ride, right? The ride would just keep going. You'd have 2.X or 1.X people in the car at all times. So the never-ending ride. But it was not going to be a big moneymaker necessarily for Uber. was going to build out the network of drivers and it would allow people who maybe could only afford a four to $10 ride as opposed to the $8 to $15 ride to access it. If the pandemic, let's say we have zero cases, does UberPool come back? Do you believe in UberPool?

How do you think about UberPool, you know, in the context that I've given in terms of historical, you know, since I know where some of the bodies are buried? It's actually excellent context. context. No, I totally believe in the idea. It helps with congestion. It helps with the environment. It takes the pricing envelope down, which is something that we're always looking for. I think the issue with Poole was our company got addicted to discounting to drive volume and didn't work hard enough in perfecting the product to drive volume. You know, there's an idea of, you know, product market fit, right? And in the go-go days, we discounted and we thought that meant we were building a really good product, you know, and discounts got big volumes. But actually, with pool, right,

you get an efficiency from having two people on a car, three people on a car. You can use that efficiency to essentially give it back to the rider in terms of a discount. The discounts that we were offering were much greater than the efficiency that we were able to drive from multiple people on the car. And those two weren't coming closer together. So we did a bit of a reset pre-pandemic, which is, hey, let's actually start pricing pool truly in terms of the efficiency that we were creating. And we had some really promising results. And then the pandemic hit. So we will bring it back. And the other product that we're actually working on in Egypt right now is actually high capacity vehicles. So we decided to actually go out and test called pool on steroids, which are larger

vehicles. They can take up to 20 passengers or like a sprinter van. Yeah. Yeah, exactly. Midibus, et cetera. And with those kinds of vehicles, we actually think we can push the efficiency envelope because there's only one driver and there's only one vehicle and you can have more than three riders. And that I think holds a lot of promise to really reduce the price envelope. And for us, You know, we want to open up on-demand transportation to not just the upper middle class. What do you call that product? What do you call that? We call it.

It's very creative naming. It's called Uber Bus. There you go. You reinvented the bus, Dara. Amazing, right? Well, when you would go to Park City, when I was broke and I would go to Sundance, I couldn't afford to rent a car, nor could I afford to take a taxi from Salt Lake City to Park City. And they had this $10 bus, and it would drive around.

But the only problem was you either get. getting picked up between 4 and 6 a.m. or 6 and 8. And it would just drive around for an hour and pick people up in Park City and then drive you to the airport. So if you were the first person picked up, it could be a long morning. And you were getting to the airport three hours before your flight. But if you're broke and you got to go to the Sundance Film Festival and it was only 10 bucks, it was it was well worth it. But if you could reinvent the bus with dynamic pricing, dynamic riding, dynamic schedules. That can create lots of efficiency

and we'll pass on that efficiency to riders to take prices down. So there's a next gen bus out there and we want to be the ones who build it. As an 11-year shareholder, I've been hearing that self-driving cars would kill Uber for 11 years. And it was always going to kill Uber in three to five years. And every three to five years, we, you know, listen, I love Tesla and Elon's my bud, but, you know, the cars are great on the highway with self-driving, but self-driving locally, still a challenge. You've sold off the Uber self-driving unit, and there seems to be five or six people making really credible runs. What's your best estimate as to when

a city has self-driving without a driver? In other words, no steering wheel, total autonomy. Because it doesn't matter until that point. It's the same as Uber. It's the same car structure. if there's a safety driver in there. Am I correct? You're correct. And you know what my answer is going to be, Jason, three to five years. Okay, if it does happen in 10 years, where would it happen first? I mean, it's really hard to understand based on what I'm saying.

So let me try it. And this is real guesswork, but call it educated guesswork. I believe in three to five years, you are going to have fully autonomous driving for certain originations and destinations and certain routes that are the right kind of routes. You know, they are mostly highway because highway autonomous is going to be easier than, let's say, mid-city autonomous, et cetera. And that will happen in small volumes. And the advantage of we have, I think, is we can, listen, if you're building a fully

autonomous ride share network, then essentially you're only. going to work in a subset of the city during some subset of times. And that doesn't you know, you want to push a button and you want a car. Like you don't care about the complications that have happened in the back end. What we can offer

and we're working with Aurora and we're a big shareholder of Aurora and Aurora is run by the founder of Chris Irmson who was one of the original founders of Waymo and he's really put together a technical team that's second and none along with their ATG team. And we can on a live basis say, you know, four years from now, if there is that hail that comes from the right origination

and is going to the right destination, we can have an autonomous car serve it. And, you know, if not, we can have a driver essentially service it as well. There's this drama of people saying, oh, robots are going to replace humans. The fact is, with most automation, et cetera, robots and humans are working together in a hybrid matter, right? Like the Tesla, even the Tesla factory is a combination of automation and humans doing the complex, unpredictable stuff. And the same thing is going to happen with Rockshare, which is. 26% of Aurora?

Is that right? 25, 26%. So we are well in the game. And with that strategy, other investors are going to help shepherd that. And that lets you focus on the businesses that are right in front of you. I mean, it's also a focus for you, right? Like how much focus can you and your executive team have if you're trying to boil the ocean? We are great.

We're great at building networks, real-time supply, demand, and pricing and matching. And there's wonderful detail and there's wonderful signs and product in that. Building autonomous cars and building hardware and these hardware life cycles that are two years long, et cetera. It's just a different game. And to some extent, it's very hard. Like one of the really cool things about the apples of the world or the Teslas of the world. And there are very few companies like that that are excellent at hardware and are excellent at software, right? And the magic comes when you put the two together.

We decided like we're going to be excellent at networks matching demand and supply. And we're going to let someone else be excellent in hardware. And we're going to plug in that hardware. Just like we're going to, you know, we want Toyotas and Chevys and, you know, any other car on our network. We're going to want Aurora cars first, Aurora, drivers first. And then, you know, you can see us working with other people down the road as well. You were the dark horse candidate, I guess, to get the job. There were a bunch of people.

That was the unknown. The room of third person, yes. The room of their person. We knew you because of you were at running Expedia, right? Like so, and you were part of that IAC mafia. Like, you were well known in our circles, but maybe not in the wider national circles. But you maybe had some reservations about taking. the job. Are you sitting here three, four years later, how do you feel about that decision?

One of the best decisions of my professional career. You know, I, it's been, it's been incredibly hard. It's been incredibly challenging. But I think actually, like, we attract the kind of employee who likes heart, who likes the challenge. And I love building a product that the world cares about. And what I really love, like, that the founding team did an incredible job building Uber to what it was. But like fundamentally still, Uber hadn't solved the sustainability issue, hadn't solved the safety issue, hadn't necessarily, you know, solved some pretty, like, the future work, which we talked about. Yeah. We are now kind of like, I've taken what they had built and we can take it to that next step. So Uber's growth continues to,

kind of do good in the world and continues to grow kind of in concert with how the cities of the world want to want to grow going forward. And like, we get to reimagine how people and things move in a city. We touch hundreds of millions of people on a, you know, on a daily, monthly basis. It's great to be in my seat. I love it. Yeah, I mean, just the fact that you're creating so much employment in the world, I always watch, I mean, you can't say this kind of stuff. You've got to be very diplomatic, I understand. But I always watch the. I mean, it is part of the job, right? I mean, you represent an huge workforce and on a global basis with many different jurisdictions. It's never been an easy job. Certainly, you know, one of the

reasons why Travis did so good in the job is he was able to fight so many jurisdictions to even have Uber exist. It couldn't have existed if you didn't have Travis in that seat fighting tooth and nail to just through sheer force of will make it exist in a place like Las Vegas or London where it was, you know, people said it would never be allowed. And now it's allowed and people, people, uh, absolutely love it. But it's just this crazy narrative, you know, of the Elizabeth Warrens or, you know, some of these folks, Bernie Sanders, you know, I think they really don't appreciate what an amazing social safety net push a button and get, you know, high paying, a multitude, a multiple of the minimum wage that exists today because of the, the,

work you're doing at Uber. That to me is amazing, just that anybody who needs work can get it today, right now, sign up, whether you're in New York and you want to run around with people's lunch and do Uber Eats, or you want to drive an SUV. I mean, you can get that opportunity to start a career and be entrepreneurial. I think that's wonderful. That, when I talk to Uber drivers, the number one reason why they love Uber is, hey, I can be my own boss. Like, I get to call the shots. can be my own boss. And I'm responsible for how well I do. And I do think for us, we do have to be better, right? If it's not working for someone, how do we help them out? We do have to be better about creating expectations. Hey, if you go out and drive on a Tuesday from, you know, 8 p.m. to

midnight, what can I expect? What should average earnings be? Where should I drive, et cetera? So I think that we can still help, you know, the average and the people who are doing really well, they're really, really happy on the system. Right. They're still, we can get the system to work for everybody or as many people as we can. I think, I think, listen, when you listen to Bernie Sanders or Elizabeth Warren, the core that they're talking about, which is there's this inequality within a country that is doing incredibly well and that, the system works for the majority, but there's a minority for whom it doesn't work,

that core comes from a good place, but let's not destroy, you know, the system that's working to, to, to, to make it work. But, you know, I mean, to be honest, go after McDonald's. McDonald's has fought the minimum wage increases every step of the way. I don't hear them lobbying against the fast food companies, which are trying to preserve like $10 an hour work. And they, the only reason why McDonald's and these other folks, I can say this.

Maybe you can't say it as strongly. But the only reason those companies have raised their wages is because of the competition from Uber and DoorDash and Lyft. Let's be honest. Even Apple was paying pretty low for the stores a couple of years ago. And they lost a lot of those store workers who had to work shifts to people who could set their own hours being a driver. And that's what competition does.

That's what free markets do. And I wish people would appreciate that part of why you get a one minute or two minute wait time is because there's a free market and you, hey, they have to pay a little better with surge pricing, but that's how it is. You ever think about taking away search pricing? People complain about it all the time. That was always polarizing. People must lobby you internally. I have a great idea. Let's get rid of search pricing. What do you say when they come to and say that? So we have in there are certain places, Las Vegas, for example, where we could not apply search pricing and the reliability of the product is horrible. So search pricing, like you need search pricing

to match supply and demand, I think that you, and what we have done now is create limits around search, right? So don't allow things to search at 5x, 10x, et cetera. But I do think having dynamic pricing, which encompasses search and having dynamic pricing to the driver. But a lot of people forget that when we search price, the driver is making a lot more money as well. It's not, you know, that's why they come out and pick you up on a Saturday night on New Year's Eve. No, in their right mind would work for, you know, the average pay on New Year's Eve or Thanksgiving or whatever, if you want to have drivers give up their holiday, give them a premium. Just like we would expect. It's overtime. Listen, traditional work. It's overtime. And that essentially is what surge pricing is. And we have now modulated and we have kind of improved and optimized the product so that, you know, surge is higher than what we want it to be right now. But people in a balanced marketplace, it works as design and we don't get many complaints at all. I love the surge pricing.

It was always just a matter of communicating. In the early days, people were really upset about it. I remember talking to Travis one Saturday night until like one in the morning. I was like, did you ever explain why we have this to anybody? It's like, no, it's like, when you explain it to me, it makes total sense, but it doesn't make sense to everybody else. We should write a blog post and we wrote a blog post. And that was like a famous moment for, I think, communicating well with the audience.

And he wrote this blog post. It was very seminal on how to Uber New Year's Eve because it was like during these hours, it's going to be surging more. But if you wait to 1 a.m. and you go home at 1, you're going to be fine. And if you get to your party before 8, you're going to be fine. If you try to do that 8 to 1 a.m. window, you're not. So just Uber right on that night if you're trying to be on a budget.

Are these rent a car things working? I saw you guys are offering to bring me a rent a car if I needed to drop it off. Or is that like an experiment? Yeah, it's, well, it's an experiment. but the volumes and the experience more than that is really promising, which is deliver the rent-a-car to you. You don't have to wait at a counter, et cetera. So we like what we see.

And the whole concept there is like, we want to move from being essentially a car hire company to being a true transportation company. Any way that you want to get from point A to B, if you want a rent-a-car, bus, yeah, anything that you want, if you want to take transit, you know, we want to offer that to you. And even now, We, for example, bought a company called AutoCab in the UK as well to build out systems for taxis, essentially back-in systems for taxis, give them the kind of dynamic pricing that we've got, and connect them to the Uber demand as well.

So that we think can extend the marketplace. That's software for a cab company to build their own Uber-like system, and then they can put their drivers into the Uber network. Correct. They can have their own front end, and they can plug into the Uber Demand as well. So this is really about extending our services and making it all. I think one of the really, really cool things talking about surge that Travis and team did was you make, you know, underneath this system is actually these incredibly complicated algos, et cetera, that are doing a huge amount of work, but they do it instantly so that the consumer,

for the consumer is like push a button, get a car, you know, payments taking care of. The negative is that you lose the context of why something is surging. it's hard to explain because you make it so damn simple and so damn fast. And I think extending the definition of Uber is and making every single interaction, whether you're taking the subway or taking the bus or taking a e-scooter or you're taking an Uber, making it all delightful is really going to be a great experience going forward. Taking out the pain was Travis's rallying cry. That's why he wouldn't put tipping in.

And I fought him on tipping forever and I couldn't win the battle. Well, I mean, I just did his point, which was it just adds another cognitive dissonance moment. You have to, oh my God, is it included? Is it not? And he had the idea of a six star, like a hidden star. You would hold down the fifth star and then a six star would come up and you could give a tip. I was always tipping in cash.

But tipping has worked out. But tipped out worked out pretty well, I think. Yeah, it's helped out driver earnings. And I think anything that helps out driver earnings is a good thing. And, you know, it creates an incentive for the driver to provide a better service and above and beyond service to earn that tip. And we think any kind of a product that drives that kind of quality, it's a good thing. All right. Final question.

You mentioned that the workers in London were going to be more full-timeish or I've got the term you used of art in London or in England. They're workers, which is essentially IC Plus. It's IC plus pension benefits and other benefits as well, which is essentially the model that we want to go forward. Yeah, that makes total sense. So if that is the case, does that mean you will be able to say, hey, you have to wear an Uber logo jacket or shirt and you have to, you could only work for us or we need you during these specific times. Can you dictate a little bit more of what you need as a company as opposed to you can with an independent contractor? we may be able to but honestly that's not what we're looking to do

that's not what we're trying to accomplish it's retain flexibility give some benefits and I think it's a good way forward ultimately it's a better way this IC Plus Moe yeah I always felt like it would be great if like you could I always said the worst case scenario is if we have to go full time

with the drivers the benefit the person who wins it just cements Uber's victory as the number one player because all the drivers will go to Uber because we have the most rides and then you can have everybody wear an Uber logo and you can put an Uber logo on the side of the car, which right now you can put like a little sticker maybe or they can put a sticker, but we can put a full Uber. All right, listen, Dara, this has been amazing.

Thanks for coming on the pod. And I'm still a very large shareholder and very delighted to see your incredible focus and your decisiveness on these issues. And I hope the markets realize how brilliantly you've gotten us to hear and give you that ability to keep investing. I like to see you have that ability to invest. maybe get some cannabis on the road, maybe get some, you know, drinks going, not for the drivers, deliver it to the customers, you know.

I'm not saying that people are smoking cannabis a lot. I don't know how frequent it is, but I wouldn't say in California it's infrequent. Seems to me that's a really good buy. Jason, I think you have a future if you ever want it in our IR team. So just let us know. Absolutely. I think you're doing okay with the podcast. I'm doing okay with the pod, but this has been great.

Really appreciate the time and continued success, getting drivers on the road. you're a driver, this is the time. It's a good time. 30, 40 bucks an hour. Get that extra cash now. It's going to be a YOLO summer. It's going to go into the fall. Just grab all that money, put a down payment on your house or pay down some bills or mortgage.

Now is the time to be a driver. Go to Uber.com to sign up as a driver. How's that? Sound financial advice. Perfect. All right. Thanks. We'll see you all next time on this week and service.

Bye bye.