Hi everyone, welcome to Grey Matter, the podcast from Greylock where we share stories from company builders and business leaders. I'm Heather Mack, head of editorial at Greylock. Today, Greylock General Partner Reid Hoffman talks with Uber CEO Dara Khosrowshahi. Like most companies, Uber has gone through significant ups and downs throughout its lifetime. Whether business is booming or if the company's grappling with declining revenue because of major global events outside anyone's control, how the leadership team responds dictates how the company will get to the next phase. Khosrowshahi calls these moments wartime and peacetime and says each requires a different mindset. During peacetime, he's typically more team-oriented and open to hearing everyone's opinion. During wartime, Khosrowshahi is speed-oriented and focused on decision-making. However, the signals that dictate whether a company is in wartime or peacetime can sometimes be hard to read. Khosrowshahi and Hoffman discuss how to assess various situations and how to act accordingly, particularly in confusing economic environments like we're living in today. This interview was recorded in late 2022 as part of Greylock's conversation series. You can watch a video of the discussion on our YouTube channel and you can read a transcript on the content section of our website, greylock.com. Both are linked in the show notes. And if you are already a subscriber to Grey Matter, you can sign up wherever you get your podcasts.
Obviously we're in a troubled market and troubled times. When you have capital markets work like this, when you have potential fundraising difficulties, you have disbelief in the market reflecting in multiples, other kinds of things. What skills of leadership, what ways of thinking about this as leaders most come to mind for you? And what are you doing and how would you talk to leaders here about how to think about how to navigate these difficult times?
Well, we're in the middle of it and so I don't pretend to know everything about it, but a couple of things that come to mind. First of all, as a leader, there's a human bias to process good news very quickly and to process bad news very slowly. The minute you see signal on good news, it's like, 'Good news, what do we do here?' And then you see signal on bad news, it's like, 'You know, let's see what happens tomorrow.' And then tomorrow's the same, you're like, 'Well, maybe things will change next week.' You know, got to be patient, got to be patient. So I think one is just recognizing in tough markets, to some extent, the leader has to be able to stare down a black hole and understand what's happening and process very quickly and then be decisive. So there are different styles of leadership during, you know, call it wartime and peacetime. And for me, during peacetime, I'm much more team-oriented. I want to hear everyone's opinion, etc. I think we're definitely during wartime. During wartime, you just have to be much more decisive and action-oriented. It was a little lesson for me. I remember this is not the first tough time for Uber, right? Like we've, I think we're going to get back to that. Yeah, like tough times is just kind of what we do. It's like a Thursday. And the much tougher time, frankly, for us than where we are now was post-pandemic. Our Mobility business, which was our cash cow, lost 85% of its volume overnight within the context of we were losing $2.5 billion anyway. So I had some friends who were like profitable businesses that lost a bunch of their volume. We were deeply unprofitable and lost a bunch of volume. And I knew we had to make some tough calls and I really wanted my team to be bought in. So we would get together on Zoom over and over, talk about what we have to do here and there. And one of the exchanges that I had with my CFO, Nelson Chai, that still sticks with me is, you know, we're talking in circles, circles all over. Nelson's like, 'Dara, just tell us what you want to do. Like, we'll do it. You don't need to ask our opinion and all this. Like, tell us.' You know, it's during the tough times your team needs leadership. You've got to assume that. And once Nelson told me that, I was like, 'All right, let's go.' And I took input, but I started leading. And this is not something that you do all the time because you want your team involved. You've got to be tamped down and you've got to solve for speed and you've got to solve for decisiveness. Because even if you're decisive and you make 20%, you know, if you make a decision that's 20% off, it's better than being indecisive and not doing anything. So there's this push and pull, which is during easier times I'm much more consultative, during tough times I'm much more hardcore. And my team kind of knows that now. You know, they understand once in a while I'm just going to come, we're just going to go and we're solving for speed. The second part that I would say is, and this isn't just during tough times, is it's the job of the leader to some extent to go against the grain. And it's very easy for a leader during good times, you become the cheerleader, everything's fine. Like, the good times are when you've got to be... the good times are when everyone feels great about what they're doing, they lose discipline, they think they're terrific. That's when you've got to come down really hard on your team. And it feels nonsensical, doesn't make sense. Like, they're doing great, they're amazing. That is not the time for you to be a cheerleader at all. And on the other side, it's during the tough times when you've got to start being a cheerleader. And you know, you've got to make assessment of your team, your situation, etc. So if you have a team member who's not a wartime person, move them out. That's a separate decision. But once you assess that your team is the right team, they're around you, that's when you really have to lift them up. And it's really hard because like at the end of every day you're like, 'Oh my God, this is so terrible.' But then when you wake up that morning and you get together with your team, it feels weird a little bit because you don't want to come off as like too optimistic and not recognizing there's this duality of understanding the reality and being like, 'We can do this. Come on, we can do this. Let's go.' And it's tricky because your team has to understand that you're like staring at that black hole, but then you're like, 'We got this.' And then really lift up that team because believe me, if you feel like crap, they're feeling like crap. They need you to lift them up.
And on the pandemic, now having gone through it and picked up some of the kind of structured principles the way that you do as a leader, if you were given like a magical phone that you call yourself the day where the, you know, the pandemic bomb dropped, what would you tell yourself to do differently?
Definitely go faster. And I mean that. This is something I tell myself all the time. As it relates to people, in terms of decision-making, we moved quickly but we could have moved a bit quicker. And then it goes to the biases that I talked about. If the right thing to do is to, let's say, cut 25% of your staff, and we cut 25% of our staff, it was terrible. You'll convince yourself that the right number is 15. You'll convince yourself that, 'Well, I'll do 10, see what happens,' etc. And you may not have the luxury to see what happens. And so I would say move faster and don't mify the tough calls. Ultimately, when we made the cuts, we did go in deeply. It took me too long to get there. It took way too many restless nights, way too many sleepless nights. And you know, while the end product, I think we handled it well, we just took too long.
So let's switch to when you were doing more careful... you know, I had kind of presumed that the way that one would do a kind of a cultural rejuvenation was one would ride in and say, 'There's a new sheriff in town, get on board with a new program,' you know, and just do that. And one of the things that I got added to my toolkit, which is now permanently in blazing, there was no ride in and you say, 'Actually, in fact, you're already great. I'm just helping you rediscover it.' And a variety of techniques, like for example, let's do a company-wide survey of what our values are, and then we'll get all those values and I'll do some editorial to read, but I'm doing it as a reflection of what you guys are saying versus you guys have to now come join my camp. As ways of doing that. So say a little bit about that kind of reforming, kind of what you did for folks here. And then that unlike the wartime pandemic, which is, 'Oh my God, we have to make all these hard decisions right now,' that was a more deliberately graceful process. Say a little bit about that.
Yeah, absolutely. So when I came in, one of the... and one of the sign reasons why I came in was because the company needed a cultural reset and the world was looking for it. I think leadership was looking for it, the board was looking for it as well. And so we had to move very, very quickly in terms of that reset. And I will tell you, like the old culture of Uber, I don't consider it a bad culture, just some of the cultural values started getting weaponized. You know, so I'll give you one example. There's a cultural value which is 'be toe-stepping.' Right? The idea behind that was challenge others, don't be afraid to challenge. That's a great kind of culture to have. But it got weaponized into it's okay to be an a**hole, right? And so it was really important to me because there was incredible talent at Uber, met a couple of them here, you know, engineering talent, etc. And I wanted to respect that, partially because it was like part of my job as being COO and I want to keep that talent. At the same time, I knew that we had to make a cultural reset very quickly. So we went out there and we crowdsourced from Uber employees what they thought the best norms, cultural values should be. And we took some of the older values that we thought were great values, big bold bets, and then we also combined them with some newer values that we wanted to carry the day. You know, the one that we talk about a lot is like, 'We do the right thing, period.' And so for me, it was a symbol of, 'Hey, we're going to take the good of the old.' And there's a lot of greatness that made it what it was. And I'm here to pivot, not say that everything that you did was, you know, terrible. It's actually interesting. I'm now... we actually very recently reset those values as well. And we went through an exercise. First of all, I think a lot of companies, people view as, 'Hey, values are forever, they never change.' I personally think that's BS. Like, companies should be constantly adapting, right? You shouldn't be changing your mission. Mission is super slow. You know, maybe once every 10 years or so. Values and norms, you know, slow. Strategy, medium. Tactics, pretty fast. Yes. Right? And so we actually revisited our cultural norms and values. And this time I was more top-down. I worked with my team, but I felt like I had a right to be top-down because I'd got to know the company and I wasn't like some stranger saying I'm going to make a bunch of stuff up not knowing anything about the company. And actually, this time it really did work out because it was a reflection to some extent of who we were, but really the new company that we are going forward. And I presume 'do the right thing, period' is still on the... that one was the one that stayed.
Yeah, no, exactly. What did you find... like one of the things we had at the... by the way, I'm going to interrupt you for a second. Of course. What's the job of a board during tough times? Well, it depends a little bit on company CEO health and position, yeah. But I think that too often boards get to adding to the tough times versus helping. That's what I'm saying. Like, it's a job of the CEO to go against sometimes, yes. Like, and I think from a board standpoint, the CEO knows, you know, he or she's a piece of crap when things are badly. Like, the board doesn't need to remind you. Yes. Right. And so I think that it's very similar to what you were saying about the CEO job, which is, look, when it's obvious we're having difficulty navigating this particular facet of the business, might be, you know, a go-to-market strategy, might be a competitive thing, might be a capital raise, might be a delay. And like, one of the most irritating things I find happening in a board meeting is like, 'Oh look, we slipped this product by a quarter,' and then everyone spends an hour going, 'Well, slipping a product release of a product by a quarter is a really terrible thing.' It's like, 'Yeah, we know it's a terrible thing. We don't need an hour to talk about it, right?' And if you don't know it's a terrible thing or the CEO doesn't know it's a terrible thing, that's a different problem. Yeah. Right. And by the way, the next time they'll commit to a much slower time frame so that they don't have to tell you that they've slipped. Yes. Right. And so I think that the key thing is, are you making the focused decision? Are you making the hard calls? Are you not getting ameliorated, you know, into kind of softer things? Like, one of the general things is, it isn't just that people like to be liked, but there's also a question of there's a lot of competing ideas. I have this mode where I try to teach other board members. It's a very simple thing of green light, yellow light, red light. Right? Green light is they're the CEO, they make the decisions, you're just talking to them. That should be the state you're in. Red light is they might not know it yet, but they're not the CEO. You know, there is some transition that is coming. They will know. Yes. Right. The most often mistake that board members who are inexperienced make is they stay in yellow light too long. They go, 'There's a question,' and then they start doing like micromanaging. Right? And so when I get to a yellow light circumstance, I pull the board members aside and I explain this theory to them and I say, 'Yellow light is a limited amount of time with a limited measurement and it goes one of the two directions.' That's right. If you make the assessment that they are, then you got to lift them up and figure that out.
So one of the interesting things that I saw you and Eric talking about at the Masters of Scale Summit, where Eric asserted that a new CEO in a turnaround circumstance had to trade 80% of their staff, and you said, 'Well, actually, it ended up being 50% for me, and I think that's a good number.' Say a little bit about what that changeover of staff looks like, how to manage it with grace and care for the organization. What are the kinds of principles when you're doing this kind of change in direction, whether it's a rejuvenation of the company, whether it's a pandemic, like, how do you approach that?
Yeah, so I don't think that there's... it's too easy to be formulaic about things that aren't formulaic. And a company's an organism, it's like a human body, right? So you can't make grand pronouncements. For me, it was pretty practical, which was I had a lot of respect for Uber as an operating entity. Whereas from an operating entity, from a technical standpoint, from a product standpoint, I thought that the company had real strengths. High bar for talent, high demand for throughput. Where Travis, who was a founder, didn't invest was in the framework around the company. CFO, general counsel, a bunch of, you know, some would consider BS kind of framing, controls, etc., governance, the board. That part of the company was quite immature. So I had a hypothesis coming in. I'd spoken to a bunch of folks, I'd spoken to board members, I'd spoken to a bunch of folks who had worked with Travis, had great things to say about him, and a bunch of folks who didn't, right? So I will get a complete view. And so when I came in, I had a plan. So my hypothesis was this was actually a company that was pretty nails in terms of operations, product, data science, and of course, you know, we still can get better. But the framing of the company, the corporate staff, etc., had to be turned over. So that's, you know, I moved very quickly there. Those areas, I brought in Nelson Chai, new CFO. I brought in new chief legal officer, new chief people officer, etc. But a lot of the leadership in ops stayed with us. And on the technical side, brought in a new team, I think upleveled them as well. And I think, you know, to me the lesson is go in with a hypothesis on where you think strengths and weaknesses are and what you're trying to personally achieve. And you know, so far so good. Two years in, it still felt a little bit like Dara's new people and then the old guard. And we were one team, didn't feel like one team. Pandemic brought us all together. And it's like one team now. Like, it is. Whether you were there before or after, etc., everyone sitting in their chairs comfortably. There's a lot of trust. These kinds of really difficult circumstances can either bring a team together or tear it apart. For us, fortunately, was the former. And the team feels really good now.
Well, with existential threat, if you survive. If you survive. Yeah. Last question before we open to the audience. Uber is one of those companies that has a unique lens into what's happening in the economy, what's happening in society, what's happening. What are the surprising lessons kind of now post-pandemic, coming out of it? What's growing? What's shrinking? What economy is working or not working? Frequently this is asked as a recession question.
Yeah, of course. Yeah. This is going to seem a little boring, which is people always look coming out of pandemics, they look for forever changes. It's very rare, like, when things get changed forever. Like, everything is reverting to the... like, everything's reverting back to the norm. There's this hypothesis in the pandemic, 'Oh, it's going to change me forever.' And like, you know, we're talking about Shopify. Shopify's growth has now come to a norm, which is a really good norm, but it's reverting. We're seeing our ride-share volumes, you know, explode now versus really low levels. And so we've been desperately looking for patterns. Work patterns, you know, workday, commute versus weekend versus party nights, etc. Everything is like, people are people. They go out. All the patterns are back. The one pattern that is not back is cities opening up. And the US was really trailing the world, I would say, six months ago. The world was opening up much faster than the US. US has caught up to the world, which is very interesting. But the US is a tale of two coasts, which is the West Coast is opening up unbelievably more slowly than basically everywhere else. The bottom three out of our 100 cities, Portland, Seattle, San Francisco, are still like 60% of pre-pandemic highs in terms of trip volume. And like New York, Miami, Atlanta, you know, Houston, anything in Texas, all of those are, you know, back and happening. So it's pretty remarkable how the coasts have bounced back so differently in like one country. And we don't see that in other countries. Most countries are actually quite similar in terms of, you know, the UK comes back, France comes back, Germany comes back in an even way. But the US is, it's just the tale of two coasts. Yep. Hopefully that changes.
Indeed. So I actually have a stack of questions, but part of what we try to do here is opening us up to the room. Oh, there's a hand here for sure.
