Uber CEO Dara Khosrowshahi

So, uh, I came up here, we scheduled this time to record. What are we talking about today? I mean, we haven't talked about Uber in a while.
Mmm, that's right. A lot has happened since we did the IPO episode.
It's been, what, four years? That is crazy. All right.
Yeah, let's do it. I ordered some food.
I hope that's okay. Oh, yeah, yeah.
Maybe we can eat while we eat. Oh, dear.
Did someone order a great? Oh, yeah, that's me. All right, cool.
It's got some wine in here. Oh, great.
It's perfect. So can I join you guys? Actually, yeah, that'd be great.
Come on in. Come on in.
Who got the truth?

Is it you? Is it you? Is it you?

Who got the truth now?

Is it you? Is it you? Is it you?

Sit me down, say it straight.

Another story on the way.

Who got the truth?

Welcome to this episode of Acquired, the podcast about great technology companies

and the stories and playbooks behind them. I'm Ben Gilbert.
I'm David Rosenthal. And we are your hosts.
Today's episode is an interview with Uber CEO Dara Khazrashahi, where he joins us from the Acquired home studio in Seattle. And it's been a while since we checked in on Uber.
They've gone through quite the transformation since our 2019 episode on IPO Day. In the past 12 months, they've done over $30 billion in revenue, up from just $10 billion two years ago.
And that's not GMV, that's revenue. That is revenue.
And they have two businesses, as many of you know, that complement each other nicely in Eats and mobility, and they've divested anything hardware, international, or that's too far in the future or speculative. They're even doing something we couldn't imagine at IPO time, which is profitability.
Now, it's very modest at this point, but we wouldn't have dreamed Uber could even get to break even back when they burned, David, what was it, $3 billion the year before the IPO? Yeah, I think it was the most capital burned before an IPO by any company in history up to that point. Well, today's discussion, of course, is partly about Uber, as we're alluding to here.
But as David and I evolve the interview format, we're putting more of a focus on Dara as a person and sharing some of his craziest stories from throughout his whole career. So this is a candid conversation that dives into moments like buying Expedia right when 9-11 happened, how he first met Barry Diller at Allen & Company, and what the financial mechanics are actually like of replacing Uber's entire shareholder base, or close to it anyway, almost in its entirety since joining the company.
Yeah, not to mention the Uber CEO recruitment process, which I don't think Dara's talked about anywhere else before. No, I don't think so either.
Well, if you are not already in the Slack, you totally should join. So many smart folks commenting on episodes and bringing new information after we record that we didn't find in the research because many of you work in the fields that we're actually covering on episodes.
So you can join at acquired.fm slash slack. Listen to our other episodes on our second show, ACQ2, like a great

episode we just did with Jake Saper from Emergence on AI moats in B2B SaaS. And without further ado,

this show is not investment advice. David and I may have investments at the companies we discuss,

and this show is for informational and entertainment purposes only. On to our conversation with Dara.
Cheers. Dara.
Cheers. Welcome to Acquired.
Thank you very much. Happy to be here.
Appreciate you swinging by the home studio on your way home from Expedia board meeting. Is that right? Yes.
How'd that go? I can't tell you. Yeah, that's it.
That's the right answer. But it was a good board meeting.
Actually, Expedia is a good place to start. For folks who don't know about your pre-Uber background, you were the CEO of Expedia from 2004 to 2017.
Is that right? 13 years. 13 years.
It was a long time. And when you became the CEO, your previous role was you were at IAC with Barry Diller, and you guys had bought a controlling interest in Expedia.
You took it private. It was at Microsoft with Rich Barton.
He spun it out. It went public.
You made a bid to take it private, I think, over like two tranches. There was like a controlling interest and then a full buyout.

Yeah, we bought Microsoft stake. Microsoft decided it's non-core.
And we bought Microsoft controlling stake. And Expedia was a public company, but we had a control position.
And then at some point we decided, hey, let's bring in the whole thing because we loved what Rich and team were building. So this being acquired and us wanting to dive into a story, there's one moment in particular

that was pretty insane. The term sheet was signed for IAC to buy Expedia before September 11th,

like earlier in 2001. The deal hadn't closed yet.
I think there was some kind of material

adverse change clause that allowed- That clause they called it, yes. You were allowed to pull out of the deal.
Yes, yes. I mean, what could be more material than September 11th for travel? But you guys didn't.
Like, take us through that. Yeah, we didn't.
And we knew we had the option to get out. Yeah.
And at the time, you know, one of the values of an option is time value, right? You don't want to exercise an option before the last moment that you can. And Rich called, I think, Barry at the time.
And he said, listen, September 11th happened. Business obviously has fallen off cliff.
We think it'll come back, but I don't know. And he said, the place is pretty unstable now because no one knows whether the deal is going to go through or not go through.
There's this Mac clause. So if you want to get out, it's fine.
Rich is very confident. He's a great entrepreneur.
It's fine if you want to get out, but just let us know which way you want to go. Oh, God, he's good.

And he's really good.

Which really, to your point about time value, he just wants you to make a decision.

And so he's like, oh, we'll be fine.

I do.

I can't imagine that if you're at the company, everyone's like, what's happening, right?

There's a future.

Companies thrive on certainty, on kind of rhythm, et cetera.

And it was a tough macro position to be in.

And then the micro position of what's going to happen at Expedia. So I can imagine what he was going through.
So we got together as a team, the IAC team, and all of us were kind of talking. And, you know, there's no clear decision to be made there.
But Barry respected what Rich asked for. And I remember the meeting, we were having all these debates.
And I think it was Barry who said it. He said, you know, if there isn't travel, there isn't life.
So we're like, look to each other. We're like, let's go for this.
Let's do it. And right after that meeting, Barry called Rich and said, game on.
No changes to the deal at all? Like exactly as? No changes to the deal. It's like, we're going to do this.
But Barry, his passion is travel, right? And I think he was right, which is just when you're in the center of the storm, it looks like, oh my God, life is going to be over. But things revert to norm.
I mean, you look at like the pandemic and everyone's looking for all these long-term changes and everything reverts to norm. And I think that was the wisdom at the time, although when you're in the middle of craziness, it sure doesn't feel calm.
But after that, we said we're in. It got Rich's stability that he wanted.
And in hindsight, it was a genius decision. Did you ever think you would then live through another moment like that over the last couple years? No, and I like this one to be finally the last one.
Never want to go through something like that again. But it made us stronger as a company.
Ultimately, good for Uber the past couple of years? Yeah, I think the pandemic was incredibly painful in that sitting together as a team, 85% of your mobility volume, which was the profit driver of the company falls off a cliff. And other CEOs, they lost a ton of business, but most of these businesses were profitable.
We were losing $2.5 billion, and then it just got way worse. So it was a very tough situation to be in, and we had to cut a lot of overhead.
We had to cut up businesses that we thought were core to the business. You really had to bet on what's core, what's non-core.
But it was a huge accelerator as it relates to our Eats delivery business. And I think that discipline in hindsight has been great, but I wouldn't want that as, that shouldn't have been the precipitating factor.
Yeah. All right.
Before I let David bring us to today already, let's go back down memory lane. So how did you meet Barry Diller? So I met Barry Diller when I was an analyst at Allen & Company, which was my first job out of college.
It's an investment bank in New York City, specializes in the media and entertainment sector. Now much more tech.
They've made the pretty cool transition. And I was a lowly analyst.
And I got assigned to this deal where Barry Diller, who at the time was running QVC. He was the CEO of QVC, which was home shopping.
And he had run Paramount and Fox Studios before that? Yes, correct. Paramount first, and then he ran Fox for Murdoch.
And then he decided he wanted to be his own boss. And at some point, John Malone, I think, had control of QVC, and Barry got the job to run QVC and have control because he wanted to be his own boss.
And who can blame

him for that? God, to be in the room with those two characters as they're negotiating. It was golden for a kid like me.
And so at the time, Sumner Redstone, who was running Viacom, had come to an agreement to buy Paramount Pictures, which was Barry's old home. and Barry thought that he was getting a steal

so he had come to an agreement to buy Paramount Pictures, which was Barry's old home. And Barry thought that he was getting a steal.
So he decided to go after Paramount in a hostile tender offer, to come in as kind of a third-party bidder. And it was a huge move because Paramount was bigger than QVC.
So it was like the minnow swallallowing the whale. Yeah, swallowing the whale.
It's like Cap Cities. Cap Cities.
Exactly, exactly. And I was the analyst on the deal.
And it was a whole kind of bidding process. Barry would bid and then Redstone would bid up, et cetera.
It was multiple steps. There was a big court case that was pretty important in terms of did Barry have the right to come in and actually bid on this thing and break apart a negotiated deal? The person who I worked for, the VP, et cetera, she got sick.
And so I had to kind of step up and work with Barry directly, like making these pictures to Barry. You're a couple years out of college at this point? I was like two, three years out of college.
And at some point, Barry's like, you know, there are all these complicated numbers that you put together. And Barry wants to know, like, who is the person running these numbers? And he's like, I want to talk to the person running the numbers.
Herbert Allen comes and he's like, print out your model. Barry wants to talk.
So I got to print out my whole LBO model, bidding model, et cetera. What are you feeling at this point? Like, holy shit.
But the only question in my mind was, when am I going to get fired? It's like, this is a disaster. And an analyst is not supposed to talk to a CEO.
But in hindsight, I've seen this patterning with Barry, which is he wants to get the real stuff. He doesn't want a version, an edited version of reality, because then it's just an edited version.
He wants to go to the source and he

wants to know like there are these numbers and I'm making at the time one of the business decisions of my professional life based on like these pieces of paper who's responsible for this and I want them to explain it to me. So for me it was like you know crazy luck but it was also it's part of Barry's process, which is get the unvarnished truth because that helps him make better decisions.
But then I met him and I remember thinking, hey, if there's ever a person that I want to work with, like, I want to work for that person. Do you think there was something about you and the way you presented that made Herbalan believe that you would be customer ready and you could go and speak to, you know, one of the biggest media moguls of our time? You know, Herb was a big believer in betting on people and not hierarchies, et cetera.
I don't know, honestly. I remember the advice that he gave me is bet on people, not on companies.
And that was a patterning that he had through his whole career. He was very loyal, found a good person, and then would bet on that person.
And Barry's the same, which is like, he'll throw a young person off the deep end, and you'll either sink or you swim. He's selective in who he throws off, you know, what deep end, et cetera.
But both of them were willing to give opportunity outside of like regular scope or regular process, et cetera. And it shows, you know, they, they build incredible loyalty in terms of the people who know them.
How did you find your way to Allen and company? I know I'm just like pulling at threads going backwards here, but I was, um, it was a very considered decision, which was was I studied engineering in school and I actually had an engineering management job lined up at a paint factory. And then I fell in love with a commodity trader in New York City.
And at the time, I'm like, I need a job in New York City. What kind of job can I get? And it was investment banking.
My brother worked there. Still works there, right? Still works there.
So I got the job and chased the woman of my dreams and broke up with her six months later. But I got a job at Alamon Company, a pretty cool career.
Well, have you written her a thank you note? Because you'd be running a paint factory otherwise. I have not.
That's a very good point. I owe it all to her.
But based on observing you and your history and everyone else in your family, it would become like a paint factory that would then like buy all the other paint factories and then expand up and down the stack and then figure out how to add like 15 other businesses. And it would become this like beautiful conglomeration of something.
I don't know. You know, you could be right or I could have just gotten totally lucky by falling into Allen & Company.
I really do think it was just things came together, and everyone's career who's successful, it's a combination of luck and opportunity and taking advantage of the opportunity, and I just got lucky. So that's like a nice thing to say.
There are a lot of other people that could have lucked their way into an Allen & Company job and then not turned it into an incredible performance with one of the most important people where your model needs to hold weight, which is Barry Diller in that exact crucible moment in time. What do you say to young people when they sort of ask you this question about how much does luck have to do with it and how should I be the most prepared and how can I seize opportunities when they come up? I think I always tell people that the most common mistake that I see in young people is that they over plan their career.
And like, oh, I want to do X or I want to be vice president or I want to make so much money by a certain time. And when you over plan your career, you know, there's this human bias, which is to look for signal that agrees with the plan that you have and ignore it.

Everything else that doesn't agree with it. So my advice for young people is like, don't over plan.
You never know what opportunities are going to come up. I plan to stay at Allen & Company my whole life.
It was my place. My brother wound up being there.
but being open to possibilities being open to opportunities and then when you get that opportunity

going rather wound up being there. But being open to possibilities, being open to opportunities, and then when you get that opportunity, going all in, you know, like, it's just don't hedge.
If you're going to be in something, go all in and do what's required of you. And then like 50% more, like blow people away.
And then, you know, tomorrow, maybe something else comes up and you'll get there. But like, while you're in, you go all in.
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watching Booking just crush it. Top line, profit margins, rate of expansion, everything about it.
Booking built a hell of a company. Incredible.
When you're on the Expedia side of things, and then you get a fresh start at Uber, how do you take those lessons with you? And what did you learn? God, I learned so much. Booking was an execution machine.
And their focus, when we talked about focus, was hotels, hotels, hotels. And Expedia was much more, it started with air, right? And hotels was, to some extent, secondary.
And so I think one of the lessons is, OK, go after the larger market. And if you're a marketplace business, go after fragmentation of supply, which is if you think about hotels, there's so many more hotels in the world than there are airlines.
So I think they focused completely in the right area and built a global business first and just were an absolute execution machine.

The other area was that Expedia was probably more focused on building demand, kind of consumer demand, brand, et cetera. Booking was more supply-led.
Especially in the States, nobody knew what booking was. Totally.
But it's like, for them, it was about building up the hotel supply. And as you built up the hotel supply, every hotel became another piece of data that you could market through Google or Metasearch.
And if you have 100 hotels in a market, and you expand that to 200 hotels in the market, that market is also going to convert better. So not only do you build kind

of a new segment of demand, but then if there's a search for, you know, hotel and Nice, Nice becomes better product and convert more, if it can convert more, you can get more traffic from Google, etc. They play that optimization game, like no one else.
And for me, the biggest lesson as I came to Uber, was Uber's a marketplace business.

Very, very fragmented supply base, right?

It's 5.6 million drivers and couriers who are earning on our platform. And a few million restaurants? Yeah, close to a million restaurants.
And for us, our growth is also supply-led. So if you think about post-pandemic, and one of the reasons why I think generally we're doing really well and gained a bunch of categories, share versus lift coming out of the pandemic, was because we really focused on bringing those drivers back to the platform, building our service, et cetera.
And it was a supply led way of building the business, which definitely

was a learning that I took from Booking.com. With booking, you can build a market of, say,

geography for hotels and then use that to build a vertical. You can do the same thing at Uber

in a way that your competitors on both sides of the business can't, right? Because you can cross

market rides and eats. Exactly.
And especially in the US, there's a much more crossover between couriers who deliver food and then drivers who drive people. There's a much larger crossover and we can actually use eats almost as a recruitment tool.
In that moment, when someone says, I am interested in earning money, you know, gig money, on demand, et cetera, with all the flexibility, freedom, et cetera, the faster you can get that person earning money, the higher the conversion rate. And because of EATS, you don't need to get your car inspected.
You know, there's a lot of steps, additional steps, background check, et cetera, that's required for driving. Those steps don't necessarily need to be completed to deliver food.
You can get people into the food ecosystem. They can start earning on the Uber platform, and then you can upsell them into additional opportunities, driving people, shopping, et cetera.
It's a structural recruitment advantage we have in terms of building up supply. And as you build up the supply, the liquidity in the market case gets better, surge comes down, pricing gets better, ETA gets better, your ability to price gets better, and the demand shows up to some extent.
So everything you just said, that's always been like the story. Yeah.
It seems like in the past few years, though, especially relative to your competitors, it's actually become more of a reality. And I'm curious, maybe you talked about booking being execution machines.
What does the Uber execution machine look like since the pandemic to maybe make that more of a reality? Well, I think that there's always a delay between inputs and outputs, right? Which is you can start changing the inputs in terms of how you build a system, et cetera. It takes a while for the outputs to become emergent.
We did take a big step post-pandemic, once Eats got to size, to merge all the teams together, the technical teams together, the marketplace teams together, single earner team, et cetera. When Eats was small, it needed its own dedicated teams.
Because if you had one team doing rides in Eats, like all the attention would go to rides. Once we combined the teams, that allowed, you know, one technical team to really focus on the demand side.
Eats is the recipient, you know, so the rides business has most of the audience. And generally, we move more people from rides to eats.
So it's a it's a almost free customer acquisition tool for Eats. It's your largest customer acquisition channel for Eats, right? Yeah, we we get more new customers from Arise than we do from Google, Meta, Instagram, you know, all of these other channels combined.
It's pretty nice to own your own media. It's awesome.
It's crazy. At a quarter of the cost.
So it's like, it's a proprietary channel and it's cheaper. And then on the supply side...
Do you charge internally for... Totally.
Oh, yeah, yeah. Totally.
You have an advertising business, right? So it's an ad unit like any other. Exactly.
We're going to have to start charging each other for plugs on it. We can tell you a little bit about internal pricing mechanisms.
But, you know, all of it sounds great. But the fact is that whatever pixel that you put on the Rides app to promote Eats is taking something away from the Rides app.
Right? So there's a bunch of experimentation that had to be done, which is what are the right surfaces? What are the right messages? How do you target it? How often do you target it, et cetera? So there's a bunch of machinery that you have to build to do this stuff successfully. And for the benefit that Eats gets to be significantly larger than the detriment that rides gets and to not get in the way of the rides experience.
You know, want to screw up that experience. So to the question of why is it happening now is one, it looks great on paper, but then to build the machinery to actually do it effectively takes time.
And then if Eats has this new customer acquisition source, every year new customers EATS account for less than 10% of the business, of the overall business, because it's a big repeat business. So in year one, hey, is it nice? Yeah, it's nice.
But it doesn't really show up to investors, external investors. But then once, you know, it's the saying compounding is the seventh wonder of the world, the eighth wonder of the world, what's happening now is the compounding is happening, right? So we've had like three years of the machinery working.
So one year may not be noticeable, two years may not be noticeable, but three, four years, what we're doing is essentially our margins are growing faster than our competition because we have a bunch of proprietary traffic that's coming over.

And then on the ride side, there's proprietary supply coming over from EATS, again, compounding. Is it still that supply acquisition cost is bigger than demand acquisition cost for you guys? Yes.
Yes. I mean, it is.
We are a supply-led business at this point. Probably two years ago, we could have added 25% more drivers and couriers into the platform.
They would all be like super busy instantly. Right now, our supply generally is growing faster than demand because it's catching up to demand.
and the average driver who's on the platform is working more because the experience is better

earnings levels are are are pretty are really good. So at this point, probably supply is still trailing demand by 5% or so, but the marketplace is now getting to a point where it's balanced.
But it's that compounding that really starts working. I was reading through the most recent earnings and you have a chart where on average over the last five years or so, drivers make more money per hour.

If we entered some economic environment where a whole bunch of people were out of work and they wanted to become Uber drivers, but that would make it so that the average earnings across the whole platform would plunge because you have a whole ton of new drivers coming on.

Would you guys sort of gate it and be like, hey, we want to make sure that we don't sort of flood the supply side of the marketplace? No, because one of our core philosophies is this is an open platform. And if your background check comes in okay, et cetera, then you can have access to earnings opportunities.
That's a core belief for us. The economics take care of themselves, right? When you look at mid-cycle, long cycle, if earnings come down on the platform, then it becomes a less attractive platform to drivers and they will do something else.
There is this counter-cyclicality about our marketplace, which is during really good times, it becomes harder for us to recruit drivers. So the cost of supply goes up.
So while revenue and gross bookings are growing and unit volumes are strong, our supply base becomes more expensive. During softer economic times, you get more drivers coming into the platform.
ETAs come down, prices come down, the price becomes cheaper. So actually our unit volumes accelerate.
So if you look like our Q1 unit volumes, they grew 24% versus 19% in Q4. So we accelerated, you know, trip growth, which is not something that you see at our scale, but it's some of this stuff working out.
Right. So it's sort of the invisible hand of the market theory that sort of self-regulates this for you.
Yeah. It's not a theory.
It happens. Yeah.
I guess like, yeah. It's this very cool experiment.
Yeah. Economists like to talk about like things in theory, but like you actually have one of the largest data sets in human history of, you know, people doing work and other people consuming services.
Yeah. If you ask our top economist at Uber, he would say that we actually don't control the price to the consumer.
That it's actually the spot price for this kind of labor the marketplace sets based on the supply of labor coming in and the demand for transportation. And so there's this, you know, people say like Uber's setting prices.
He'd say, we're not setting prices. The marketplace is setting its own price.
So what do you do then? Like you have to have some levers at your disposal. You're getting a lot more profitable.
I mean, certainly I think in 20, whenever we did the IPO episode, Uber had lost like close to $3 billion the year before going public. You said in the episode that it was the most that a company had ever lost before going public in history.
I don't know if that's true, but attributed to Ben Gilbert at the time. Order of magnitude, that's true.
Depending on what profitability metric you look at, you guys are a break-even or slightly positive business and increasingly getting more profitable and looking

like a self-sustaining business. So what can you do then if you aren't in the business of deciding what a ride should cost? Well, I think we're in the scale business, right? Which is we essentially wire up every form of transportation of whether it's people or things.
And it's increasingly people and then shared taxis, et cetera, right? There are four and a half million taxis in the world. Who would imagine that Uber would be working with taxis? But we're going to wire up every single taxi in the world, right? And then on the- The curbs and the cabuluses and the flywheels.
And by the way, we work with them, right? A lot of times we will connect through them as intermediaries, again, to wire up these taxis. And then we've gone from food to alcohol to groceries, etc.
And then we have a freight business as well. So the more we wire up, the more demand.

You guys have boats now?

I'm sorry?

You have boats now, I hear?

We have boats in Mykonos, which is pretty cool. We have boats on the Thames, too.
It's just like if it moves and it carries people and things, we're going to wire it up.

Thank you. Boats now? I'm sorry? You have boats now, I hear? We have boats in Mykonos, which is pretty cool.
We have boats on the Thames, too.

It's just like if it moves and it carries people and things, we're going to wire it up and make it available on demand.

That usually brings in the demand for transportation, et cetera.

And then it's like math.

You have to do it in a more and more efficient way. I think one of the secret sauces that we have is we have a very large and capable marketplace team.
These are ML engineers who are building out the systems that match price all of this connectivity. And when you're working over an ecosystem of 2 billion transactions a quarter.
Yeah. than anyone else.
So every year when I can't speak to how our competitors are matching and pricing, but every year matching and pricing probably improves by 5% a year. So you improve the marketplace throughput by about 5%, everything else being the same.
And that's like free growth. And when it's on top of, call it $120, $130 billion run rate, it gets big.
And again, it's compounding. Like every year, this machinery gets better.
So then just to make sure I'm understanding right, the reason why, because you talk to anybody and you're like, oh, what should I ask Dara? And they're like, ask them why Ubers are more expensive than they used to be. And I'm like, because it's a good business now.
But actually, I don't think, it sounds like that's not actually the right answer, that the reason rides have gotten more expensive over time is A, inflation, but B, just that there is more demand for those rides than there is supply to serve them. Correct.
The cost of labor has gone up, right? I mean, how much you have to pay for any kind of blue-collar job, you know, everybody's talking about it, right? The bunch of retailers were having trouble hiring enough people, restauranteurs, et cetera. And then it did become more expensive to bring drivers into the Uber ecosystem.
Earnings expectations have gone up. And by the way, I think that's a healthy thing, right? It's if you kind of step back, you know, the increase in salary and wages for blue-collar jobs hasn't kept up with the salary of, like, tech workers or, you know, capital, et cetera.
So I think the catch-up is a really healthy catch-up. That is the reason why Ubers are more expensive now.
Now, in this environment where we are adding supply faster than demand because the supply is really coming into the marketplace,

prices in Uber now, year on year, are down. So getting Uber to the airport in San Francisco this morning was the cheapest it's been in months.
So pretty cool. Well, specifically not thank you, thank the invisible hand at work.
Thank you, Mr. Market.
Yes, exactly. How has the complexity of Uber relative to Expedia matched up with your expectations coming in? So there's complexity in terms of all of the stakeholders that you have to think about.
And that's like, it's a difference between chess and like four-dimensional chess. It is like Expedia, travel agency, you're bringing demand to your supply base, etc.
And you have to think about the travel ecosystem. With Uber, Uber is like an incredibly important service to the cities of the world.
And also Expedia, you weren't providing the service. Yes.
You were a marketplace layer. You're not operating the airplanes.
Exactly. You're not making up the hotel rooms.
Exactly. The drivers are providing the service, right? But we're much more responsible end-to-end.
But you're responsible for your customers. We have a very, very important responsibility to driver and courier community, these over 5 million people who are making an earning or making kind of a side earnings on Uber.

And then the responsibility in terms of like regulators and governments, et cetera, that consideration set is just, it's so much bigger.

So from that standpoint, it's tough, but also really interesting and satisfying in some ways. Were you ready for it? Was I ready for it? Yeah.
No. I had no idea.
Is this one of those, like, if you knew you wouldn't have done it, but now you've done it, and so all this value has been created and, like, great. I'm so glad I did it.
It was a friend of mine. I was like, hey, are you having fun? I'm like, no, I'm not having fun.
I love it. The job is too hard.
It's not fun, but it's so cool. It's such an interesting space.
You really feel like you're having impact. Everyone at Uber, we always talk like you don't come to Uber for easy.
You you don't come here for an easy job it's complicated it's hardcore people work their asses off but like you love it and it's not fun like it ain't fun but people love being at the company that's something i didn't know and then and then the the dynamic real-time nature of the marketplace and how we balance the marketplace and the pricing, etc., is unique. It's Thursday night, there's a Taylor Swift concert, all hands on deck.
We've got to figure things out, that operational nature, but how dynamic and fast it is. Does Uber HQ plan for Taylor concerts ahead of time as they're happening? Uber HQ doesn't, but there are ops teams on the ground.
They're the heroes. They're on the ground, city by city, work their ass off, and they are where the rubber meets the road, so to speak, to use a transportation metaphor.
David asked asked this interesting question that I want to dig a little bit deeper on, the were you ready for it? What kind of diligence did you get to do on the opportunity when this job came on the market in the national news in a very prominent way, in a very short time period? I want to cover that first. When did you bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bit of a little bithunter.
Whoa. Headhunter called me.
It was a process i'm like no way like no thank you goodbye happy in seattle yeah 13 years i got my place on wimby yeah i love working for barry like it was i was good this is fun yeah and then and then we exactly it was fun and then i i was at the Sun Valley Conference, the Allen & Company Sun Valley Conference, and having drinks with Daniel Leck. And he's like, Dara, you know, did you get the call from a headhunter about the Uber job? I think you'd be perfect for the job.
And I didn't know what the headhunter, why the headhunter called,

turned out Daniel. I'm like, dude, why would I ever do that? Like, I'm happy.
Like, why would I ever jump into that mess? So Daniel gave the headhunter your number. Yes.
And I'm like, no way. He tipped him off.
No way. And he looks at me like, with those like, piercing Scandinavian eyes.
He's like, Dara, since when is life about having fun?

It's about having fun?

It's about having impact.

It's important.

You can do this.

And I'd had a couple of drinks, and the alcohol was flowing, and we were having fun.

And my wife says, like, yeah, you can do this.

I'm like, yeah, I can do this.

So the next day, I called the headhunter back, and I said, let's talk. And the next step was for me to meet a board member and we had dinner and he was very charming and he kind of started the recruitment.
It was pretty cool. And how long between then and when you accepted the job? God, I think it was about two months.
It was over the summer uh how do you keep it secret nobody knew i told them i said listen up front um i have a job and it's a great job so the nanosecond that my name shows up in the news i'm out of here so i just want you to know like the nanosecond it shows up in the news i'm out of here but i had to be realistic that it could show up in the news it's amazing that that it didn't so actually at that point i called up barry because i couldn't put barry in a situation or myself in a situation like i've worked with him 13 years probably 20 years at iec and then even before as a banker like he and i have an incredible relation i always like so much to him i couldn't take the risk of his seeing it in the press and you know the consequences of that um and and the and the loss of trust so i called him up i said barry had on a call me about uber um i'm gonna talk to them and he's like you're effing crazy hung up on me i told i told said like oh my god i'm gonna get fired uh and nothing dead silence you weren't gonna get fired because what was barry gonna do like step in and be CEO himself? He wasn't going to. Maybe he would.
I didn't know. We worked together for a long time.
Call him the next day. He said, speaking as the chairman of Expedia, it would be a real mistake.
But speaking as a friend, I understand why you're interested. I would be too.
How can I help? And that's the definition of who he is. Because we weren't in the news, it was like we gossiped about it.
It's like, oh, did you hear Meg is this? And so it was a fun thing that we gossiped about, but he actually, there was a point in time when i had to make a presentation to the uber board this was like my big presentation and and i heard that the other candidates were coming in to present as well so this was a big day and i told him i think it was a saturday or sunday that i'm coming in making presentations he's like show me the presentation no it was a powerpoint so i showed him powerpoint and he actually helped me in the powerpoint he's like this is good this is good you have to add add this page uh so it's just it shows you the kind of person he is which is he put friendship in that case over his own business interest maybe it was sick of me i don't know but it was just calculated yeah it just shows you that that is true personal loyalty. Yeah.
And there's an element to it, too, where if he got to collaborate with you on it, then there was a chance you would stick around on the Expedia board and remain a friend of the company, even though you're not in the seat. Yes.
And I still am on the board. It's, you know, I love the company.
But it's weird being on the board as a former CEO. Like it's a strange experience.
Did you do anything to prepare for that? No, like usually my life was like

stum- company. But it's weird being on the board as a former CEO.
Like it's a strange experience. Did you do anything to prepare for that? No.
Like usually my life, it's like stumble into something and then figure it out. You're also a busy dude.
Yeah. But it was, I wanted to stay on the board.
I wanted to help. And you know, the company's going through its own journey now.
So hopefully to greatness. Did you consider, I mean, this sort of famously was an issue in the Microsoft transition and has been an issue in the Disney transition.

Did you consider, hey, actually, maybe it would be better for the company if I didn't serve on the board just to give enough space for new leadership? I talked to Barry about it, and it's ultimately up to him, right? And I think he decided that he wanted me there, and I try to be helpful. But I think it's absolutely right, which is the job of the new CEO to some extent is to be the CEO and do something different from the old CEO.
That's definitional. You know a little bit about that.
Yeah, exactly. There could be hesitancy at a board meeting, et cetera, because the old person's there, you know?

And so that, it was, I think on a net net, I trust that Barry's judgment, it does feel

weird sometimes because I've moved on, but it's working.

I think it's working, but it's complicated.

I bet.

All right, listeners, it is time to talk about one of our favorite companies, Statsig.

It's funny, David, Statsig has gone from this little startup when we first started working with them a couple of years ago to this total powerhouse now. I know, it's wild.
I was looking it up and they have added all these customers since we started working together. OpenAI, Figma, Atlassian, Vercel, Notion, tons more.
At this point, if there's a growth stage tech company out there, there's pretty good chance they're using Statsig. Yep.
So listeners, if you are unfamiliar with Statsig, they basically took what was the standard product infrastructure at every big tech company, and they built it as a standalone company. This includes advanced experimentation tools, A-B testing, feature flags, product analytics, session replays, and more.
So if you're building the next great software company, this sort of infrastructure is essential because it allows your product and engineering teams to release things quickly, measure the impact of them, and track progress over time. Totally.
So, I mean, as we've talked about on the show forever at companies like Facebook or Netflix, data was just a part of how everything was built, which contributed to all the crazy bottoms-up organic growth that they had. Now with Statsig, you can get that from day one at your startup.
And today they're not only trusted by startups, but also by more mature enterprises like Bloomberg and Microsoft and Electronic Arts. Turns out that a single system for data-driven product decisions is useful at any scale.
Yeah. And by the way, the scale they're operating at is completely insane.
They process over 2 trillion events per day now. By the way, David, this is updated.
The last I checked it was 1 trillion. And then this morning I pulled it up 2 trillion.
And they handle releases to billions of end users. If you're listening to this podcast and you've used software in the last few years, there is a very good chance you've been a part of many experiments orchestrated by Statsig.

Yeah, it's just awesome. And as they've gone upmarket, they've also started to offer some interesting deployment models, like being able to run the whole thing natively inside your existing data warehouse, or just using Statsig's fully hosted solution.
If you want to leverage Statsig to grow your business, there are a bunch of great ways to get started. Statsig has a very generous free tier for small companies, a startup program with a billion free events that's $50,000 in value,

and significant discounts for enterprise customers. To get started, go to statsig.com

slash acquired and just tell them that Ben and David sent you. Thank you, Statsig.

All right, so back to the reverse diligence question. Yes.

What did you get to learn about Uber? And I mean, to directly ask, did you get to talk to Travis? Like, did you get to talk to any of the sort of departing leadership? Well, I talked to Travis a couple times. I talked with Ryan and Garrett, who were the other founders.
I talked to a couple of other board members. I did financial diligence, et cetera.
And, you know, for me, it was ultimately about the opportunity. It's such an important company.
I always tell people, I look for three things, right? It's, do you work with people whom you like and you can learn from? Can you use an individual to make an impact? And then, is the place or the company that you're at going to make an impact? I wasn't sure, number one, but I was a CEO, so I could build my own team. And as it turned out, there have been great folks there who have stayed, who were there before me, and then new folks like Tony West and Nelson Che that we brought, et cetera.
So the new team's a combination of new and old, which is great. And definitionally, as a leadership team, we can have an impact on Uber.
And Uber is a company that it's unique in terms of its impact on the ground and the city. So it all checked off and the financials, you know, it was still a really young company.
So the financials for me, yeah, could I do deal with this? Even though it was 10 years in, right? Yeah. Less than that, probably.
Yeah, probably. It was just about 10 years.
Okay. Yeah.
There yeah there you go you know better than i do i imagine you had to have been feeling like god if we can make this work the opportunity here is just like absolutely you know all turnarounds are hard tech turnarounds are especially hard but i think uber had a global position, a talent pool, a brand that was absolutely exceptional that was just going through a really, really hard time. It was a verb.
Yeah, exactly. And so that was actually advice that my dad gave me.
Like, when a company who's a verb asks you to run it, just say yes. I'm like, all right.
Sometimes you can overcomplicate things. And it's like, hey, do you want to take a shot? I want to take a shot.
It's so funny you say turnaround. I literally, it never occurred to me that you could construe Uber as that, but it might be the only turnaround in history where it was growing incredibly fast, had 10 billion of revenue, had some of the smartest people in the world working at it, had all this momentum, of course, burning money, catastrophe in the boardroom, catastrophe in the C-suite.
So it is a turnaround in that sense. And it was losing a bunch of share to Lyft.
Right. So that was the- Delete Uber? Yeah.
Delete Uber. Delete Uber, yeah.
Moments, et cetera. So that was the tough thing, which is you're burning a bunch of cash,

and at the same time you were losing category position to, you know,

what's a tough competitor and a strong brand.

Tell me if you agree with this statement.

In the U.S., you no longer really have a formidable competitor in ride sharing, but in food delivery, you have a tremendously formidable competitor. I think Lyft is stronger than people give it credit for.
Yeah, it's definitely going through a tough time. I mean, the new CEO is, you know, he's like moving.
He's making moves. He's super aggressive.
We'll see where that ends up. I feel way better today than I did five years ago, but I wouldn't count them out.
Lyft is such a great example of a story we see over and over again on Acquired of like, it's never over till it's over. It was over for Lyft.
And then it was not over. And now they're having a tough time.
We'll see. But DoorDash is a tough competitor.
DoorDash is larger than we are in the US. We are focused on keeping share in the US and then gaining a bunch of share outside the US.
And then over a period of time, using the structural advantage. One, build profit pools outside the US.
Use that to attack the US over a period of time, and then use the structural advantage that we talked about in terms of customer acquisition over a period of time to hopefully gain category position against DoorDash. But they're a tough competitor.
We respect them. We don't like them, but we respect them.
Is there something in particular that you think they've done? I mean, when I think about them, I think about what you were saying about booking, just like being an execution machine. I'm curious from your perspective.
I think it comes to like these company biases, which are pretty important. They made a bet on the suburbs.
And they made a bet on selection, restaurant selection. Uber was an urban company.
We operate in the big cities, transportation, et cetera. The business in suburbs is much lower.
So we want to leverage a customer base that was an urban customer base. So we went after the urban restaurants, et cetera.
And Uber was about cheap and fast, right? So if you think about it, if what you're trying to do is optimize for speed, let's say delivering 15 or 20 minutes, the radius of restaurants that you can deliver front is smaller. So you make a sacrifice in terms of selection in order to optimize for speed.
As it turned out, one, the suburbs in terms of food are bigger than cities. A lot of families in the suburbs.
Yeah, big families, et cetera, big demand demand, etc. So we, because of our urban biases, we didn't look at the overall market.
We're like, what's our market? How can we leverage our demand, etc.? That I think in hindsight was a mistake. And this is like a 2013 to 16 decision that everyone's still sort of living with now.
I mean, now we've corrected that. Yeah.
But listen, it was, I was running this same playbook 2018, 2019, too. So I don't want to blame it on, oh, this is, you know, it was happening all along.
It's just like, usually you focus on the things that you're good at. And we were really good at urban and we were really good at fast and cheap, right? And we now are much more focused about building out selection as we built out selection in urban centers our category position versus doordash is actually quite constructive really strong we are looking to break into the suburbs uh and there we got some work to do and and the suburbs are a very, very strong position.

It's kind of their profit pools, right? And then we're building our profit pools outside and international. And, you know, kind of the battle is happening in the big cities.
Yeah, it's interesting. I would imagine the suburbs, there are so much more weighted to food delivery than rideshare.
Totally. Yeah.
Totally. Now, we are expanding rideshare into the suburbs now, and it's a pretty fast-growing part of our business.
So maybe we'll get there over time, but definitely it was an early aim of the business. We now specifically are aiming in certain suburbs.
And you have to build out your courier base, your restaurant supply, demand. So all of it has to come together, which is difficult.
And DoorDash has done a good job. Yeah.
Not the end of the story, though. I'm curious.
There's so much of this strategy that if you connect the dots looking backwards to use the Steve Jobs parlance, it just makes so much sense. This expand internationally, leverage the fact that you're sort of the leading global player, generate cash, use it to compete domestically, eats, feeds, ride sharing, which feeds, you know, you can sort of use this flywheel.
We haven't talked about freight yet, but I'm curious, like, of the three pillars today of ride sharing, Uber Eats, and freight, and divesting everything else, all the autonomy, all of the self-driving cars is autonomy.

What else did you guys divest? All the international bikes and scooters. Planes, right? A VTOL.
Elevate. Yeah, elevate.
Elevate, et cetera, yeah. What of today's strategy was in your pitch to the board when you were joining as CEO? And what is an emergent thing that's happened while you're in the seat? so the pitch to the board was really different in that it wasn't about

stress and what is an emergent thing that's happened while you're in the seat? So the pitch to the board was really different in that it wasn't about strategy. It was about operations and how you take the business to break even and profitability, et cetera, right? It was presenting myself as a mature operator and my track record at Expedia.
I think now things have changed, which is we have become much more focused on those three segments. And if you look at rides, we have a number of growth bets, which is there's this base business, UberX, which is going to be 50% of our growth.
Then about 15% of our growth are international countries where the business model as we had it wasn't legal. So the attitude at the time was, well, if our business model isn't legal, then we're not coming in until we're invited in.
And we took a different tack, which is, well, what business model is legal? And let's adjust our business model to the country versus have the country adjust to the business model.

And once you're in and you build trust within a country and you build a voice, et cetera, maybe then the business model can change over a period to benefit drivers, couriers, et cetera. So like we're in Germany, we're in Spain, we're in Japan, we're in Korea, we're in Turkey.
There's a bunch of countries that we're expanding into with tweaks to the business model to make sure that we're expanding into those countries the right way.

And then there's a whole host of new bets that we're making in terms of transportation. Taxi, which is huge.
Low cost, hairlables, two wheelers, three wheelers, Uber for business, health, transportation, all of these different segments, that whole kind of the new bets portfolio will be 35% of our growth. So if we do it right, we will, 50% of our growth will come from these new initiatives that really didn't exist.
And then on the eat side, obviously it was about food and kind of the general expansion of that business, but it's really about getting into the other categories, getting into grocery, liquor, et cetera. And one of the parts that I'm super excited about is we've always had kind of, call it an integrated offering.
If you think about Eats, there's a marketplace offering. You come to Uber Eats and Eats is bringing you demand.
And then there's the fulfillment of that demand, right? My bringing wine here and delivering it, right? Thank you. This is delicious, by the way.
That has nothing to do with demand necessarily, but it's fulfillment. These are two separate businesses that got stapled together.
Exactly. So we have now, we're separating the tech stack, right? So that now we can offer, we can go to merchants and say, if you want marketplace, great.
But if you want fulfillment, we can offer you fulfillment in a separable way. So for example, Walmart isn't in our marketplace because they're Walmart, they have an incredible brand, et cetera, but they use our fulfillment services.
And more and more that our vision is we essentially want the local grocer to out Amazon Amazon. Like every single local business can deliver same day, which is better the next day.
If we can connect that to Marketplace, that's great. But that can also be a separate part of our business that can grow and thrive.
It's so funny how much of this goes back to the original 10 years ago, 15 years ago vision for Uber. It just takes so long to realize these things.
It does. It's complex.
It looks great on paper, and then real life is a lot more difficult, right? Are there activities that you've sort of thought about where you used to need to do something different or counterposition the market in order to be successful, where now sort of look around and you're like actually in this area we're the incumbent so there's a different strategy that we need to lean into as an incumbent our working with taxis was was an interesting twist right which is to some extent they have been definitely the competition or we have been the competition or the um challenger to those incumbents. At some point, we became much bigger than taxi.
But in the end, if you remove yourself from the emotions, et cetera, and we're competing against X or Y, we're in the job of wiring up vehicles and drivers who want to drive people to places. And that includes taxi, like there are four and a half million of them.
And if you take the hypothesis, which is the days of old where you wave your arm to, you know, wave a taxi down, like things are changing, then it was a move that was obvious. But at the same time, like the beauty of Uber is when you get into the actual challenges.
Like, for example, we launched Axeep.

And the way that we match generally Uber is one-to-one. So you hail for an Uber.
We will match you. We'll make an offer to a specific driver.
Driver says yes. Driver comes pick you up, et cetera.
What we found in taxi markets is that when we made the one-to-one match, if we weren't integrated into the taxi meter, and that's something that we'll build over a period of time, the taxi might be full, but the acceptance rate of the taxis was much, much lower, and we didn't know why. And if the acceptance rate is lower, you might wait for a long time to get matched because we're going to send offer, offer, offer, offer before you get a match.
So the team team built a technology blast dispatch which is instead of a one-to-one match it's a you know we'll make a dispatch of 10 different tassies one of them accepts just like the old taxi dispatch system like who's you know there's a pickup on 54 leonard street and someone says joey says yes i got that Yeah, I got that one. So like what's old becomes new, what's new becomes old.

But it... wake up on 54 Leonard Street and someone says, Joey says, yes.
I got that one. Yeah, I got that one.
So like what's old becomes new, what's new becomes old. But what's been interesting is there's a simple idea, but then building out the tech infrastructure to be able to fit to that particular market becomes a challenge.
But also it's an opportunity, which is now for some of our competitors to copy that. One is it's taking a lot of tuning to actually get that experience to be excellent.
There are some markets where we're mixing demand. You might click for an UberX, a taxi might show up.
Is that a good thing? Is that a bad thing? It improves marketplace liquidity. And things that seem very simple on the surface to actually make the magic happen of pushing a button and a car shows up in five minutes and you get great service, it's actually pretty difficult tech to build on the ground.
It's really cool. That is cool.
I have another sort of corporate structure question that I'm curious about. I think you guys, between when you took the job and today, turned over basically the entire Uber shareholder base.
I'm sure there's some people that still hold their shares from those early days. But what is that like at the scale of a $70, $80 billion market cap company turning over a shareholder base in its entirety? Very painful.
It was the displacement in terms of shareholders. It was tough, right? And there's a certain cohort of shareholders going after hyper growth, etc., especially in this marketplace where it's much more about disciplined growth, profitable growth, etc., that that changeover has been difficult.
but we now have a set of shareholders like the Fidelities of the World, Capital, Morgan Stanley, et cetera, that have the capacity to own a lot of shares, way more than they do today. And there's a consistency about it.
As we keep delivering, they keep upping their stake. And we're now seeing a stock price that generally is is working but i'll tell you when we're in the middle of it like it was it was tough you know after the ipo after the uh lockup stayed travis sold all his shares and those days like those were not probably 15 of the company i don't remember something like that%.
It was a lot. There are moments when you remember that stock prices are a function of supply and demand.
Totally. And when 15% of a company's outstanding shares hit the market all at once.
Or 2%. Or 1%.
Yeah, right. Like that's, wow.
I think in hindsight, I think it was a good move by him because it created separation he wanted to move on and so i in hindsight i respect what he did and in hindsight like i didn't see it at the time i was like pissed right and people were panicking oh my god travis is selling what does that mean etc like and and you know there's this everyone wants to create drama around Uber. So it's difficult as the leader to keep the team focused and believing because it's very easy to keep score based on the stock price.
And the stock price is definitely moving in the wrong direction. And Travis, whether you like him or not, you respect him.
He's a really smart person. He's a founder of the company.
That was a tough time.

But I think we're now in a good place, which is the shareholding is moving from either some of the startup folks or hedge funds to fundamental long-only players who hopefully they'll be shareholders for the next 10 years. one of the things that we heard from many people as we were researching that time period was just

the for the next 10 years. One of the things that we heard from many people as we were researching that time period was just the immense degree of the stakes involved for the whole ecosystem.
Like this went beyond just the drama in the press. That's one level, right? But like the number of university endowments who through the venture funds that were invested in Uber had large portions of their whole university endowment that were dependent on the private mark of Uber.
And fund of funds where compensation had already been paid out as if this was a liquid security, but it's not a liquid security. And sovereign nations that were, you know, not dependent, but like paid attention to this.
Were you aware of that? Did you feel that? Oh, yeah. Obviously, Benchmark and Travis were in this power struggle, but there was this heavy feel like when you talk to the Benchmark folks, there's this responsibility, which is this was one of the hits of the century.
This is a category-defining company and investment. And benchmarks had a lot of good ones, but this one was a great one.
And while I wouldn't say it was a probability, there was a much higher than non-zero possibility that it could all go. It could all go poof.
So I think that was a very, very heavy weight on Benchmark and some of the other startups, et cetera, which led to all events that ultimately led to like they're bringing in an unknown outsider. Like that, those are some heavy decisions i wasn't there i was kind of yeah at the tail end of all that drama and but then you had to deal with the shareholder based turnover which was like the real the unwinding of those that expectation well one one cool kind of um it wasn't cool at the time but but one one really interesting kind of dynamic that that played out when I got in was there was all this stuff happening.
Like, I had to go to London, TFL, they revoked our license, and there had been a data breach, and we had to deal with that. And just, like, it was craziness, right? And at the same time, SoftBank was looking to invest in the company, And this is the Vision Fund days.
And SoftBank, the only way they came in was heavy. There was no TikTok.
There's no likeness of being with Masa. Let's talk.
And the issue that we had to deal with was one where Benchmark and Travis and the founders, they all had high vote shares. And they both wanted to control the company.
And if you sold your shares, they would flip into low vote. So there was this game of chicken, which is SoftBank wanted in.
And in typical Masa fashion, it was like, hey, if you don't let us invest in you, we're going to invest in that pink company, right? And it's billions of dollars. And so we had to get SoftBank in, and they wanted to invest in Uber because it was a top brand, had top tech, et cetera.
But at the same time, none of the shareholders wanted to sell because there was this game of chicken, whoever sold might lose control, et cetera. And so we had to go around to all of the high vote shareholders.
And we literally had to like get everyone to agree to blow up the high vote shares. I think it's actually the only time when a tech company, like they blew up all of the high votes.
And so every, like, we literally had to go shareholder, shareholder. And, like, Ben said he would say yes.
And George, like, everybody. And if anyone said no, none of it would work.
And, you know, Salt Bank would go to Club Pink, which would be a disaster. Wow.
So that was a really interesting kind of this. It was like all or none.
Right. And in the end, we got everyone, including Travis, Benchmark, everyone agreed to essentially switch over high vote to low vote.
And that one, it got SoftBank in, but it stopped the power struggle because then no one could control a company. And that was actually a real secondary benefit, which is then it became like, how do we build a great company versus who's going to get control and who's going to have more impact? We did it for SoftBank, but in hindsight, it was a really important move, which is, okay, no more board control.
This is no longer going to be a controlled company. Let's go build.
This was an $80 billion prisoner's dilemma. Yeah.
Yeah. Because if anyone said, actually, I'm going to move in my own self-interest here, actually, long term, it would have blown up a deal.
Everything would have blown up. And you might have had a Lyft who was gaining category position against us with a $10 billion investment from SoftBank.
That's right. It was $10 billion.
It was actually, I think, $15. Oh.
And some secondary and some primary. Wow.
It would have been like that. That would be, maybe it would have been life or death.
Who the hell knows? And I mean, Uber had raised the most money of any company, any startup at that point. It was just, it was a very, a very very high stakes game and it was we had a deal person cam who like did heroes work like just talk to everyone and then he would like kind of bring me in as a nice guy and you know say all the nice things and but you know in the end in the end like it worked it was a big move and everybody everybody converted it, which is pretty awesome.
Wow. This is like a little bit of echoes of Sumner Redstone and your early...
It was good training. Good training, right.
It was good training. I love the operating side of the business, the tech, et cetera.
That's the stuff that I love. But I have to say the investment banking background that I had helped.
Like, even the concept of, hey, how do we get out of this issue? The way to get out of this control issue is everyone blows up the shares. And I was like, wait, like, that will work? We're like, yeah, like, that could work.
Show me the bottom. No, then, like, going after, like, starting to call people.
Wow. It was awesome.
It was cool. Humility is great and all, but, you know, were you proud of yourself when that went through no because the next day there was another crisis like it was like you know breathe for two minutes you know drink more wine and then off to the next battle okay listeners now is a great time to introduce a new friend of the show who many of you will be familiar with, Claude.
Claude is an AI assistant

built by Anthropic, and it's quickly become an essential tool for us in creating Acquired and

the go-to AI for millions of people and businesses around the world. Yep.
We're excited to be

partnering with them because Claude represents exactly the kind of step change technology that

we love covering here on Acquired. It's a powerful tool that fundamentally changes how people work.
I know, Ben, you have used Claude for some acquired work recently. Yes.
So listeners, I used to take four plus hours the day before recording to take all the dates for my raw notes and put them in a table at the top of my script for recording day. On the Rolex episode, I actually fed my raw notes into Claude and asked it if it could do that for me, which was amazing.
I just got my most important 100 dates for the episode done in like 20 seconds. You texted me to this table.
It was awesome. Yeah, that freed up an extra half day that I used instead to focus on explaining how a mechanical watch works, which I'm so glad I got to spend the time doing that instead of making the table.
Totally. So cool.
I was actually just chatting with Claude to brainstorm ideas for something big that you and I are working on for later this summer, and it was insanely helpful. Listeners, stay tuned to hear all about that.
Yes. So listeners, by using Claude as your personal or business AI assistant, you'll be in great company.
Organizations like Salesforce, Figma, GitLab, Intercom, and Coinbase all use Claude in their products. So whether you are brainstorming alone or you're building with a team of thousands, Claude is here to help.
And if you, your company, or your portfolio companies want to use Claude, head on over to claude.com, that's C-L-A-U-D-E dot com, or click the link in the show notes.

I'm very curious about how you operate your Twitter account. On the one extreme, there's like an Elon Musk type operating a Twitter account.
There's only one Elon Musk type operating Twitter. There is no type.
Yeah. It's a singular point.
There is one in, I don't know how many MDOs they have, but one in some hundred million data point of tweeting whatever comes to your mind, no matter the consequences. So much so that he bought the company.
Yes. And then on the complete other side, there's like Barack Obama and Tim Cook.
And I'd say you're like one click in from the Barack Obama, Tim Cook. And I'm curious.
like, consider that compliment. Like, you definitely operate your public persona with sort of a head of state grace.
And I'm curious if you ever think about letting it fly a little bit more. Do you have a full drafts folder? Like, do you ever wish you could express yourself a little more? What I think yeah twitter feed do you have a burner account so i tweet mostly myself there's some stuff that folks say we did this it's it's me like i don't have someone running the account and you know i mix it up with some personal stuff and then some business stuff because you want to keep it entertaining but at at the same time, I'm not using Twitter to express myself.

I'd rather have a long-form discussion like this.

Like, this is, to me, much more interesting.

And so Twitter tweets can be taken out of context, et cetera.

So I'm not there to stir the pot.

So maybe that's what comes out in terms of my Twitter persona.

I'll take Obama-esque or Clinton-esque. Tim Cook works for him.
Yeah, that's quite a compliment. All right.
Next, we're kind of in like a lightning round here. So next random lightning round topic, you were on the board of the New York Times.
Yes. What are some of your biggest learnings from being involved with that company? It was definitely my favorite board to be on.
It was a really interesting time at the New York Times because they were really becoming a top technical company in terms of being a publisher. It's a pretty extraordinary learning organization, and they wanted me as the tech person.

I was coming from Expedia and optimization, all that stuff. And their capacity to learn, like super traditional company, capacity to learn was pretty awesome.
One of the fascinating parts about the company, and it's both a superpower or it could be a weakness, is total separation of church and state in terms of content and business right so like when i asked well what's the cost of certain kinds of content and then how much traffic you know can we have the connection between cost of content and traffic it was like no you cannot ask that question because the content is separate so it's it's just a fascinating organization and the bet that they made on subscriptions was amazing. It was not obvious, because the advertising business was much bigger at the time.
But it was an enterprise bet based on a core identity of the company, which is we believe in quality content. And I thought that was one of the most impressive bets because it was totally non-obvious at the time.
Like all, every single news organization, et cetera, was advertising, advertising. This is the BuzzFeed days, right? It was quick content, et cetera.
But I think that the bet that they made in quality was very much a bet on their identity that wasn't backed up by data and certainly wasn't backed up by their financials. But the company went all in and they really benefited.
Do you think that could have happened in a company that wasn't family controlled? Like, did that have something to do with how they could make a bet like that without the data to support it yeah i think they're very sure of that core the quality of the content that they're building and that allows them to make those kinds of business bets because in the end they know that the content is going to win absolutely a little bit like netflix too it's like quality content focus on subscriptions Now they are going to the advertising, right? So you can't have a forever strategy or be so dogmatic as to not to understand that markets change. Strategies have to change for the time.
But it was absolutely the right bet at the right time. Well, I'm curious how much this was an explicit boardroom conversation.
The Times also made a very explicit bet on scale of quality content. You could argue maybe Wall Street Journal, but other than maybe them, maybe, maybe the Post, maybe, nobody else has aggregated quality content at scale.
Globally, people might think of the political stuff or the new stuff, but the New York Times company company covers every vertical every geography has at least twice as many reporters employed as any other news organization in the world i think how much was that a discussion in the boardroom there was absolutely a view of the management and the board agreed and i have to be careful because it was a boardroom and it's confidential, et cetera, which is if there's going to be a top global brand for quality news, that should be the New York Times. Like why would it not be the New York Times? They're very clear out about that and they're quite determined to achieve that.
I think they're doing a great job. Yeah, and it's interesting, right? Like, the company's called The New York Times.

And yet it's a global, you know, it really was a, in a way that, you know, in video and with Netflix, I think it was a more, an easier leap to make. For news, I think it was a really unique leap that the Times made.
Well, it will be interesting to see, which is they, you know, Netflix is building like Korean content that then extends globally. New York Times isn't necessarily doing that, right? It's English language content that is relevant to the world, but it's probably relevant, especially international, to a subsegment, right? It's higher end consumer, et cetera, who can't afford the price.
But again, it's been an absolute winner of a strategy and what's been a tough business. Yeah.
I mean, there's a graveyard in the middle between the independent publisher with a low-cost structure and the New York Times, and there's not much in between. The middle is where you go to die.
Yeah. More lightning round.
I remember hearing in 2013 that it was cool that I was in 2013 because 2014 one year away was going to be the year of self-driving cars and here we are in 2023 is next year the year how close are we oh that is a it's an unanswerable question i mean it is because there's the last two percent of use cases the tail use cases um it's unknowable what it'll take to get past that last 2%. And there's this pretty interesting philosophical question, which is, how safe does a robot have to be? In the US, I think there are 40,000 deaths as a result of car accidents.
Let's say that robot cars are 10 times safer. And I think highway accidents are one of the top two or three causes of death in the United States, period.
So like something 10 times safer? Yeah. If you're 10 times safer, you know, fast forward 25 years from now, like who knows what it'll be, 4,000 deaths a year, right?

So little more than 10 a day.

And if you have four companies that are responsible for the marketplace,

five companies, and there are 10 deaths a day,

a good day is, hey, we only had one fatality.

That's a good day.

Like, it's just, I can't imagine that. And so there's this, well, does it have to be 10 times better? I don't think that's good enough.
Does it have to be 100 times better? Maybe that's not good enough. So like, from a societal standpoint, of course, if it's 100 times better, we should go forward with it.
But that would mean there are 400 fatalities a year, one every single day. And I don't know how society would deal with that.
Society is very, I don't call it forgiving, but they understand humans are human and humans make mistakes. You must have experience with this already.
Yeah. Listen, we had this unbelievably unfortunate circumstance in Phoenix, and it caused us to completely redesign how we built for safety first, et cetera.
Ultimately, because of the pandemic, we decided to get out of self-driving, which I think is, it was a good decision because our core skill set is like building this demand network, connecting demand to supply in a dynamic way, et cetera. And we now get to work with a bunch of partners and like waymo's a partner aurora's a partner etc so we get to work with a much larger ecosystem but i think the question of that that last two percent and then what is society ready you know what what safety will society underwrite to those two questions know, are for me unanswerable.
My instinct is that you will see small scale continued experiments kind of get bigger over the next five years. But it's going to take a good 10 years for it to be a material part of our network or transportation at large.
But that's a guess. I'm curious too, also, I want to ask, given both your job and you and I both live in San Francisco, something crazy has happened in the past six, eight months that it's now happening in San Francisco.
We went from, for 15 years, everybody's been like, yeah, self-driving cars, it's happening tomorrow. And we're like, yeah, yeah, yeah yeah but like have you ever taken a ride in one i haven't yet but like every day you walk down the street you're like there's cars going by with no driver in the seat it's pretty extraordinary and it's it's become just so commonplace that like i don't even think about it anymore but then friends come visit and they're like what what's going on here yeah but still like the the service for certain originations and destinations it works the the pickup you know again it's it's okay for a human driver to double park for a pickup not okay for a robot so there's like again when you get into the detail if you look at our ride share service for example if our fulfill rate which is the percentage of time someone asks for a ride and then there's a car available, if that's less than, call it 98%, that's like all hands on deck.
Like it's a disaster. So like we are available all the time, everywhere, et cetera.
And there's a lot of work that goes into that. For any singular rideshare provider to provide that kind of coverage is going to be really, really difficult, which why ultimately we think the better solution is for the Waymos of the world, Auroras of the world, et cetera, mobilize to work with us so that you have this kind of hybrid transition state where you can still have this 98% coverage everywhere, no matter what weather it is, et cetera.
But we have this smart kind of switching layer. Sometimes a human should come pick you up.
Sometimes a robot should come pick you up. But the transition is going to take a while.
But it is happening. It's cool.
All right. Last lightning round question.
And then I have a closing segment. If you could only own Uber Eats or Uber, the transportation business, which one would you rather own? Also, Eats is a transportation business.
Mobility. It's just transportation of stuff.
You can't ask me that. You're like, choose between your children.
Like, is it George or is it Donnie? Like, come on, you can't be serious. You could own a business with a 20% take rate or a business with a 30% take rate.

Which one would you rather own?

So I will answer somewhat seriously, which is high take rates are dangerous.

So our job as a company is to grow volume as much as we can as as fast as we can, and make our shareholders happy enough, minimizing the take rate, which is taking as much of that dollar and giving it to drivers and couriers. Like last quarter, gross bookings grew over 22% or so, which is really good.
The money that drivers and couriers, including tips made on the platform, grew by 30% higher. And at the same time, we were able to expand our margins, be free cash flow positive.
So, like, the design spec that we're building is, how do you, like, torture the organization? Because sometimes it is torture. Like watch every single nickel and dime be incredibly efficient in everything that you do.
Automate everything, get fraud out of the system, et cetera, so that you can actually operate a business at scale at the lowest take rate possible. Like talking about booking.com and one thing that we learned, when I started Expedia, Expedia's take rate was 25%.
and Booking's take rate was 15. And over like a torturous 13 years, we took Expedia's take rate from 25% to the teens.
It was like 17, I think, or so when I left. And those are like pure margin dollars that you're taking out.
Like there's no goodness that comes out of it. And so it's just really hard work to do.
And as a result, we're pretty hardcore, which is any quarter I can deliver anything on the bottom line if I can move my take rate up a little bit. But like it's too easy, it's too tempting.
Yeah. And so we're very hardcore about like, no, no, no, we gotta keep take rate low And you got to do the hard work to be able to keep take rate low.
So I'd say I take the 20% take rate business. It's more lasting.
The growth can go on for much, much longer. I asked in a tongue-in-cheek way, but I completely understand that.
And see the it's the NZS Capital thing. It's the do you want a business with...
Bill Gurley wrote that blog post years ago about a rig too far. Right.
Yeah, exactly right. You build more durability by leaving more on the table for your ecosystem partners.
Or maybe more accurately, you make yourself too vulnerable if you... And it takes oxygen out of the room, right? It's like, what's it saying? Fat pigs get slaughtered, right? Yeah, yeah.
P get slaughtered exactly hogs and like you can't you don't want to put yourself in that position it's very tempting it's very very easy there's this temptation obviously this quarterly kind of treadmill that you're on etc and there's like you can make someone happy by increasing take rate and throwing it to the bottom line and we we really really culturally try to resist that notion. Cool.
Well, the last segment that I have here is giving you the floor. You know, we're at the end of a long form podcast.
So anybody that's still listening appreciates nuance. And so if there's something that you feel is often misunderstood or that you want to say to people that are willing to let a long-form argument soak in, what do you think is misunderstood about the company or you or the industry or this time that we're in right now? Really anything you want to talk about? I don't know if it's misunderstood, but it's certainly something that's top of mind for us is that we ultimately, the future of the business as it stands now depends on our building the best platform for earners.
And it goes to like the take rate, right? If the take rate goes up too much, then we're taking too much of the service, et cetera. And the fact is that I think Uber was guilty of taking earners for granted because when I first came in and for much of the company, like we were in a state of oversupply.
We had too many drivers. It goes to instead of gating them, et cetera.
We just didn't really invest in the driver experience and the courier experience the way that we should have. And then the way that we organized the company around the earner experience was pretty standard in terms of a B2C business, right? There's a team, you know, there's a team that runs the Uber app, there's a team that runs the Eats app, and the team that runs the driver app.
And you do all the typical stuff, which is analytics and measurements and A-B test, et cetera, in order to optimize throughput in the marketplace, et cetera. But as we step back, we don't A-B test what the 401k match should be for employees.
It was equivalent. Some of the experimentation that we were doing on the earner side is like, yeah, should we match a 3% or 6% and let's look at employee turnover?

Cool experiment.

Maybe you could optimize. But when you're building a product that people are making a living off of or are earning money that they have to earn with, there's a different duty of care.
and the amount of time that they're spending on the app.

Most of Uber employees, myself too,

like order rides all the time, order eats all the time, you know, you get in, get out, et cetera. But a driver will be spending four hours, five hours, six hours with the app every single day.
So the consequence of like all of this coming together and our building for drivers, the way that we essentially build for consumers, which is pretty cool and techy, etc. One is like the P95 experience.
Usually you build, you don't look at P50 because averages lie. And then you look at P95.
Well, that's the worst experience. The probability percentage.
Yeah, the probability percentage. is, you know, drivers, an average driver who's driving a week experienced like a P95 circumstance

every single week, multiple times a week, because they spent a lot more time on that. So there's been a pretty important culture change of the company, which is like higher duty of care, actually slowing down in terms of how we build for earners, being a lot more humble, listening to them, their experience, et cetera.
The fact is that when you have 5.6 million earners on the platform, there's this marketplace, which is it works for some earners and it doesn't. So there's always going to be 10%, which is like half a million people who are not happy with experience, but we've got to make sure that 90% are, and we're getting more people who like the experience into the platform.
But because of where we came from, it's actually pretty new muscle for us to like build this earner experience. And I do think like, as I step back and I think about like, what am I going to be proud of at the company? And like, there's a lot to be proud of in terms of turning around the business and like the team that we built and the service that we built.
I think there's a sense which is like tech is out of touch with the real world. And it's a lot like tech is, you know, you're building for the virtual world.
And Uber is unique in that it's a technology company that built for the real world. And the impact that we have, especially as it relates to earners, it's real people.
And so what I would be most proud of, one is there's a practical reality, which is if we build a company that has the best product and experience for earners, we're going to win long term. But if we're that technology company that's very much connected, not with the elite, but with an earner base and the broad population, not just in San Francisco, but all over the world, that's a company to be proud of.
But at the same time, I think the muscle we've been developing in the last two to three years, we have a long way to go. Is Uber the largest earner platform in the world? Yeah, I think we're the largest source of work anywhere by far and growing pretty fast.
That's a crazy statement. Yeah.
Because the largest companies who, like even if you just look at employees, companies that employ people employ max like 2 million. Max, yeah.
Yeah. And Uber has how many earners on the platform? 5.6 million.
You know, as of the last quarter, it's growing. That's a lot of earners.
What does the federal government employ? It's like on par with, it's got to be on par with that. Now, the vast majority are i know they're quite part-time yeah but it's still the scope is pretty strong there wow and it's everywhere so cool well thank you dara you're very welcome it was a pleasure i'm glad for treating me to the wine well no i mean you you treated us and and i'm glad you decided to stay after dropping it off.
You gave me a good tip. It all worked out.
Oh, David, that was a blast. So fun.
Funny. It's like you were just here next to me in Seattle and now you're there in San Francisco.
The magic of the internet. I'm really missing that delicious wine that Dara brought us.
I know. Listeners, you can tell us if you liked that bit or not or if it was too campy.
If you want more of David and I, we recently did an episode on My First Million, and it was really fun. We went behind the scenes of Acquired, and we sort of talked about Acquired's business, our journey turning it from a podcast into a business, why we think the podcast works.
And listeners, you might have your own ideas, but where our differentiation is in the market of content out there today. And I know it's just a blast.
Sam and Sean are really fun to talk to. So if you are interested in hearing that, you can click the link in the show notes to specifically go to that episode or search any podcast player for My First Million.
They also did episodes recently with a couple friends of the show, David Senra from the Founders podcast, and actually, David, one of you and my favorite YouTubers, Doug DeMuro in the car category for anyone interested in cars. Doug is such, such a nice guy.
Yeah. Check out ACQ2.
It's our interview show where we talk to folks who are on the cutting edge of what's next, figuring out things like where is the defensibility in AI for B2B SaaS companies, or, you know, our interview with the CEO of Angelus talking about how they're deploying AI at their company. I know AI is a buzzword, but it is just dominating how every company is making moves these days.

And it's great to talk to the protagonists who are actually in the arena right now making all of these moves. So that's on ACQ2.
Check out the Slack. It's where we're talking about this episode and every other acquired.fm slash Slack.
And if you want to come closer into the kitchen and be a part of what David and I are building here, become an LP, acquired.fm slash LP. Current benefits include once a season, you guys will pick an episode.
Y'all picked Lockheed Martin, which is shaping up to be one of our biggest episodes ever. So thank you.
And I had a blast researching that one. So thanks to our LPs.
And David, we got to schedule an LP call here. Yeah.
In this month or so. Let's get it on the books.
Yep. With that, listeners, thanks so much, and we'll see you next time.

We'll see you next time. Who got the truth?

Is it you? Is it you? Is it you?

Who got the truth now?