It is a very exciting and a very special session with a man who takes over a troubled company. Dara Khosrowshahi is the man who understand challenges, he is a man who has gotten accustomed to dealing with challenges in his life and perhaps he is now faced with one of the biggest ones - to turnaround Uber.
CNBC-TV18’s Shereen Bhan is in conversation with Dara Khosrowshahi, the CEO of global cab aggregator Uber in a very special Town Hall.
Below is the verbatim transcript of the interview.
Q: Let me start by talking to you about your beginnings. You left Iran in 1978, your father left the US to visit his father in Iran when you were 13 and didn’t come back for six years. Your mother brought you and your siblings up single-handedly.
A: She is a superwoman.
Q: She is a superwoman, kudos to her. How significant do you believe that those early developments were in shaping the choices that you have made today?
A: Those developments have really indelibly made a mark on who I am. I think for me what was really important about leaving Iran is that as a family we were very well-off, quite wealthy in Iran and my father was a patriarch. He believed in if you are going to make money in a country, you have to keep in that country, you have to reinvest in that country. When we fled, we lost everything. That was really tough for my parents but as kids, what I found is that even though we lost a bunch of money, we always had each other and we always have family. So you can make fortunes, you can lose fortunes but family is forever and the one thing that has been incredible stabilising force for me is my family.
I may be the CEO of Uber at the public ground but I am always the little brother with my family.
Q: Do you get bullied a lot at home?
A: I get all kinds of crap from my brothers when I am at home. So they keep me totally level-headed and don’t let me get away with anything. That is a lot of fun.
Q: Let me talk to you about the journey to Uber now. You have spent almost more than a decade at Expedia, things were going well for you. You lost a bet to your wife because she thought that you were going to take on the Uber opportunity and you weren’t so sure, what made you finally decide to do it?
A: My wife was always a believer and I was competing against these capital names and legends of industry and I am dude who run Expedia with a long last name. My wife always had faith in me and she always – from the very beginning until the end, she just said, you are the right person for this role. So she bet me for USD 5 and I owe her USD 5 because it turned out that she was right. When I came to the decision point, when they offered me the job, I thought back to the advice that I always give young people, students or engineers about their careers and I will say that you want to think about three things. One is you want to work with people who you like, you want to work with people that you respect because why waste your time working with folks that you don’t respect, that is number one.
Number two is you want to work at a company where you can make a difference. Working is about making a difference in your own way and everyone can make a difference in their own way but you want to go to a place where you can make a difference. Then finally you want to make a difference at a company or an organisation that is making a difference.
Number one for me at Uber was something that I couldn’t saw for I met the board members -- and the people at Uber and the team has been extraordinary. I got lucky on that one.
On the second and third one, as far as going to place where you can make a difference, Uber was in a lot of trouble. It was a real turnaround and at a company that can make a difference. This is a company that is going to reinvent mobility going forward. It is going to be one of the defining factors in what mobility means on a global basis for us. So number two and number three I had big checkmarks and that was ultimately the decision that I took. That and the advice that my father gave me which is if a company asks you to go lead it, you just say yes.
Q: You didn’t Uber it to IIT-Delhi today, did you?
A: I didn’t Uber it to Delhi but I Uber it all over.
Q: I want to pick up on the first comment you made on the checklist and that is that you need to work in a company where you enjoy working with the people that are part of the organisation, what about your equation with Travis Kalanick now, there has been a lot of press on where things currently stand between the two of you, apparently you got off to a great start, it is a bit shaky now, where is the story between you and Travis?
A: On to the circumstances, this has been a very difficult transition for the company and it has been a difficult transition for Travis as well. It is from going and leading this company as a CEO to having a step back at that as a board member, that is a tough transition and obviously the press coverage would be difficult for anybody.
What I can say as far as Travis goes, these transitions can be difficult but he has always been there. He is still passionate about the company, he is rooting for the success of the company and he has always been available for me when I wanted to ask advise from him etc.
In my coming on board as a new CEO, I have to make my mark, I have to take the company in a different direction and I have and that is probably a direction that Travis might or might not have taken it but I have got to take it in the direction that I believe in with the culture and the norms that I believe in but what I can say for Travis is he has been there for me, when I call him, he gives me good advice and he and the board are rooting for the success of the company, which means they are rooting for my success and so far so good.
Q: Let me now talk to you about the direction that you have as far as Uber is concerned. I think it was to our affiliate CNBC that you said that I am pretty confident that we can turn knobs to make this business profitable but it would mean sacrificing growth and innovation. In terms of the knobs that you have been able to turn so far, what aspects of the strategy that you have been able to successfully turn so far and what is next now when it comes to being able to turn the knobs and what do you mean when you say, it will come at the cost of growth and innovation?
A: I think the first part is about the culture of the company regardless of when you get into strategy etc, you don’t have the right culture of the company, your strategy almost doesn’t matter and one of the first things that we did when I got on board and I got together with my team was to redefine values, the core values of the company and the way with which we did it was kind of cool which essentially went out and talk to all of the Uber employees and we almost crowdsourced the values of the company and the values that they believe then. As a senior team, we got together and talked about the values and we came up with what we call the cultural norms of the company because norms are about behaviour. You don’t want to values just to be words, you actually want people to live them, you want them to feel them. So we took care of that and I think that the company is taking those norms to heart and one of the really important ones is simple one, We Do The Right Thing. Period. Once we did that we started, I was able to start getting a team together and brought some really important team members and then we started looking at the strategy of the company in terms of growth and profitability. We are aiming for IPO in 2019.
Q: Are you on track for that?
A: Yes. We are. I can absolutely say that we are. We see how the markets are and the environment.
Q: What you think are going to be the triggers in that final decision? Obviously you are going to keep an eye on where things stand in terms of you being able to bring down your losses because that would then give you the kind of valuation that you would expect from the market but outside of what happens on the balance sheet front, what are going to be the other considerations that will decide the timing of the IPO?
A: I think the most important consideration is that the market conditions. Then also the systems that we have internally – there is this company that has been growing incredibly quickly and we have been very focused on our product, what is our product like to our driver partners, what does our product look like to the users, the algorithms, the very sophisticated algorithms that are about matching supply, demand and pricing, we have been very outwardly product focused.
As you think about putting the frameworks together to take the company public, you actually have to invest in your systems, in your accounting systems, estimates etc, a lot of stuff that doesn’t necessarily add consumer or driver value but it is necessary for the company to go public so that you can report in a timely manner.
Those are the kinds of investments that we are making. Frankly I think the company did the right thing to focus on product, product, product and then products but now we have to focus on more than one thing and I think our execution on the system side and then market dynamics are going to be the determining factors. Everything I see about the growth of the company, the profit potential, the innovation and the new products that we are investing in, in our autonomy, Uber air elevated etc all of that part of the business - the business part of our company is right on track for an IPO.
Q: The focus was on product, product, product, is the focus now shifting more to profit as well and in the quest for profit, I come back to again the question that I asked you, when you talk about sacrificing growth and you talk about sacrificing innovation, what does it going to mean, is it going to mean exiting markets outside of the US that are not doing as well for you, what is it finally going to come down?
A: I don’t want to sacrifice growth and I certainly don’t intend to sacrifice innovation. That is what I was saying which is we have to be careful not to turn to profits too quickly. We are investing quite aggressively this year because if you look at the market that we are addressing, we announced this last quarter that we are at USD 40 billion bookings run rate, growing revenue of over 100 percent, there are very few companies that are of our size that are at our scale, still growing revenue at more than 100 percent but when you step back, we are competing in the transportation space. This is a USD 5 trillion market place that we are going after and we account for less than one percent of that market. So you will find me investing as much as I can humanly get away with and still go public. That is the trick.
Q: South-East Asia, there has been a lot of press around that?
A: Our plan at this point is to invest. So investment in South-East Asia this year is going up. In India we continue to invest and we consider that absolutely core market so we are going to lead forward. Now at the same time, we will look opportunistically at any opportunity and I do think that as you think about a company that over 10-year timeframe, you want to be able to grow not only organically but you also want to be able to grow with your transactions and acquisitions etc. you look at how Google has grown android, YouTube etc, acquisitions and deals have been a big part of their growth and when I look at Uber and where we want to be 10-years from now, it is going to be a mix of organic growth and there will be transactions but right now, I am much more focused on organic.
Q: I want to talk to you about the interesting development and that has to do with Softbank. I remember you said that I would rather have the SoftBank Capital cannon behind me than facing me. You have an interesting situation in India where SoftBank is also the largest shareholder of your fiercest competitor Ola. How does it all work?
A: You have to ask them that question. I think Soft Bank is a very big picture investor and when I talk to Masayoshi Son about his beliefs, Masa’s core belief is that the ride sharing space is a space that is going to grow. People 10-years from now, 15-years from now - when these folks get old enough to drive a car because they are so young, they cannot be that old, they are not going to want to own cars. Cars are a huge waste of assets. On an average, cars on a global basis are used 4 percent of the time and 96 percent of the time they are sitting around. It makes no sense as far as asset allocation goes.
So more and more as we move forward and as our business scales and as we introduce new technologies like pool where people can share a car or we introduce new technologies such as autonomist, the cost of our services is going to start rivalling the cost of car ownership and ultimately, our services are going to – I believe -replace car ownership and just to put that into perspective, we account for less than 0.5 percent of miles driven on a global basis less than 0.5 percent. When a cost of our services gets closer to the car ownership and I think it is going to be in 5-10 years, we are not talking about the business that is going to grow 50 percent, we are talking about the business that is going to grow 10x, 20x, 30x once we become a true alternative to the car ownership.
So I think SoftBank isn’t just thinking about Ola versus Uber, SoftBank is thinking about Ola and Uber versus car ownership.
Q: From a practical perspective you are competing with them in a market like India. SoftBank clearly putting big money into Ola as well, which it is using against Uber to compete in a market like India. What is the conversation that you then have with Masayoshi Son?
A: I view this as, we are not spending against Ola, we are spending against car ownership. We are actually building mobility as service and our competing with Ola, it is a healthy competition because it forces us to improve our product, it forces us to be innovative, it forces us to reduce prices and ultimately that is going to come at the cost of car ownership.
Businesses have to scale, they have to get more efficient but I don’t have to worry about that, I just have to compete against Ola, I will let Masayoshi Son worry about what he is doing with his capital.
Q: You have also said that you don’t want to be seen purely as a car for hire company. You want to have the ability to run a bus system for a city for instance. How much into the future is that?
A: I think it is within five years. If you think about our business and I will compare us to Amazon. Amazon started with books and then it was able to expand into many other products and then opened up their marketplace to third party retailers. I view us as where we want to go is be the Amazon of mobility.
So, we started with cars which are books. Now if you take a look at our products, we have got cars, we are introducing auto, we are introducing pool as well and we are also introducing other products such as Eats which is a food delivery business which is growing very well in this market place. However we are not just about moving people, we are now about moving food and we are going to be about moving things going forward.
All of those are our new product lines that we are adding, not in the retail space but in the transportation space.
The next step that we are taking is actually opening up our mobility platform. So, for example in San Francisco this is a small test and then it is going to expand, we are having a third party company called JUMP which is plugging in electric bikes into our platforms. These are not Uber bikes, these are JUMP bikes but they are showing up in our platforms so that our users can use them. You can expect that to happen over and over so that third party mobility services can plug into Uber.
Where I want to get to is a world where you can take a train to commute or ferry to commute and once you get to the other side, there will be a motor driver waiting for you taking you from point to point from the train station to your work and back etc. Ultimately our technologies, these matching technologies, the payment technologies are going to extend beyond the private sphere I believe but also into public partnership as well. We are early in those conversations, it is going to require a lot of dialogue and a lot of trust but I want Uber to be about getting you from point A to point B regardless of the way you get there.
Q: You said that you also want to have the ability to move things. So, is a foray into the logistics business something that you would consider as well?
A: I think it is certainly something that we are considering. Actually we are more than considering in the US. There is a business that we have built called Uber Freight. If you look in the US at least, the way the freight moves around is that our shippers for certain percentage of their shipments, they call up a broker and they say I want to move this shipment from point A to B, it is this many miles, it has got to get there by X date and these brokers start calling truckers who are independent contractors mostly in the United States to get a bid and get that shipment through. There is a huge cost to that, these brokers they charge too much. So, what we are doing is, we are taking all of that process, we are using our marketplace, technology, supply demand and pricing technology to totally automate it, so that we are essentially building an electronic Uber for freight and at the same time we are working on autonomous trucking technology so that we can serve parts of those routes and eventually all of those routes through autonomous trucks and radically reduce the cost of shipping as well.
So, we are now actively working on getting things from A to B as well.
Q: Outside of the issues and the challenges that you are dealing with inside the company, from an external perspective what are you most worried about, what are the big risks outside of the regulatory risks that you are most concerned about today?
A: I think the biggest concern that I have is, we had a very tough 2017 as a company and part of it was company growing too fast and making some decisions that were about growth without thinking about what the consequences were. There is a real temptation in that kind of a world to shift too far the other way, which is to become too conservative, to create bureaucracies around decision making, to not want to take risks etc. We haven’t done everything right as a company and certainly the company recognised that there is a change in leadership needed and I am part of that but there is a lot of right done about the company. The entrepreneurship, the drive for success, the passion around mobility, the quickness of decision making and the scaling of this business, all of that was right. So, I want to take the best of what made Uber what it was, this enormous company that grew faster than any other company in the world this entrepreneurial bench together with the responsibility of growth, the partnerships that you have to build with regulators, with cities etc and put those two together in one really dangerously great animal. I don’t want to shift too far the other way too fast.
Q: So, you have brought in the adult supervision that was needed?
A: I brought some adult supervision but I still want to be a kid.
Q: What are the levers that you are going to push now to ensure that you continue to bring the losses lower?
A: The lever is scaling. This is a business where bookings grew 80 percent, from a revenue basis we are growing over a 100 percent. What I look for is, increasing automation and making sure that every single transaction and every single driver and rider that we serve gets the perfect experience.
Right now we get too many calls for our customer service lines, we get too many errors and I think using automation and using smart data to reduce those errors is actually going to reduce our costs, increase our profit pools and help us grow expenses much more slowly than revenue. So, the business is scaling. I think we are on a very good path and we just need to keep it there.
Q: How important is India going to be from a tech perspective? It is a market that you want to continue to put money on and a market that you want to continue to bet on but from a tech perspective how important is India going to be in the context of what you just said?
A: I want to make a big bet in India. I think the talent pool here is extraordinary, I think the work ethic here is terrific, people are hungry to succeed. I love the entrepreneurial energy in India. So, I want India to be our second tech centre. San Francisco is the headquarters but India is going to be a tech centre and who knows may be 10 years from now, India will be our first tech centre.
Q: What is the hiring plan here?
A: Multiples of where we are now.
Q: What is that concerns you today as a CEO of a large corporation with global operations? Looking at internal challenges as well as the external uncertainties, we are living in a volatile and an uncertain world, as a CEO on your dashboard in order of priority what are the key risks?
A: For me the key risk and a priority for us is safety. The top priority that we have as a company is standing for safety. The fact is that we every day are offering 15 million rides and this is 15 million times in which a rider is stepping into a vehicle of one sort or the other and putting their lives in the hands of a driver and then a driver has to trust, that a stranger comes into their livelihood and serve that stranger well, and that stranger respects them and treats their car and treats them with the kind of respect that any entrepreneur should have. 15 million every day is a lot and it is very important for us to create the safest environment that we can both for the rider and driver and that is what keeps me up every day. When you are serving that many rides and it is going to be 30 million before we know and after that it will be 50 million a day, things are bound to happen and the challenge for us using data and using identity to create a high quality of service every single time, that is going to be a key to our success but it is also a responsibility that we owe to our driver partners in our community and our rider community.
Q: Since you talked about security and localisation earlier, in the Indian context security is the top priority that Uber needs to focus on given what has happened in the past. What more can we expect, you have introduced things like the SOS button and so on and so forth. What more can we expect from Uber in terms of ensuring that there is a 100 percent security every time you take a ride?
A: The most important factor for us is to use our data and we have got the best data scientists in the world to understand how a driver is driving and whether or not their actual driving is creating any alarm bells, have they been driving for too many hours, are there safety issues, are they swerving one way or the other, so making driving more safe is a big deal. Over a million people die every year in terms of accidents on the road. I believe that we can use our data when the car is on the move much more effectively and ultimately that is going to be augmented by autonomous driving which represents the technology that will make the roads radically safer going forward.
Q: Transparency as well as communication with regulators around the world, how significant is that going to be from an expansion perspective as well because you are facing huge challenges whether it is London or other parts of Europe and you do acknowledge the fact that there was lack of transparency on the part of Uber communicating or dealing with regulators. What is going to be the big change there?
A: I think the big change is having a dialogue with regulators. We were busy growing, we were going forward and I think we were just guilty of not having real dialogue with our regulator partners and expecting the world to adjust to us and that sometimes doesn’t happen. So, I can tell you that while nothing is guaranteed in life, every dialogue that we have had with regulators has been constructive and ultimately what we have going for us is that every single city in the world wants mobility as a service. Every single city in the world wants to reduce pollution, every single city in the world wants to reduce congestion on their roads and wants to improve quality of life and the mobility of their citizens whether they live in the middle of the city or they live in areas that are more remote. So, that is something that we can drive as a company.
So, while we have had our faults in terms of how we have handled particular situations, if you step back, our company is a force for good and I don’t know any city, while there may be some cities out there but vast majority of cities in the world want us playing a part in where they take mobility going forward.
Q: What do you make of Hyperloop?
A: I like Uber Air more. We are working on a technology, actually battery technology, now it is making possible for us to have vertical take-off and landing vehicles really in 5-6 years in pilot mode and 10 years commercialising it. Why spend billions digging a tunnel when you can take to the air.
Q: Who is the leader that inspires you today?
A: I think Jeff Bezos is an incredible leader for Amazon. A founder who can scale the way that he has scaled, a founder who can succeed across different products that he has built and a founder who takes failure in his stride and just keeps innovating is someone who is worthy of great admiration. If we can be the Amazon of mobility then I think we have win on our hands.
Q: You said it looked messy and it was messy, this is when you got into Uber. On the messy scale where are things today?
A: The map is still soaking but it is getting better.
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