Speaker 1 • 00:00 Autonomy is existential for us. It and it it is somewhere between existential and massive value unlocking. And it won't be a couple of years, but it also won't be a couple of decades. And so somewhere between now and then, like how the world moves looks totally different. You should be able to get anything to your doorstep in 30 minutes or less. All local commerce, anyone that has a storefront, a distribution center, a node, a warehouse Whatever. If you want that at your doorstep in 30 minutes, you should be able to get that.
Speaker 2 • 00:36 That's Andrew McDonald, President and Chief Operating Officer of Uber. With gas prices jumping, I wanted to ask Mac how drivers across Uber 's platform are responding and other signals he's picking up about the economy from the company's data. We also talk about Uber 's newest move into travel and lodging via a partnership with Experiment. Whether the goal is to turn Uber into a super app, and ways that Uber and Airbnb are competing. Plus, what Max sees as the inevitable shift To autonomous cars and what responsibility Uber has to its human drivers. I'm Bob Safian and this is Rapid Response. I'm Bob Safi and I'm here with Andrew McDonald, president and COO of Uber. Uh Andrew, Mac , thanks for being here. Bob, great to be here. I'm excited to chat. So Uber has gone through many waves and phases, early disruption and attention, then a a difficult period reputationally, Darak Ashrashahi was on the show a while back, Uber CEO, and he was pretty candid about the challenges of of resettling the brand and the culture. In recent years, it's been Definitely a maturing phase growing up as a business. You've been along for for much of this ride joining in 2012 Where do you feel like Uber is in its journey for you? Are you in the midst of an ongoing phase? Is is a new one emerging? Yeah,
Speaker 1 • 02:09 it's a great question. It's something I think about Probably more than I should. At this point, I'm the longest tenured employee at the company. So I have a little bit of uh I guess the honor but also the burden of carrying some of the the history and You know, u not many folks from call it Uber 1. 0 are around for Uber I think we're on like Uber 3. 0 right now. I would say DAR's early days were Uber 2. 0, but we've we've come out of that sort of rebuild phase and now it's a phase of growth. The new phase uh is is sort of like a technological shift more than an organizational shift. You know, for Uber, like every company, AI is topic de jour, but also probably the topic that will dominate the next few years, if not decades. We're a physical world company, an atoms company. We sit at this sort of digital physical intersection. And I think AI in the physical world is a a major new frontier for us. So It's less about culture or organization, you know, new phase, more about technology, which I I think is exciting.
Speaker 2 • 03:15 As we're talking Uh a lot of the news is about sort of rising gas prices, the Strait of Hormuz choked off, putting pressure on everyone who drives. What are you hearing from your drivers? I mean, and and what can you do to help? Raise rates for riders? Like, how do you navigate that piece of this moment?
Speaker 1 • 03:36 Yeah, so so that's something we obviously focus on a lot, right? Um we think about the people that earn money on our platform holistically, we think about what their PL looks like, not just what our PL looks like. I I think the good news is even though, hey, rising gas prices, that's gotta be really tough for people who drive for a living. When you look at the percentage that, you know, an increase in gas prices, actually how much of that flows through to the drivers like weekly pant piano if you will. It's actually relatively modest, right? I'm I'm not saying it's insignificant Every dollar matters, but it it's not necessarily the extreme flow-through to price that you would see in like an airline industry, for example. Now that said, like we are responsive to it. Driver sentiment is impacted when gas prices go up. We see it in our data right away. They also want to see a response from the company. In the past, we've made some mistakes. You know, candidly we've done Uh for instance w we've done direct fuel surcharges in the past where we we just put a additional Yeah, call it a buck on the consumer receipt. Yeah. Charging riders, but also doing it in a very direct pass-through way. Like put it on the receipt, fuel surcharge, here's the impact. The challenge with that for us is It's a bit of a fixed lever, like it's y you know, when do you pull that back? If gas prices revert to uh you know, pr pre crisis levels Is that your license to pull it back? You're still gonna have folks that are unhappy if you pull it back at that moment. And so we actually try to use um levers that are a bit more flexible. In some cases that means we just take some of the hit, i. e. we take lower margins, lower take rates. In some cases we actually just raise underlying prices. So instead of having it be a surcharge, we just You know, if if the marketplace is tight, our prices go up. That's the benefit of a uh dynamic pricing marketplace like what we've got. And in other cases, we'll actually just try to negotiate on the driver's behalf. So in the U. S. we've rolled out a bunch of fuel discounts through our driver loyalty program that actually ends up offsetting most of the cost.
Speaker 2 • 05:45 Hmm. Is it is it different? I mean, outside the US, I mean you're you're a global business and that gas prices are much higher in some other parts of the world than they are in the US.
Speaker 1 • 05:57 It's it's definitely different. I I mean this I I would say this is one of those topics that is a bit country specific. This is why we are not the normal tech company per se. We get pulled into the country level details of the 75 countries we operate in, often the city level details. Um and and gas prices are a different story depending on where you look. I mean, yes, the the war obviously just puts upward pressure globally. But in many places, you know, they have huge domestic industry in production or governments uh subsidize gas prices. You have electrification rates, which are very different. We we have a seven cities in Europe that are highly electrified, i. e. driving a lot of EVs. We call those our Spark Seven cities. You know, the ability for those markets to absorb fuel price increases when you've got forty percent of drivers in an electric vehicle is very different. And so yeah, that the the factors are different and what we do is we sort of organize a global steer co where individual teams will you know adhere to a global set of principles, but we need solutions that work loc locally. We actually do have a fuel surcharge. As much as I don't love that approach, we have a fuel surcharge in Australia, for example, because there's some local factors there that make that attractive. We vary our approach quite a bit, which is frankly a theme for our company overall. I mean
Speaker 2 • 07:13 Uber 's an American brand, how much is it viewed that way? Around the world. I mean, I know some markets resisted Uber as an interloper at first. Over the last year or so, you've got US actions in the Middle East and trade policy. Are are there implications about being an American brand for your business?
Speaker 1 • 07:34 Yes, yes. And and You know, candidly, sometimes it's a halo for us and sometimes it's a track. Brazil is our second largest mobility market. um by bookings, by dollars, and our largest mobility market by trips volume and and meaningfully so In Brazil, like generally American tech companies have a halo. They're seen as high quality, aspirational, providing excellent serv uh service levels relative to local alternatives. So being in a American c tech company or a Silicon Valley tech company is a is actually a big tailwind for us. Aaron Ross Powell And when like
Speaker 2 • 08:17 tariffs are put on relations with with Brazil, that doesn't didn't necessarily impact the way your brand is viewed.
Speaker 1 • 08:25 It it hasn't. And and you know, we tend to be pretty immune to the sort of microeconomic impacts of tariffs. So much of our money flows locally. We we actually don't get that impacted by things like tariffs or punitive um, you know, cross border policies. If you're a customer in Brazil And you pay us ten bucks, you know, like nine fifty is going into the driver's pocket. And so You know, the money sort of stays locally. And I think we actually benefit a little bit from that. Like if you're like boycott Uber in Brazil because of, you know, it's an American brand Sure, there'd be impact on us, but actually there's more than a million people that depend on our platform locally to earn money. So you know, those are the folks that actually end up impacted. So we often feel more local Because the face of our business locally is the restaurants that earn money on our platform, the retailers, the drivers, and that's who shows up for us when you're a customer. Now In a place like Europe, it's different, right? Some European politicians have said openly, you know, our recourse in trade policy is taxing the American tech companies. And, you know, we get bucketed into that group. And That can be tough.
Speaker 2 • 09:40 But it sounds like it's more about government policy than it necessarily is about like, oh, Uber 's American. I don't I don't want to, you know, support that that brand for that reason.
Speaker 1 • 09:52 Yeah, I that's minor. And part of it is too, there's often not a local competitor, a local alternative. Like so You know, I'm from Canada originally, right? It's been well publicized that uh, you know, there's been some bi-Canadian movements the last year and a half. You know, the people are like, don't use Uber, it's an American tech company. Well The next biggest ride hailing player is Lyft, which is also an American tech company. The next biggest is uh Hop, which is uh European. Like there's not a Canadian alternative to Uber and in most countries that's true. So you emphasize
Speaker 2 • 10:32 sort of the local nature of of Uber's business. I was thinking that, you know, you serve both Folks who go out for the night and those who stay in and and order takeout. And in that way your your business is sort of has a a a barometer of the economy in some ways, of of what's of what's going on on the ground
Speaker 1 • 10:51 We're constantly looking for what's coming in our data. We'll look at, you know um different credit card types, different payment method, all sorts of different cuts to try to get at, like is the consumer weakening and We just don't see it. I think we're a really good barometer of the labor market. Actually a more pure barometer of the labor market than consumer health. Generally the barriers to get on the Uber platform as a worker compared to other jobs are quite low. And so we tend to be a really good sign of the the local labor market, right? When there is um high unemployment. And and again, I would not say that at the federal level or even state level, I'd say it like a city level or even a zip code level. You see more supply come into the market and prices go down until there's like an equilibrium found between price and earnings And and when labor markets are tight, you you see prices go up and you know again that equilibrium get found at higher prices. So A lot of people study us for labor data and right now, like the labor market's quite healthy i in in the US in particular. Prices are not necessarily coming down as a result of excess labor supply. And so I think that shows the economy is still ticking along.
Speaker 2 • 12:10 You recently announced a partnership with Expedia enabling users to book hotels through Uber. And it feels like sort of the next step in Uber as you know all in one super app.
Speaker 1 • 12:24 Yeah, I mean th this was a fun one for us. Um Not the least of which because uh you know my boss uh is on the board of Expedia and used to be the CEO of Xpedia. We don't use the term super app internally. We don't love it. I I I and and the reason is We're not trying to be all things to all people, right? And um, you know, often super apt Particularly when you use it in the context of like developing markets, you know, I think some of the biggest super app success stories are out of China. or out of Southeast Asia or India. Amazing penetration in businesses they've developed. A hundred percent. And and usually not always, but usually payments. Andor messaging are at the center of those ecosystems, right? It's often built on a wallet or it's built on a very large user base, you know, via messaging or whatever. Um and then they start building out adjacent services. That's how I think of a super app. We we are an app about like I I I think about daily usage, broad access to local co car um commerce. And we do we do intend, we have built out adjacent services to core ride hailing. and core on-demand food delivery and now have many different flavors across mobility and delivery. And by the way, increasingly with our Uber Freight business, which we don't talk about as much um serving sort of end-to-end logistics i in cities and across countries. And and really it's about convenience and accessibility for the customer. And travel is a very natural use case for us to anchor in. 15 % plus of our mobility business uh comes through airports. We have a very high percentage of our customers that use us across multiple cities. Increasingly people are replacing room service at the hotel with Uber Eats, increasing when you get to your hotel and you realize you forgot your toothpaste or your toiletries. You're doing a quick convenience order So travel tends to be at the core of a lot of how people use our our platform. And so we're building around that.
Speaker 2 • 14:30 I I talked with um Airbnb's Brian Chesky last fall about their efforts, you know. They had the experiences now. They're offering car services largely from from airports in in Europe. I how much are are Uber and Airbnb sort of eyeing each other as as kind of competitors as your as you're each moving in the, you know, from a core to a different place?
Speaker 1 • 14:54 Yeah, so so it's a great question. And, you know, uh Uh we have amazing respect for the Airbnb. Um we're we're m I mean through our Expedia partnership, we're making VRBO um rentals available as well. So we're gonna play in that space as a channel. Now, many channels is not a new thing in the travel business and um I think frankly we all intend to grow the pie. Um and Airbnb, I think we we watch closely what they do. We don't view them as a competitor, we view ourselves as an incremental channel to the industry. What I'd say though is j you know, just as the super apps of your are based in like uh payments or messaging, which are high frequency use cases. Uh we're building around on-demand food delivery or rideshare, which is also pretty high frequency transactions for the average customer. I think going from infrequent to frequent is tougher. And and so, you know, I don't know what the average annual usage is of an Airbnb customer. I have a decent sense of what that looks like for the hotel operators. And I think it's hard to get somebody to go from you know, two to three personal hotel bookings a year to now using you for all sorts of things that are more about daily use. That that's a I think that's a tougher transition to make. Now we've got to prove the opposite. We've got to prove that we can go from frequent to infrequent You know, how do we get you to think about booking your hotel through Uber when you're used to use us for a bit more of the daily utility transaction? That that is a challenge, but I think it's an easier challenge because you're just starting with more shots on goal, but it's a different challenge.
Speaker 2 • 16:31 There were rumors last year about uh potentially possibly an expedia acquisition. Could this partnership be a a step in that process?
Speaker 1 • 16:39 That acquisition is um I would say off the table for now. There 's nothing live and ongoing there. But of course, like as we learn about the travel space more by participating more directly in new product offerings there Um you know, to the extent we get very excited about travel, like w we will do more commercial partnerships, we'll grow our existing commercial partnership with Expedia. And you know, we would be open to pushing into new verticals more directly as well. So uh I think it's early days, as you said. It's early days, right? You know that always says we're always exploring everything Right? Like we are listening all the time, and I think that's how you find interesting opportunities. Uber one, which is our membership program, right? And we just uh announced last week that we crossed 50 million members You know, started out primarily focused on our delivery business and our food delivery business. No delivery fee as a core value prop of Uber One was something that really was a clear hook for consumers. We have taken steps over the last few years to layer way more value into that program. By adding mobility benefits, by adding family benefits. And now we're starting to add travel benefits. And I think the offer we've given on the hotel side is really rich. I think we have an opportunity to make Uber One the best travel rewards program. And that's an interesting hook for us as as we go forward.
Speaker 2 • 18:01 It's like you you you're you're building your Amazon Prime or like a Costco membership. Like there's that other side of the business that's that's part of what you're doing at the same time as you're sort of pushing into these other these other verticals.
Speaker 1 • 18:14 When you think about a like a local membership program that you can get anything you want from really any storefront, whether that's a restaurant, a retail store, a convenience store, and you can go anywhere you want. And you could do that on a bike, on a scooter, on transit, in an Uber X, in a Uber Black. And all of that is layered on top with like a local membership program. I think that's really compelling And then if you're traveling, all those benefits travel with you to explore whatever city you're going to. That's that's unique and different and like we aspire to be alongside the Costco's and the Amazon primes of the world for sure.
Speaker 2 • 18:49 G recently released uh an intriguing paper about autonomous vehicles that that AV technology is ready that the conversation around it kind of lags the the capabilities. Ca can can you explain that why why you release this now?
Speaker 1 • 19:05 When you're building new infrastructure in a city, which is essentially what Uber has done in rolling out transportation systems in more than ten thousand cities around the world. You have a deep responsibility to all the stakeholders that are impacted by that. It's not just about product market fit. It's not just about whether consumers love your your Uh your app is not just about whether people enjoy earning money on the platform. It's you are impacting cities. And we think in in retrospect Ride sharing sort of happened to cities, and then cities uh had to respond, and often that response was combative and dragged out over multiple years, and in some cases we're still paying down that debt. we've gotten a lot of things wrong over the years. Um we think autonomous should happen with cities. And by the way, the underlying technology is so amazing and will have so many knock on benefits for society from a safety perspective. From an economic value creation perspective, eventually from a cost perspective, it's gonna be awesome. Um and I think we feel a deep responsibility to steward that future forward, having learned the lessons from our past, which means working with cities, making sure that um important issues are sort of addressed head-on as opposed to as an afterthought. Issues like the labor transition, right? AI is raising this question for society overall. A Vs, uh autonomous vehicles are, you know, probably the purest form of uh the physical world AI. We need to make sure that as we roll out a new transportation system in a city's or a new ridehill network of sorts that we're not recreating the problems of the taxi industry of the past. And all sorts of, I think, important questions that are all addressable. But actually we'll make sure that there's not pushback against autonomous vehicles and that the progress isn't slowed, which ultimately is is important to us. So Yeah, that's why we put it out there. We we've learned our lessons and we want to help the world learn lessons and we just want to put a stake in the ground of what we think good looks like.
Speaker 2 • 21:04 I recently had uh Zooks CEO, I Aisha Evans, as a guest on the show, and you've partnered with Zooks and also with Waymo. Uber shuttered its own AV effort several years ago, but you've you've left the door open to reviving it As you as you talk about AV, it sounds like you're a believer that like AV fleets, they're coming. They're gonna be here. Uh will you need to have your own AVs in the long run? Can can you just be the conduit for others?
Speaker 1 • 21:36 It's a great question and and candidly, it's a question that I think we have a responsibility as a management team to continue to revisit. Like we have 25 autonomous vehicle partnerships today globally. And starting to work with our partners to scale, helping them build out the physical world infrastructure they need to scale, whether that's depots or charging capacity. Remote vehicle management or customer support. It's no longer about, hey, let's just get a couple of vehicles on the road and test that our integration works and help, you know, see the see how your technology performs. But like how do we go from five vehicles to five hundred to five thousand? And to me that's that's a matter of when not if the technological progress and the technological problems are largely solved. It becomes a business model problem and a scaling problem. And our job is to make sure that the economic return on those assets for our partners or for whoever the ultimate vehicle owner is, right? Because I think many Models will emerge. I think you'll have fleets that will own these assets. I think you'll have financial investors that will own these assets I think you'll have individuals that will own these assets. So whet whether or not we need to own vehicles directly, own fleets directly, own the technology directly, I think it's something that will get answered over time. Our position today is that that's not our role in the ecosystem. But Like any management team, we should always be open to changing our mind. If the facts change or our strategy is proven to be wrong, then then we'll have to change direction.
Speaker 2 • 23:07 Your current uh human drivers who are worried about being replaced, like like many people are worried about about being replaced by AI. What do you feel like is your responsibility in that transition? toward those drivers compared to the responsibility of the cities, of the governments. One of the ways
Speaker 1 • 23:27 you don't make this entirely a government problem? is that corporations act responsibly. And so when we advocate for things like a hybrid network, when people are requesting an Uber They may get that fulfilled by an autonomous vehicle. They may get it fulfilled by a human driver. We think a hybrid uh transition is a very responsible transition that allows us to you know, continue to grow the pie. Our business is still growing north of twenty percent a year, and that means that human rideshare jobs and earnings are still growing. And I think they will for years to come, even as we layer in autonomous vehicles to our network. And I think that helps the transition. More than ten million people earn money on the Uber platform globally, and we have a deep responsibility to those folks to help them you know, have opportunities in the future. You know, we of course will work with governments on this transition, but I think corporations need to lead the way. Aaron Powell
Speaker 2 • 24:19 Are there things you've learned in this process as you're as you're Testing, figuring out how to how to apply AI in a way that's effective that that others might take away from the experience. Because Uh I mean the equal parts, excitement and fear and and you know cost about this.
Speaker 1 • 24:37 Yeah, and and the first thing I'll say is like I'm on a learning journey like you know probably everyone else on this this podcast, right? And As much as I multiple times per day have moments in my personal AI usage where I'm like, this is so cool. Like, this is amazing. I can't believe I was just able to do that. I also suffer from the sort of inertia of uh there's kind of been a couple of hours of learning for me to do that thing. via cloud or via chat GPT. And so I'm gonna do it the old way. And like I'm trying to fight that every day. I think the way consumers are now expecting to consume AI from companies is like this chatbot format. And It's not yet clear to me how like a company like Uber or many of the other sort of consumer transaction-oriented companies actually make that transition. Brian Chesky yesterday, I think it was yesterday tweeted about why isn't Airbnb rushing out sort of AI-led interfaces for customers. And I thought he was very honest in his response, which effectively was something like, it's very hard for us to make the transition from our traditional UI to uh you know, a chatbot-led AI or a voice-led um UI without killing conversion. And there's like more than a hundred billion of do a hundred billion dollars flowing through the Airbnb platform. And if you kill conversion on that as you make some hard fork to a totally different UI Like that's billions of dollars of value destroyed in the short term. And even if you're the bravest founder-led, you know, forward design thinker like Brian is That's a hard a hard gap. And by the way, it's not obviously better for the consumer. I 'm not sure.
Speaker 2 • 26:19 Well that's the thing, right? You're not sure what's going to be better for the consumer and until you're sure like you don't want to sell them something that maybe isn't what they want.
Speaker 1 • 26:29 We're working with pretty much all of uh the large model companies as they roll out try to roll out commerce and there hasn't really been anything that's taken off yet. It doesn't mean it won't happen, but it's it's you know A year ago at our board meeting, we were worried that by this point a year later, we'd be totally disaggregated because all commerce is going to be flowing through uh the large model codes in in the form of chatbots and that just hasn't played out yet.
Speaker 2 • 26:56 I had a uh interesting discussion with Louis uh Von Anon from uh from Duolingo. I don't know if you know Lewis or not, but How he, you know, he he's learned over over the last year that some of the things he thought AI was going to make more efficient for the company Doesn't necessarily because you have to spend so much time, you know, checking it and and reinforcing it. He's he's not finding that that uh enormous leverage from his uh from his engineering team that he hears about, that he's hoping for.
Speaker 1 • 27:26 Yeah, I mean the headline stats are like you make your head explode, right? When you hear companies talking about, hey, twenty-five percent of code commits uh over the last quarter were AI driven. Um or, you know, our token usage went from X to Y, or percentage of employees , you know, all all these sort of numbers. Um and it's amazing and I think it's like this massive transformation of society. But then you sometimes go and you talk to your senior engineering leaders and you're saying, okay How many projects that were on the cutting room floor got moved above the line because of the, you know, productivity gains because twenty-five percent of our code commits were via cloud code last last quarter That link is not there yet, right? Like you you're not I mean, I think maybe implicitly there there's more that is getting shipped. But it's it's it's very hard to draw a line between one of those stats and okay now we're actually producing like twenty-four five percent more useful consumer features, right? And and that line is hard to draw. And I think over the over the coming quarters and years, like Maybe that will become clearer, but I think today it's hard, even if some of the underlying metrics are like trending in a really astronomical direction. Uh our CTO um Praveen went viral because he effectively said in an interview that we had blown through our AI budget. um for twenty twenty six and it was like, you know, middle of March or something when he when he said this, and everyone was like, Oh, you know head exploding moment we're gonna have to start talking about, you know, token consumption and the associated cost versus headcount and like making trades on that as an engineering organization. And so if you're not actually able to draw a direct line to how much you know, useful features and functionality you're shipping to your users, that trade becomes harder to justify. Because it's not free. AI is not free. No, it can feel it can feel that way. Uh and uh if you're like just a user sitting there and coming up with interesting use cases and you don't pay the bill, like it can feel that way. But somebody's paying the bill. What's at stake for Uber right now? Aaron Ross Powell Autonomy is existential for us. And it is somewhere between existential and massive value unlocking. And it won't be a couple of years, but it also won't be a couple of decades. And so somewhere between now and then, like how the world moves looks totally different. And I think that's amazing. I mean I don't think my daughters who are all um, you know, little kids today, but I I don't think they will end up getting a driver's license. They won't need to learn to drive. No, I don't think so. I I think uh ultimately autonomy will go to the skies, whether you're talking about drone delivery or you're talking about Companies like Joby that are effectively building human-sized drones, which will again further revolutionize how people move around. And by the way, we want to be pushing on on those frontiers. And then on the delivery side, you should be able to get anything to your doorstep in 30 minutes or less. All local commerce. Anyone that has a storefront, a distribution center, a node a warehouse, whatever, if you want that at your doorstep in thirty minutes, you should be able to get that. I think that's really inspiring and again further changes how people experience the world. And um it's really compelling and exciting.
Speaker 2 • 30:55 Well, Mac, this this was great. Thanks uh thanks so much for doing it. So happy to be here. Thanks for the time, Bob. This was the first time I spoke with Mac, and I was impressed by his openness about Uber's menu of reactions to rising gas prices, the pros and cons. Of being an American brand and the costs around AI. It's nice to hear an acknowledgement of past mistakes by the company, too, although whether those lessons can be applied to an AI future is still TBD. One clear thread in Max Comics. Is around flexibility. Uber is leaving the door open on a bunch of things, from buying Expedia to creating its own A V fleet. It's a reflection of just how uncertain the future is for even successful business models. We may have goals and Impact we want to make, whether that's a 30-minute delivery of everything or ride sharing in the skies. But we also have to keep our feet on the ground, ready to change our route based on the dynamic conditions around us. I'm Bob Safian. Thanks for listening.