Khosrowshahi wants transparency to occupy driver's seat at Uber

Here to solve India's traffic crisis, says the CEO who wants transparency to be a key word at Uber 

The first thing that struck me when Uber CEO Dara Khosrowshahi began his roundtable address in New Delhi on Thursday was how different he sounded from his predecessor. Travis Kalanick, it seemed, had always enjoyed the media, being the center of attention, being in the limelight.

Dara Khosrowshahi, the former CEO of Expedia, could not be more different. And yet he is slowly embracing the attention because, as he puts it, it is part of the job of running a company like Uber. His responses ring true; they are measured, nuanced and fact-based. He doesn’t love the spotlight, but he’s not going to avoid it, preferring to face questions with facts, and what might soon become his signature trait: transparency.

He has promised his team transparency all around. With employees, with the board, with investors, with customers. This is quite possibly the one big change that Uber as a company needed, and could well be the foundation on which it builds its future. As to my question on what can we expect from him as a CEO, he said, "one thing I promise to always bring to the table is transparency...a culture of transparency."

He admits that India is a very important market for Uber. While they’re profitable at the asset level, the overall business still needs large doses of investment and the company is going ahead with whatever it needs to do. India’s complexity as a volume-driven, discount-hungry market doesn’t faze him. The 3x larger footprint of Indian rival Ola (also a fellow Softbank portfolio company) notwithstanding, Dara is certain that Uber is expanding in the right way, not in a hurry and is not mad about expansion. He would rather focus on doing things the right way. It’s important to him – doing things the right way, whether it’s expansion, investments, developing new products, or building the company’s culture. I couldn’t help but think that Uber may have finally found the right man for the job.

Here are some excerpts from the interaction.

On Uber in India…

If you can succeed in India with your product, with the Indian consumers, and the demands from the consumers in terms of price, in terms of quality of service, India can essentially be the laboratory for us for the next 6 billion consumers who are going to have access and exposure to our products. So, this is a core market not only in terms of India’s promise, but in terms of how we shape our product for the global market.

We believe that India is a core market … Unlike other technology companies…we actually are affecting real people on the ground. In India, we have 300,000 active travel partners that are using our product on a daily basis. And that means that we have a responsibility of working with local governments, regulatory bodies, city regulators, etc. and we have to have a dialogue there. For me, one of the key success factors as CEO of this company is to increase the dialogue and the partnership that we have with local regulators and authorities…conversations that we are having all over the globe. And what is working for us is that every country, every state, every city wants transportation as a service, available to lot more of the citizens at affordable prices and also wants Uber as an opportunity for work. And that’s something that’s working for us.

The Pool product is getting more than one person to share a ride because it helps for congestion and helps for pollution. It’s a human behavior that a lot of people don’t necessarily like. So, in our Pool product, on a global basis, we lose a lot of money in Pool. But we do it because we believe in the long term, and in order to create that demand and supply match, we actually have to invest in order to ensure that (it) will really start taking off, and the marketplace will be long-term sustainable. So, we were quite scientific about investing in the Indian market, sometimes on the supply side, sometimes on the demand side, because we believe in the long-term viability of this marketplace, and we will continue to invest.

As we think about our city coverage in India, and when you think about scaling your product, I think some of the real mistakes that some companies make early on, is that they try to expand before they perfect their product. I think that our product in India is a very good product. But we are very much focused on quality, which means that there is zero defect in terms of driver-partner experience, zero defect in terms of rider experience, the match rate that we make from Pool product goes from seconds to none, expanding the type of vehicles that we use for Motos, autos, etc…We want to perfect the product first and then scale up.

And when I look at the 29 cities that we are in India from an exposure standpoint to a population standpoint, the coverage is actually really, really good, but it is not too broad where we are defocused from improving the product and the scale we are at. So, I think we are at the right place. Will we be in more cities in India three years from now? I think, yes, but at this point, I think that our exposure is the right exposure.

We have a lot of respect for Ola. They are a very strong global competitor, and competition makes us better and makes Ola better. Competition usually results in a better product for driver partners and better products for consumers. Competition certainly has played a part in our service, and how it developed here. We are pretty confident about our competitive position here. We look at driver sentiment, rider sentiment, the quality of our service, and we intend to keep it that way to continue growing in terms of people and in terms of building our service and expand.

Also Read: Who says Ola is winning in India? We are still aggressively competing: Dara Khosrowshahi, CEO, Uber

We don’t specifically disclose how much we invest in India…but it’s a lot, and that investment is going to continue. We are an alternative to taxis. But really what we want to be is an alternative to car ownership itself, and car ownership becomes car sharing, but think that it will solve all kinds of problems as far as traffic problems, pollution problems in cities. I think those issues are real issues in India, with the population urbanising more and more. And that’s worth the long-term investments for us. India accounts for more than 10 percent of our trips, and I expect it to account for a higher and higher percentage of our trips going forward.

…and in Southeast Asia

We are going to continue to invest very aggressively in South East Asia. And that is an investors market – it means that we expect to lose money in South East Asia, and we expect to invest very aggressively in terms of marketing, subsidies, etc. From a competitor standpoint, we think we can improve. But for example, if you look at the deal that we struck with Comfort, which is a leading taxi company in Singapore, we received very good signs as a result of that deal, in terms of our supply in Singapore, and in general, our business fared. So, we are cautiously optimistic while we leap forward, and we will look at anything. Part of my history as CEO of Expedia was – one is which you grow organically, and you grow through transactions as well. So, when I look at Uber 10 years from now, I am hoping we will have 80 percent of our growth through organic, and some growth from transactions as well. Right now, the plan for South East Asia is to grow forward, leap forward and invest.

On re-building the core values at Uber

One of the first actions that I took when I took over the company was to relook at the values and the culture of the company. We went to employees and we asked them, ‘What kind of company do you think should Uber be?” We actually crowdsourced the values of the company, and the response and the passion for Uber that Uber employees had about the culture going forward was extraordinary.

And we brought that kind of crowdsourced values, and our senior teams talked it over and formed a new set of norms. We call norms as the value because norms are about behavior. It says we do the right thing, period.  And I firmly believe that if you drive behavior top-down, you are going to get it wrong, because someone is going to forget to read some compliance memo somewhere. It is important that it comes from the teams, not just words from me.

On Softbank as an investor

Softbank is a respected investor. But decisions that we make, strategies that we undertake, strategies that I am driving as the CEO of the company in consult with the board. While Softbank may have an opinion, theirs is not the only opinion in the room, and it's very my belief that we as a company need to have a balanced profile in terms of growth and investment. There are developed markets that we are going to continue to invest in, they are going to be more profitable…But (at this time) we account for less than 1 percent of the overall transportation industry. This is a $5 trillion industry that we are competing in, and that is the ultimate size of the pie that we are aiming for. That requires investment, and if we weren’t investing in these kinds of markets – the big market for big populations, that have a lot of growth ahead of them, we wouldn’t be the right proprietors of the company.

Also Read: Softbank isn’t looking at it as Uber vs Ola; they want to change car ownership: Dara Khosrowshahi, CEO, Uber

On driver-partners and the future of work

Our driver partners are entrepreneurs who can choose to use our platform any time they want for how long they want. We have actually now introduced safety features that restrict them from driving too long. That’s actually our effort to drive safely, which is our number 1 priority on a global basis and make sure that our riders and drivers are safe. So, we believe very, very strongly that our drivers are entrepreneurs, they look (out) for themselves, and they use our platform as a tool. Every time I go to our drivers my questions are: what can we do better, and why do you like the platform, what is it that we are doing that has you coming in here and ask questions? What they love about the platform – and every single time they say this – “I can be my own boss. And that brings me respect, that brings me self-worth, and I can live my life the way I want to.”

And it’s incredible how sophisticated these drivers are in terms of our systems. They know our systems better than I do! They understand how to operate, they fix up hours, neighbour pods…these are much more of entrepreneurs, and I think that to think about them, try to fit them under older labour laws would be a real mistake, for entrepreneurs in our systems, as well as our governments.

Young people are taking charge of their own careers. They are going to be in a place for three to four years, they are building their own experiences as entrepreneurs…More and more of them are going to a much more flexible labour model.

The first model doesn’t necessarily come with benefits, etc - but the new way of working, I believe, the on-demand working model – can come with benefits. One of the things that we work on and we are testing in the US is – how do you take temporary benefits to the workers, how do you help them and bring medical benefits to them, retirement benefits, etc?

I think that programmers, technologists and engineers in the world five years from now are going to in a world where they will say – you know what I am going to be working for two or three months on a cool project that Uber is doing, and then I’ll do something else for Amazon, and then probably something else. That kind of work model, where an entrepreneur is in control of their own skills, I believe, is going to be much more fact-of-life going forward. And I hope that regulators are not going to fit the new model into the old model.

On Waymo…

I want our autonomous group to focus on building on the business and to commercialise the technology that we are building not just for Uber, but also for the world, especially in terms of safety. So, the Waymo case was a very significant distraction for us.

I think as a company if I could pick a world, where I am being sued by Google, or I can pick a world where Google can place their investments in me, I’ll pick the second world.

So, the opportunity came up, again in my prior career ahead…long relationships with Google, very respectful relationship, and I think the way we settle with opens the doors in a way that’s constructive, and hopefully, a relationship that we can build on going forward.

We are certainly investing in our product to get this technology commercialized as quickly as possible, and again having the autonomous technology under one roof with the network – which we think is a real advantage – we will partner with other players. For example, we announced a partnership with Toyota in terms of developing their autonomous concept car along with the software, and we will be announcing a number of new partnerships and plugging it into our network. Our strategy ultimately is going to be an open network strategy rather than a cold strategy.

On Uber Elevate - the vertical take-off aircraft

With the battery technology, we are radically improving in terms of size of battery, and power of batteries, and storage capacity of these batteries; we believe that we are now in position for manufacturers to build the VTOL that will have multiple rotors, that will create a safe environment for vertical take-offs, and because we have got multiple rotors, the noise pollution for these vehicles is much lower than the noise pollution you see for helicopters.

We could take five years or so, for these to be close to being available on a pilot basis, they will be safe, they will be quiet. We are talking to many manufacturers right now, and we are talking to cities about how you have to build the technology to be safe. What kind of air routes can you create from, say, city centers to airports, etc, and ultimately, it is very much in the interest of a number of cities to solve congestion problems to create other high-speed corridors for travel within those cities, and ultimately to help pollution as well. So, we are very excited about it.