Uber CEO Dara Khosrowshahi on self-driving's future, changing business model, job displacement

the driving force behind one of America's most influential companies. Record high today for Uber. 100% up last year. Whimo and Uber have announced a partnership. When you have a CEO that's done what DAR has done, you set the bar higher and higher. The impact we have on society is significant. We hope to keep building on that impact going forward and I'm quite optimistic about what the future's going to bring. Ladies and gentlemen, please welcome Uber CEO Darra Kazer Shahi. [Music] Good see. All right, Dar, I wasn't sure if you were aware, but I was an early investor in Uber. You I've heard you say it once or twice, and I'm curious how my investment's doing. I don't know. Okay. Based on today, today's looking pretty good. Um, so, uh, autonomy is the discussion I think everybody wants to have in the timeline. How many partners does Uber have in autonomy today? So, we have over 20 partners across both mobility and the delivery business. Uh, I'd say mobility now is in the field as we speak. Obviously, we've got a partnership with Whimo, who is uh I think the best of the best in Atlanta and Austin. Uh but there are a number of other players that we are partnered with. A number of Chinese players, Autonomy in China is uh hitting the big time and a lot of these companies that want to expand outside of China, we're partnering with. And then in the US, uh even in in the second half of this year, uh we will have a couple of partnerships kind of hit the road in Texas. uh and then in Europe and the rest of the world. So you will see we've announced a bunch of partnerships. We're doing a ton of work with these partners. You'll see these cars hit the road with safety drivers eventually and the safety drivers will come out this year and especially going into next year. We're going to have significant number of cars on the road. How many people in China have level four no safety driver today? And what's your assessment of those companies and their safety record? You know, it's a different market obviously. So there are uh bu uh wery pony are all on the road today. No safety driver. We are partners with all of them. Their capabilities are amazing. You can imagine driving in China in these big cities is quite a complex uh undertaking. Uh they take safety just as seriously as uh the western companies do. So I think their safety record is excellent. Ultimately, we think autonomous can be both superhuman in terms of safety and can save uh millions of lives over the course of time on the road and over a period of time as the cost of especially the hardware stack comes down. We think that it can bring the cost of mobility down and make mobility on demand available to many many more people than it is now. So, it's going to be a very big kind of market expander for us. So that was the debate, Dar, that maybe kind of exploded a little bit on X between you and Elon where you guys I mean very respectfully just debating the pros and the cons. Maybe just set it up for the folks in the audience the difference between um Elon's approach and the Whimo approach and maybe the the relative pros and cons as you see it. Yeah. I mean I think they're the ones building the cars. So I'm to some extent a very very very interested bystander. But but the way that that I put it is um Elon's approach uh depends on excellent software right to do a bunch of the heavy lifting in that there are some you know early on whenever you're building product there may be some cheat codes that you undertake. So for example, you could call it uh cheat codes or you know good engineering. Some of the things you see in early systems is one is uh camera uh radar LAR. So multiple sensors uh sensors redundancy on the sensor stack to make sure that your perception algos are seeing the world as it really is. Uh Elon is doing camera only. Uh tougher on the software, cheaper for the hardware. Okay. Second, I would say big difference is many of the players use HD maps. And what HD maps do is is essentially you map out an area so that it's much easier for the software to determine what are permanent aspects of a certain view. You know, the uh the lines on the road, uh traffic lights, etc. Because of the HD maps, it's very very easy for that piece of software to determine what's permanent and then what's impermanent, vehicles, people, etc. So, it makes the job of the software much easier to figure out what's going on and then and then determine what to do. Uh Elon's approach doesn't depend on HD maps. Uh and again, it makes a Java solver harder. And then the other I would say significant um uh factor is the compute. So when you look at the compute and many of the other players the compute in terms of flops and memory etc in the back of the card uh car is pretty expensive pretty extensive uh and I think Tesla's approach is with a much tighter compute stack. Do you see a world where you try to pour your distribution into all those solutions assuming that everybody's amendable to working with you and it meets your threshold for what you're looking for? Yeah, I think safety or cost or exactly I'd say safety comes number one. So we have a certain safety case that we want to make sure that our partners adhere to or exceed and sorry just is that an eval or is that like is that certain rates that they have to publish to you or how do they demonstrate to you? It's it's the technical approach and the eval together. And listen, it is a dialogue, right? Because different people take different approaches to safety. We want to make sure that showing up on the Uber platform, it is as safe as it can be. And our def definition of safety is multiple site times safer than a human being, which is achievable. Whimo is showing that it's achievable. Many of the Chinese players are showing that that it's achievable as well. So if it meets our safety criteria and the economics are attractive and the economics as the cost of hardware comes down, you know, LAR was 20 30,000 bucks a pop like 5 6 years ago. Now solid state LAR is 300 to 500 bucks a pop. So the cost of hardware is coming way down. It is going to need to continue to come down because these cars are very expensive. Then we'll do business with them. We we want to be the platform and and we want to essentially help the entire AV ecosystem thrive and we think there's enough economics uh for the network player to have a great business and uh the software providers and the vehicle owners to have a great business. And then obviously there's fleet operations in terms of housing the cars, recharging the cars, you know, all of the um kind of in the world uh work that's necessary as well. When you you're going to get to a tipping point, I'm going to assume in driver miles, let's say, where one of the most interesting things that I've thought of is could you tell a city how it should actually be designed for optimal traffic? So we work I wouldn't say for optimal traffic I think theoretically it's possible but you know something a Google could there are lots of other players uh who can help with that but we're certainly helping cities in terms of uh where you should put charging infrastructure for example uh parking drop offs etc uh to help traffic flows I think we can be a partner for cities and we do have a small operation where essentially we offer data a for free for cities to embark on city planning so to speak. Do they take it? They don't. Some do. Some do. Some of the more sophisticated cities take it, but I wouldn't call it a big part of our business. So, Dar, I want to ask you about the uh the business model impact of um of basically robo taxis or self-driving. In the old world, um, uh, Uber's network effect was a marketplace effect where you connected drivers and riders. And if you had the most geographic density in an area, then you could promise riders faster pickups and the drivers got higher utilization. And that was a very powerful network effect. But we're moving into a new world where anyone who has a fleet of self-driving cars in theory could just make them available to the public and start competing. How do you see that impacting your mode? And and do you have to go from being an asset light business to now owning all these these cars and deploying them? And is that a good thing or a bad thing for your business? So this I think that the same economics apply, right? Which is if we have uh that fleet owner um is not going to have as many vehicles available in a certain market than let's say a network uh like ours and we will have a hybrid network. We're going to have humans and autonomous cars together and that's going to continue for a while. You know, the the autonomous the machines are going to aren't going to replace all humans at least for the f for Zipil future. So for us um if you're part of our network, you are going to get more requests than the player who's doing a standalone because we already have the demand. The request is going to come from much closer. So instead of, you know, a pickup who's 15 minutes away for a 10-minute ride, you're going to get a pickup that's 3 minutes away for a 10-minute ride. So the utilization in terms of the revenue generating miles as a percentage of total miles driven is much much higher on on our network. So the player that you know if you have fleet player A who's going direct standalone fleet player B who's working with us fleet player B will have much more business will have many more miles that are that are creating revenue as a percentage of the total miles driven and as a result each of their cars are going to get much more revenue per car per day than than the fleet player who isn't working with us. So I mean that ultimately is you know even if you if you think about Uber Eats right there's this drama which is hey do you go direct only or do you work with a marketplace and the fact is every major food player McDonald's has a direct channel but they have a box and they want that box to create as much revenue as possible so they have a direct channel and they work through our marketplace Door Dash marketplace other marketplaces as well because that's how you drive utilization. And so I think that most of these players, there are going to be some players like a Whimo, like a Tesla who can build their direct channel, but we think if they want to drive maximum economics out of these really expensive cars for now, they're going to also want to work with us. Do you think you will need to buy and deploy your own fleets or can you rely purely on third party fleet owners? So I think that um there's going to ultimately if you look at the end state I think all of these cars are going to be financable. So if you look again in the hotel business I used to be in the travel business a Hilton or a Marriott who's the brand doesn't own any of their hotels. Those hotels are owned by financial only players. And I think 10 years down the line you know there are these things called REITs real estate investment trusts. You're going to have fleets. You're going to have financial owners that own big fleets of cars that are on our network, maybe on other networks. The new the new enterprise kind of a thing. I'd say it's going to be more financial players. So, it's not, you know, Hertz and uh enterprise are operators. These these are going to be like pure stones of of the world and they own fleets and they're just trying to monetize those fleets as much as possible. That's the end state. Between now and the end state, we will take balance sheet risk because we can sign up. We know exactly how much revenue a car can produce in said market because that because cars are already producing revenue. So we can sign up for the revenue. We will prove out the business model. We'll use our business we'll use our balance sheet to prove out the business model and then at some point the whole thing is going to get financialized and we'll be able to take it off balance sheet. Is is Whimo willing to work with you? actually Whimo is working with us now in Austin and Atlanta. Okay. So, in Austin, Atlanta, if you're using Uber, uh you can be picked up uh with a Whimo. Our customers love it. Uh is it the driverless aspect of it that they love or you know, they're so I think I think one is they're new cars. They're really nice cars. Yeah. Um it's kind of freaking cool. Yeah. Uh and you do have privacy in that car as well. So I think the combination of it works out really well. We see customers who experience the product, they rate it really high highly, they use it again. Uh and so it's just it's just an absolute dynamic product. So we've we've mostly only spoken about the XY axis and we have a couple of our friends who've built businesses that are, you know, trying to launch these EV tall businesses, some of our other friends who are experimenting with small drone delivery. tell us where all of those things play in your infrastructure going forward. So we're we're absolutely believer in uh EV tall. We're an investor in Joby uh and we are going to work with them as those vehicles become available. We know that there are some other vehicles but I think that the kind of Z uh axis if you if you want to call that makes a ton of sense. Listen in cities of the world essentially they have built in the third dimension because there's only so much that you can expand you know in the x and y dimension. So businesses have expanded in third dimension uh residences have expanded in the third dimension but our transportation uh uh infrastructure has only expanded in two dimensions. So it's no wonder that traffic just keeps getting worse and worse and worse because that third dimension is isn't available. So we are absolutely believers in uh both EV talls uh and drone delivery. Now I think on the delivery side that there are two areas that we're working on. One is sidewalk robots. It's easier tech to develop. Explain what that is. A sidewalk robot. So sidewalk robots um there are some of them in LA and Santa Monica. They are autonomous vehicles that uh drive on the sidewalks. They drive pretty slowly. They're very, very safe. Uh they look kind of cute. Uh and they're appropriate for deliveries that are a mile or less uh long. So deliveries in a tight space. And so there's a certain addressable market for us in deliveries where those sidewalk robots work. And we're working with Serve, Cardan, and number of other players in the US, in Japan, in a number of other markets. Then on the other side is drone delivery. and drone delivery is appropriate for markets where, you know, they're more spread out, suburban, no highrises, etc. Those two together we think can cover 50 plus% of our delivery uh TAM so to speak. But then there's another 50% that we're going to have to work on in terms of the first and the last mile, you know, coming out of the restaurant and then getting the the food into your apartment as well. Humans take care of their own first and last mile, but you need something to take care of the first and last mile of the food. That's where the challenge is going to come in. And we're working with a number of players to see how we can get that first and last mile for food. I want to talk to you for a minute, if I may, about the balance sheet. Um, one of the great, you know, sort of early uh insights we had at Uber was around profitability and the press and the narrative was, "Oh, Uber could never be profitable." And I would talk to TK about it and and and William and all the Josh in New York and they're like, "Yeah, we could flip it at any moment in time to $2 more a ride. We would lose no rides and it would be wildly profitable." And in fact, under your stewardship, Uber has become a money printing machine to the point at which you announced a $20 billion stock buyback. Yes. And I saw it and I said, "Wow, this is just incredible." However, did you tweet about it by chance? I might have. I might once in a while I'll retweet you and and give you a little shine. Um, but I did have this thought that um, and I had Chris from Neuro on the program and you have this great partnership to put 20,000 Lucids on the road. Um, what wrong podcast, but keep going. The other podcast. Um, and so I'm wondering how you think about the war chest, the money printing machine and deployment of that asset. How do you decide $20 billion stock buyback versus putting 300 million into Nuro or we had Travis on the podcast and he said um he's had many opportunities to look at things like Pony which has been in the press and um it would be pretty great to have the original founder maybe I don't know you've got a couple of billion laying around and maybe help him have Pony come to the west so how do you think about deploying that capital in order to you know continue to grow from Where are we at? 1% of rides globally are ride sharing approximately a little more, but it's between 1 and 2%. It's a very low number. It's clear it's going to go to 20 with autonomy. And so if we all believe that and that's obvious, is that the best use of the capital? How do you make that decision? So I I think the good news for us is it's not either or. We can walk and chew gum at the same time. Uh in the past 12 months, we've had over 8.5 billion of cash flow. the business is growing you know top line 18% bottom line 35%. So that cash flow is going to grow by a lot over the next 3 to 5 years and we announced the 20 billion buyback because in looking forward to areas in which we could invest aggressively for example in AV because we should because it's an enormous opportunity whether it's vehicles or fleets etc. We are very comfortable that we've got enough uh capital to be super aggressive there appropriately and at the same time buy back our stock. There's a great company we know of. Uh management team can get a little better but they're okay and we think it's a great deal. So it's not it's not an either or. It's it's it's an and for us and we're lucky to be in that position at this point. You um have a very big business in Uber Eatats. Um it competes with folks like Door Dash. Mhm. When Travis was on the pod a few weeks ago, maybe a month ago, he he talked about sort of the robotization of food and all of that. Can you just talk to us about your vision of where all of that stuff goes to? And so, we're we actually work with Travis uh and his cloud kitchens business. He's also built a a restaurant tech business in in Otter as well. And I do think that you are, you know, any food business that is not deep in delivery is going to lose share period for the foreseeable future. So every single player, food player, grocery player, even now retail player has to get into delivery and has to get into on demand delivery. Otherwise, they're kind of missing the most attractive segment of of consumers out there. Uh and I think as the cost of labor is going up um all of these businesses are building are uh investing increasingly in roboticization. It's not something that we are getting into but as more food healthy food delicious food becomes more available lower prices then our delivery business kind of will benefit a lot. I'm hearing consistently from you and you can just tell me if this this is wrong that you are becoming increasingly an asset light highly liquid distribution network like you have this incredible network effect. You have these hundreds of millions maybe approaching a billion users and you can just pour them into all of these things. We we are essentially we bring demand to the assets that are driving the movement of people and things and food and grocery and these are all asset heavy businesses. So the next incremental piece of demand that comes from our network is incredibly valuable for them and we can do so staying largely capital light at the same time to the extent that I can use my capital to invest in the AV ecosystem or fleets etc. We can also do that. There's one company that wants to go on go on its own. A friend of ours runs it. Um I'm think that you probably have had some conversations obviously publicly you have. What's the best pitch to Elon to put a 100,000 robo taxis into the Uber fleet while still doing his own because his app is doing spectacularly well and the and the pilots are doing well so he'll obviously figure it out. But what's your best pitch to him to joining the Uber network? Uh I think listen the the pitch is simple which is if you're looking to maximize the revenue of those robo taxis today uh today we are your ticket to the maximization of that revenue to the extent that you're looking to have these fleets owned by people you know kind of the digital shepherds which is is an amazing vision that that Elon has to the extent that those uh owners are not able to monetize their assets on the Uber network they will under monetize and if there's a competitor who is offering those vehicles to be on the Uber network, the monetization of those vehicles are going to be superior and those digital shepherds are going to go elsewhere. So I think that is the pitch and again Elon is you know he kind of believes in full stack. Yes. um and he's proven it and and I think that this market is large enough for there to be multiple winners but in the end to the extent that you know we would love to partner with them uh but at this point they're looking to go it alone and I think the market is large enough to carry a number of winners in this I see a tough question about uh humans I was talking to Will Barnes who ran um originally in Los Angeles and then half of the country for for Travis and uh Will Barnes had a pretty amazing insight which Because in the early days, we had humans protesting humans competing for, you know, the taxi drivers versus the ride share drivers. Um, in China, in Wuhan, in fact, there's been a lot of civil unrest. And they're talking about limiting the number of licenses for self-driving cars because of the disruption that would happen if young men who have those jobs are not able to have a job. And we saw the Whimos get called to their death here in Los Angeles. And that was a pretty clear message as well. How do you think about that group of people losing their jobs? These drivers who built the Uber network, who built Lyft, who built Door Dash and China's overwhelming concern about this um because these are robots taking human jobs and there's an you know there there's a lot of discussion about this and I think maybe in the tech industry we don't talk about it headon. I think listen this is it's a big issue for AI in general and uh job displacement. You see it with younger graduates as well. I think for us at least for the next 5 years uh the number of robot cars coming onto the platform are not going to be displacing people because the platform is just growing so quickly that we can very easily take that take that demand and and there is a natural turnover of our driver base. So in a market like in Austin uh or other markets in which we're launching uh uh autonomous we will turn down the driver recruitment uh machine so the robots can come in and the drivers who are currently driving in the platform can make as much money. So Austin drivers now are making as much or more money than they were before we introduced Whimo. So I think for the next 5 to seven years we're we're going to have more human drivers and delivery people just because we're going so quickly. But I think you know 10 to 15 years from now this is going to be a real issue. And Jason I don't have a neat answer for it. Now we're finding like other kinds of work. We've got uh drivers and couriers uh you know uh labeling AI labels and looking uh you know uh we have a whole Uber AI solutions business. So we're essentially one way to look at Uber is we are a platform for work and transportation is the first kind of work and now we're expanding into other kinds of ondemand work as well to uh be able to adjust the kind of work available to people who uh want to earn our own platform. But I think longterm this is a big big societal question that we're going to have to struggle with and lots of others are going to struggle with too. Absolutely. All right. Thank you very much. Thank you. really appreciate it. Great. Crushed it. Thank you, my brother.