How Uber Plans to Win the Next Trillion-Dollar Market

Every single year that I've been in Uber has been a challenge and obviously the challenge and the opportunity now is the rise of AI. You don't just exist in the digital sphere, right? Our experiences encompass digital first in terms of your interaction with our platform, but then they are delivered or fulfilled in the real world. The rise of physical AI, autonomous vehicles, drones, etc., they are going to change how we interact with consumers in the real world. We think it's another trillion dollar marketplace. It will change how society operates.

Yeah. So I've been at Expedia for 13 years, CEO working with Barry Diller, and loved the experience and I loved where I was. And at the time, Uber was in the news all the time, right? It was in the business if you're interested. So obviously I was reading about the situation at Uber. It seemed pretty chaotic and pretty difficult. And then a headhunter called me out of the blue and said, 'Are you interested in the Uber CEO job?' And at the time I said, you know, no effing way, like who would even think about it at the time. And I had a considerably lower profile as you can imagine. So I kind of blew it off. And I was at the Sun Valley conference, Allen Company conference, and was having a drink with Daniel Ek and my wife.

And Daniel said, 'Hey Dara, did a headhunter call you? I recommended you for the job. I thought you'd be great for the job.' And I was like, 'Oh, that's why it happened. Like what? Like what are you crazy?' And he said, 'Why? I think you'd be great for the job.' And I said, 'Listen, I've been at Expedia for 13 years. I'm so happy with what I'm doing.' And I remember Daniel, he looks at me, he's like, 'Laura, since when is life about happiness?' Interesting comment. He's like, 'It's about impact.' And Uber is a company that has impact on the world. It's important. It's in trouble. Why wouldn't you take a shot at this? I think you'd be great. I think a lot of people come to Uber because of the impact that the company has in the world. You know, we are shaping how the world moves. We're a huge part of people's lives. We've got over 10 million couriers and drivers on the platform. And I just wanted to go to a place where I could make a difference.

And I wanted to go to a place that was making a difference. You know, like when I started investment banking at Allen Company, it was amazing. It was the best company in the world. But I was like, investment banking isn't really changing the world, right? And so for me, it was about having impact at a company that was having fundamental impact in how people live. And you know, we'd had a couple of beers and my wife was there, Sid, and she'd had a couple of beers and we talked about it. And the next morning, actually, in the parking lot, I remember calling the headhunter and I said, you know, tell me more. So that's how it all started.

I mean, complete chaos. Travis had not been the lead of the company for some period of time. And there was a group of executives, a committee if you want to call it that, who had been running the company for a few months. And obviously the company was in the public sphere in many, many bad ways. Lots of things going on both internally, externally, and the business itself was very dynamic, hugely competitive. So it would have been difficult enough if there weren't any of the external distractions going on coming into the business, which I think fundamentally was strong but was going through a lot of change, a lot of chaos both in terms of the board and what the board wanted in terms of the stability of the management team and then getting structure around the business as well. But you know, with time and with a lot of work and working with my team, we were able to bring some order to the chaos both externally and internally and it's turned out to be a great ride for me.

I think the most important how, because every situation is different, but the most important how is simplifying the situation and breaking down what seems like an unassailable problem into its component parts. You know, it's vector mathematics, right? If you have a three-dimensional complex interaction, you can just break it down to each dimension. And if you solve each dimension and you bring it all together, you can actually solve pretty complex issues and equations into its component parts. And the same is true in business, right? So when I got into Uber, there were very distinct areas that I had to take care of. One, at the board level, the board was fighting for control. And you had a board that was focused on who's going to control the future of the company versus what the future of the company was going to be.

And so, for example, we brought in a new chairman, Ron Sugar, who has become my partner through all of the years and really brought the board together. This isn't about who controls it. This is about the fate of the company. I think the company lost trust with stakeholders, with regulators, with the public. And so we went out and first went on a listening tour to understand what the issues were and then started acting based on that impact and started communicating both internally and externally, which is the concerns of stakeholders externally were just as important as our own concerns as well. And then with employees, is putting together the team. There was a lot of talent inside of Uber, but there were some folks who kind of were stuck in the old world who had to get off. And then there was an incredible talent base. Andrew McDonald, who is our president, COO, you know, kind of predated me and has come through many, many years. Many others have been with me since before day one. And then bringing in new management members like a Tony West as well who's been with me ever since. So I think if you focus on each distinct problem, what seems like chaos can become small surmountable problems that you take on and you kind of, you know, you set initiatives against each of them and over a period of time, you can't control what gets solved when, but over a period of time things get better. And I think things got better.

I think I'm lucky. Sid, my wife, calls me a robot. Which is I don't get stressed out by situations. We lost everything when we came here from Iran. Absolutely lost everything and I saw it destroy my father.

I was 9 years old.

And you know, my father built along with his family an incredible family business. We came here, we lost everything. But then we rebuilt. And I think for whatever reason, fast doesn't help. Like overthinking things doesn't help. It only makes things worse. And I'm able to approach things kind of from an engineering mindset. I studied engineering school, which is what are the problems? Let me list them and let me have an approach to solving each of them. Test and learn. And not everything improved in a linear path, but being stressed out, like what's the point of it? Who cares?

For us, we came to the states, we got to stay with my uncle Nasi. The adjustment for us was not very difficult, but as I grew up, I observed my father who when I was a kid, he was kind of a giant of a man become less giant because I was getting bigger as well. And he just lost that spark, you know, he wasn't able to begin again here in the US. He did his very best. He was an entrepreneur. He tried his hand at a lot of things and you know, I think that one, it drove myself and my brothers and my family to rebuild. You know, many immigrants have a chip on our shoulder and I had a particularly big one. But at the same time, I didn't want to be in the same situation, which is for work, for fortune to break me as a person. So, I was able to separate the two, which is, yeah, do I want to do well? Absolutely. Am I going to give it every inch that I've got? Absolutely. But in the end, I know who I am, and I'm always going to be that same person. I'm not going to let the chaos of the world affect me mentally.

It's never satisfied. I don't know what it is. I always wanted to do well in school, sports, you know. I just for me I just believe in being all-in in anything that you do. You know, when I'm with my kids, I'm with my family. I don't have this thing around. I'm not checking messages. I'm not getting distracted. I believe in, you know, if you're going to do something, whether that's work, whether that's sports, whether that's personal life, just go all-in, get rid of the distractions, and I think you'll lead a happier, more effective life.

Yeah, it's core. Like I don't know whether I would have been the same person, you know, the counterfactual if I were in Iran, but I know my family is awfully competitive. A lot of Iranian immigrants have come here to the US and many parts of the world have been extraordinarily successful.

Totally.

God, I'm figuring it out as we go. I think being a parent is so humbling, but I think we're doing our kids a disservice by giving them too much, being around too much. You know, I don't know about you as a kid, but on the weekends, my mom would be like, 'Get out of here and come back for dinner, you know, figure it out.' And I think this kind of the helicopter parenting, etc., being around your kids all the time. You want to love your kids. You want to know that they're absolutely loved and appreciated. But it's the challenges in life that form you. And it's the overcoming of these challenges that give I think humans a profound satisfaction. And if you as a parent are overcoming these challenges for your kids, you're actually doing them a disservice long term, whereas short term you think that you're doing them a favor. You're giving them an easier life. A happy life is not necessarily an easy life. And so for me it is a challenge because I love my kids but Sid and I co-parent in a way which is, you know, we're not going to do everything for the kids. They come home, they're responsible for their homework. They've got to learn how to make it in this world themselves within the scope of family which will prepare them for the outside world which as you know can throw you a lot of curve balls.

It's, you know, I tell you that every single year that I've been in Uber has been a challenge and there's been another, you know, there have been so many answers to question and we interact with the world in so many ways. Obviously, the challenge and the opportunity now is the rise of AI both as an internal tool as to how we build. And what's different about Uber than many other companies is like we don't just exist in the digital sphere, right? Our experiences encompass digital first in terms of your interaction with our platform, but then they are delivered or fulfilled in the real world where all kinds of things happen. So you've got kind of a determinative structure in terms of the interaction with the app, but then probabilistic outcomes and we always have to kind of deal with those outcomes and the things that go wrong in the real world, traffic, driver cancelling, your food being late. So we have always used kind of in that probabilistic world AI tools to build out our system for much longer than most companies out there.

But now with the onset of AI both in the digital world, the ability to build much larger models that know much more about you, can anticipate what you want more accurately, can really drive utilization and can drive how people work and make an engineer into a super engineer, to then the rise of physical AI, autonomous vehicles, drones, etc. and how they are going to change how we interact with consumers in the real world. I've never ever seen a pace of change so fast and it's incredibly exciting.

I'm not like a top-down driver so to speak. We have a bottoms-up culture which is I want people inventing all over the company. I don't want to be that single point of failure. Obviously the CEO is important for the company. So I hesitate to drive mandates and I would tell you that AI adoption at the company just because we are kind of an AI native company or ML native company in terms of where the technology has come from, it's been occurring all parts of the business whether it's engineers and how they scope projects, how they build, debugging, on-call, platform, migrations, all of that is now has enormous AI adoption to our legal team, to our marketing team. So it is happening everywhere. Where I come in is that I'm pushing the teams to fundamentally use the power of AI to rebuild systems and processes from the bottoms up. And by the way, it could be a decent first step to take a process and have AI optimize 20% of it, 30% of it in terms of speed or effectiveness or cost. But to rebuild it from the ground up, that's much harder. And that's where I'm coming in and really pushing the teams to think about processes from a first principles standpoint and the impact of AI on those.

The most amazing thing that I've seen is that I'm seeing the impact show up in all kinds of random corners of the company. You know, what we're seeing now is like we've got devs in India who all of a sudden are driving 10x the code commits that they used to. They're using autonomous agents all over the place. So the uptake of the tools that we're seeing is not at all predictable in terms of who is racing ahead with this new technology versus what we typically saw. And so I think you're going to have very, very unpredictable patterns within the company. It's up to us to find it and it's up to us to kind of promote those individuals who are kind of the rebels inside the company. We want the rebels to win here.

We're dealing with it now actually. We blew through our AI budget in a quarter, you know, for the whole year essentially. And it is forcing us to adjust. You know, we are going to meter headcount increases because to the extent that my engineers are getting much more efficient, their throughput is increasing. They're becoming superhuman in terms of their output. We, you know, one, there's a cost to that and it's a significant cost and at the same time we're kind of metering the increase in headcount. So my view right now is drive adoption, encourage usage across the company. We do believe in efficiency here. We've got over $10 billion in free cash flow, which is great, but it's on well over 10 billion trips a year.

So these are, we are not a high margin business. We want to really drive efficiency in order to lower prices for riders, to give more earnings to our earners, etc. So I do think it's a combination for us right now of encouraging adoption but then driving efficiency. And the way that I put it is we're using the more expensive models to explore, hey let's try a new interaction here and obviously, you know, these frontier models whether it's an OpenAI model or a Claude model, they really are terrific and they're great to experiment against. Once we scale some of these experiences and interactions, we'll look to bring in more efficient models that are more efficient on a token basis or open source and again lower cost. So exploration is go, go, go but then efficiency and scaling is something that we're also talking about.

Totally. So I think the first is there's an enormous opportunity in just, it's boring, but it's wonderful boring, which is just building larger models, right? So building, you know, our models in terms of our feed models, our search models now are probably 10,000 times bigger than our older models and they're just able to take much more data about you and make predictions about what are you going to search for. Now we have universal search. For example, if you search for something, it's not just classified as rides or eats or grocery. We can show you everything that we have available across our services. So, first it's just like the tooling has gotten better, the capabilities have gotten better, and today we can guess when you take an Uber ride. 3/4 of the time we can guess where you're going and it's just a one-tap interaction that can only improve based on these larger models. And as it relates to the real world, we can anticipate what's happening in the real world much more effectively now. And then the form factor with which you operate is going to change as well and more and more and it's going to take a while, you know, you'll have drones getting your food to your home or you'll have AVs delivering you from place A to place B. So everything is changing about it. Some of it is immediate opportunity now but we think there's a ton of opportunity going forward.

Supply. So, we are a supply company. The more drivers we have in the marketplace, the more restaurants that we're wiring up for you, the more latent demand that we have. And it's one of the lessons that I learned when I came from Expedia to Uber. At Expedia, we were really focused on, you know, demand, how many consumers can we get to the website, etc. and we were a demand-first company and then we would build out hotel inventory and flight inventory in response to demand. At Uber, everything is upside down. One of our very, very significant growth opportunities right now is building out our surface not just in the big cities but in the sparse markets in all of the suburbs of the world and smaller cities of the world. Not the top 10 cities in a country but the next 50 cities, the next 200 cities in the country. Well, the first thing we do is actually go out and recruit drivers, recruit merchants and restaurants, groceries, couriers, and then just the demand shows up. I don't mean it's not that easy, but the biggest opportunity and challenge we have is making sure that we secure every single supply, every single car out there that's going to take you from point A to B, every single restaurant, every single retailer, every single grocer. If we do that, the demand will take care of itself.

It's very early, but it's moving very fast. So we've got over 30 partnerships now with incredible partners like a Waymo to a Nuro and Lucid to an Nvidia that is building not just compute and sensors but also a software driver now to companies like Waabi and WeRide of the world, Pony AI's of the world. You know, just like you're seeing in the foundation model space, there isn't going to be a single winner. There are going to be many players in the foundation models. There'll be open-source smaller models as well. We're seeing the same kind of acceleration in the development of AV. And as a result, we want to be your go-to market solution for companies that are building out these digital drivers.

And we're allowing these companies to really focus on building the driver. We are building services around them. We're going out and securing depots and charging in cities in which we see kind of the regulatory landscape moving in the right way. We're working with fleet partners. We're securing financing. We just announced a billion dollar financing line with Santander for EV fleets and AV fleets. We're working on kind of autonomous insurance as well. So we're building the entire ecosystem so someone who builds a driver can get those cars in the road and then we have all the supporting infrastructure. We are collecting data as we speak in the streets that we can feed to the model and then when they hit market we've got instant demand for them. And what we're seeing is consumers love the product and AVs that are on our network are 30% or more busy than let's say AVs who aren't using our network. That 30% in terms of trips per vehicle per day, in terms of revenue per vehicle per day can make a huge difference in terms of your ROI of investing in these expensive cars.

So the one thing that is surprising and in a different way is how quickly magic turns to normal, right? You know, it was when I first experienced Uber, it was in New York City. I was at Expedia. I'm like, 'Oh my god, this thing is absolutely magical.' Push a button and a car shows up in 5 minutes, etc. Next day, you're like, 'Where's my damn car?'

And you know, with AVs, you get in them and it's magical. The cars are nice. There's a sense of privacy, peace. You play your own music. And you know, for the first two minutes, you're like, 'Oh my god, this is amazing. Look, look at what's happening.' And then minute three, here you are, you know, doing the same thing. So, I think what's incredible is what's magical now is going to seem normal to all of us 10 years from now. You know, in the end, it's about getting you from point A to B safely, efficiently, affordably. We want to make sure that these AVs aren't just available for rich people in the middle cities. We want to make sure that they're available everywhere. But I think this technology, the speed to market is going to be fast and the interactions are going to normalize faster than you think.

It's a coexistence that frankly I'm quite used to coming from the travel business. Right? If you think about OTAs, these online travel agents, they compete with a Marriott, they compete with a Delta for the consumer, they compete with an independent hotel as well. All of whom are building a direct channel for the consumer, many of whom have loyalty programs, etc. But at the same time, they want incremental consumers coming from the platforms because they have a big box to fill and they want to drive as much utilization of that box as possible. And the returns for a hotel that has, you know, 70% of its rooms filled versus 90% is night and day, right? You will take the 90% every single day. The same is true, for example, in Uber Eats, right? We work with McDonald's, we work with Starbucks, we work with Chipotle. All of these companies to some extent also compete with Uber Eats as well. And the same will be true of a subset of AVs which is a Waymo. Of course they want to build their own brand and their own channel but at the same time we are able to drive more utilization for them when their cars are on our network. The same will be true of Zoox, the same will be true of Nuro, etc. So we're going to have some players, for example, Waabi is focused on building one end-to-end model that they license to OEMs and we will be responsible essentially for all the demand. So there are going to be lots of models but I don't think it's going to be black or white which is do we only compete or do we only work together. We think there's going to be an amalgamation of business models. There already is in travel, there already is in food. Same thing will happen in transportation.

I don't think it's necessarily an Uber thing. I think it's a big question for the industry. You know, you've seen how powerful AI is, but at the same time, how unpopular it is with the general public. And folks like you and me in the corporate world, we're just amazed and we're driving utilization. And the way that these AI models interact with the average person is, yeah, search got a little bit better. But if it's driving up, or I think it's going to drive up my electricity cost or if it's going to cost my cousin's job, that doesn't feel that good. And I think the same will be true of AVs, right? Which is it's terrific technology. It is going to be safer than human beings, but how does it interact with emergency service providers? How do we make sure that the technology is available to everybody, not just the wealthy? We've got to have these dialogues with regulators, with real people living in cities, with our drivers whose earnings may get affected. Now, drivers in Austin and Atlanta where we have two big partnerships with Waymo, drivers on the Uber platform, they're making more money. The number of drivers joining the platform is increasing because it looks like AVs are actually adding incremental demand to the platform. So we have good news early but we've got to communicate and we've got to go at the pace that society is prepared for us to move otherwise there will be a backlash and you know, you're kind of seeing in some of the public perception out there.

Access to supply. And that's why we are, you know, we have a partnership with basically every AV provider whether it's in mobility or delivery or even freight. You know, we need access to supply and we're investing time, we're investing capital. And I think we're in a great position to make sure that we are the largest amalgamator of AV supply just like we are the largest amalgamator of, you know, transportation services around the world.

We think it's another trillion dollar marketplace. We think that over a long period of time as we see the cost of AV software come down and usually we see the cost of hardware come down, I mean, this is universal but usually 30 to 40% per generation, you know, we think the Lucid midsize that they are building for us and Nuro together, it would be a $60,000-$70,000 car. At those kinds of prices you can actually bring the cost of transportation down for the population. And what we see is as we bring the cost of our services down, demand goes up. When Uber was introduced early on, people were sizing the market based on the taxi market. We're multiple times bigger than the taxi market. And I see the same potential with AV, both in terms of the cost of transportation, reliability, safety, all of which are going to improve. And then think about delivery, right? If delivery is done with a drone and instead of a 25 minute to 30 minute delivery you get habituated, you know, the magic is a 10 to 15 minute delivery, cheaper, faster, better, it will change how society operates.

It's happening as we speak. Many of the OEMs, the traditional OEMs that we're talking to are now seeing that L4 driving is absolutely a reality that is much closer than they think and seeing the services and how popular they are with consumers. They are investing in L4-ready systems. So, I think you'll see the traditional players get there over the next, you know, 2 to 4 years and they'll start, you know, right now the cars are being manufactured in the hundreds and the thousands. It'll get to the tens of thousands. It'll get to the hundreds of thousands. Each of these vehicles probably drives three to four times what a human does.

So the efficiency and efficacy of one AV vehicle is substantially higher than a human based on how much humans drive as well. And then we are seeing newer generation companies coming in called the Foxconns. Now the Foxconns exist in China. You know, the Chinese players in terms of their capabilities and bill of materials is incredibly, incredibly impressive and we need that kind of a low-cost player in the western hemisphere. It's being worked on but we're not there yet. The Chinese capabilities in terms of manufacturing both in terms of quality and cost at this point is unrivaled.

The biggest issue is just battery density and the ability of the battery to lift itself and then lift the payload, and what that payload looks like, and then the requisite range and recharging needs of those drones as well. You know, Joby is building drones for people, that's happening. And I think drones for food and other grocery are going to start hitting real scale over the next two to five years. It is going to cost more than a human delivery to start with. But the kind of ramp of the technology in terms of payloads being larger, in terms of being able to operate in whatever weather there is, and then being able to very, very accurately get you a payload right in front of your house, all of it is moving in the right direction. So is it going to be a big part of our lives two years from now? No. But 5 to 10 years from now it's going to become more and more normal.

Middle East is going fast. So the Middle East, especially if you look at Abu Dhabi, Dubai, Saudi Arabia, they are on it. The regulators are very entrepreneurial. You know, they want to lean into new technology. So you're going to see those services, they are happening today. No vehicle operators in Abu Dhabi, Dubai. Europe, the US is certainly happening, the Californias of the world, Texases of the world, but we want to make sure kind of the right discussions are happening at a regulatory level. It's going to take longer in a New York, it's going to take longer in a Boston, for example. And Europe is starting to happen. So we are starting commercial robo taxi in Europe and I think we will have pilots, for example, in London before the end of the year. So Europe is starting to recognize that they can't be left behind. The European OEMs certainly are a huge player in terms of manufacturing capability and employment in Europe as well. So Europe is catching up.

The basics are the same, right? You've got to get selection right. You've got to sign up your merchants. And when I look at kind of the serviceable addressable market in the cities in which we operate, we've probably signed up around 40 to 50% of the restaurants and or merchants that can be on our platform. And so it's about getting selection and then making sure that you've got the right reliability every time when you order something. We get it right. We don't make mistakes. We deliver it to you within 30 minutes. And for us, our magic sauce is cross-platform, right? We started with mobility and we are now able to increasingly upsell the mobility customer the delivery product whether or not they want to use it on Uber Eats or they actually, you know, when you open your mobility app now on Uber, you're going to see Eats right there. And about 13% of Eats bookings are actually coming from the mobility business. So in larger international markets and the US, you've got to get the basics right, but the platform for us is a structural advantage we have versus other model line players. We get a bunch of free customers from our mobility business. And then we have an Uber One membership program, 50 million members now, growing 50% year-on-year. Every company has a membership program, but the way I look at it is we're kind of like Netflix. For the same price, you get more content than anyone else. You get discounts on mobility, you get surge protection, you get free delivery, you get no fees on groceries, $60 or more. Now you're getting 10% back on your hotel. So, if we can build this loyalty program that is just bigger than anyone else's, and we have this cross-platform magic, we think we can get to the number one position and at the same time have higher margins than our competitors, and we're proving it out in market after market after market.

So, I think honestly we're okay at it. I think we can get a lot better at it. I think one is I want to get more of our team members to put themselves in the shoes of our suppliers, to drive more, to stand behind the counter of a restaurant. All of our employees are like crazy users of Uber Eats and Uber rides, but they don't necessarily, we don't put ourselves in the shoes of our merchants. You know, after COVID, partially because I was going freaking crazy at home, but partially because I wanted to understand, well, what does a driver courier experience feel like? I bought an e-bike and started delivering food in San Francisco. And our drivers and couriers and merchants are on our platform much longer than the typical consumer. Typical consumer, you're in, you're out, maybe use us once a day, twice a day, hopefully three times a day, but the interaction is like a 30-second interaction. A driver will have her app open 6 hours, 8 hours, 10 hours a day. And as a result, the premium that we have to put on quality, making sure everything goes right. You know, like a P95 bug happens to consumers once a month maybe for a loyal consumer. A P95 bug is happening every single week for a driver who's on the app, you know, 6 hours a day. And we are getting much better. We've got to put ourselves in the shoes of our merchant partners, of our delivery partners. I learned so much delivering food that, you know, those couple of years in San Francisco driving people in my Tesla in San Francisco. I think that's what it takes to be a better builder and, you know, kind of be better at amalgamating supply so to speak. We have a value at our company which is building with heart. I'm an engineer at heart. I'm very numerical in how I look at things but there's a craft to building. There's a humanity in our service and we have to make sure that we keep building with heart and I think we can get better.

How hard it was. Like it was just like going into the restaurant figuring out where to pick up, you know, making sure that you got your orders right. About 50% of orders are batched. So actually you pick up two deliveries sometimes at the same restaurant or another restaurant and just making sure that you get everything right. There's a reason why things go wrong in the real world. There's a lot to process for couriers, for drivers, and then you have to kind of deal with the real world traffic as well. So, just all of the things that you have to process for a consumer, you push a button, car shows up. You push a button, your food shows up, it's all easy, but for that driver and courier, there's a lot more going on and processing everything can be a challenge.

We've been at it for a while. The ideal membership program is one where you're essentially, you have a fixed cost base, right? So a Netflix is investing a certain amount in programming and the cost of selling a membership is customer acquisition and there is no cost for the services that you render, right? There's no variable cost for the services you render. The benefits of membership programs, travel membership programs are often upgrades to rooms that were empty anyway or upgrades to seats that were empty anyway. So those membership programs are ideal and that's why membership started in the travel business and in entertainment, for example, as well. You know, cable was a membership program if you want to call it that. It becomes much more challenging if the cost to serve is a variable cost. And I think Amazon is the first one that took that on, which is, you know, the cost of an Amazon Prime membership is higher the more you use that membership. And Amazon was able to kind of work through this, walk through this kind of valley of despair, right? As many people in the public markets didn't understand what it was doing and the losses kept increasing, but they understood kind of the unit economics of membership and they stuck with it and they were able to brave through those early days and I took a lot of inspiration from that example. In the early days of Uber One and when we acquire a member, you're less profitable. We're essentially trading. We're making a prediction which is you're going to spend more on our platform even though your first transaction, second transaction, third transaction is going to be much less profitable because we're giving you back a bunch of money. Over the lifetime you will be more profitable and we're seeing that. So the membership program took some time to kind of get up to speed. It is solidly profitable now, but the first year of membership is a year where we lose money on you, but we're going to make money on you two, three, four years from now.

We tend to be pretty data oriented and what we've seen, and it's relatively obvious, is that people who travel a lot tend to use Uber a lot, right? We're available in over 70 countries. What's the first thing that you do when you land at an airport often is you open up your Uber app. Just last year, we completed 1.5 billion trips for people outside of their home city. About 15% of our trips are to and from airports. So, we could identify travelers. It was a use case that was a headline use case. And we started thinking to ourselves, hey, what more could we do for the travelers? And what differentiates Uber from some of the other places, again, it's not just about the booking experience but it's about delivering that experience in a reliable way in the real world. We also go much deeper into the fulfillment stack than let's say the typical online travel agent. We decided as you're able to target more, etc., let's look at other travel products. We started with trains. We launched it in the UK and Spain and we saw kind of the same thing that we've seen over and over again which is the more you interact with our platform, the more services you have, the more you interact with those services, the more you come back. So more content meant more retention. And so we said like well what content can we find in travel? It was very natural for us to go into hotels. It's a high value decision that you're making. We went out there, talked to the various travel companies to make sure that we had the best supply in the business and we happened to make a deal with Expedia, my old company, and we're essentially giving the vast majority of the economics of that deal back to Uber One members. The design spec of hotels is again, how can I make sure that you have, as a person, your life is more deeply integrated with our services? 10% off hotels, 20% off 10,000 hotels. That's a great deal that you're not going to find elsewhere and it's another reason for you to join Uber One.

For me, the idealized end state is obviously we want to bring a lot of value to you as it relates to the booking experience, but I want the value to carry into the market. You know, you book a hotel in San Francisco, we offer you, we go through your email if you open up for us and we already collect kind of your information on your flight. We pre-book an Uber to the airport. We pre-book an Uber from the airport to your hotel because we already know where you're staying. And you know, ideally when you get to the hotel, we know you're approaching the hotel. Either we give the front desk a heads up that you're going to be there, or Patrick is going to be there and know you, or we allow you to completely bypass the front desk, go to your room, maybe you can use your Uber app as a key. The magic, I want to bring some in-market magic to you as part of your travel experience. We're already part of your experience in city. The richer we can make that experience, the better. We're starting with a booking. We've got to start someplace. But that's the Uber magic I want to bring.

We have debated in the past whether or not people's interaction models with our service can change from on-demand to planned. People get very, like our brand has always been known as on-demand, you know, like push a button get a car, push a button get your delivery, etc. And so there was a question mark, could we go from on-demand to planned? And we started moving in that direction with actually Uber Reserve. In the olden days, you know, Uber Reserve actually we allowed you to reserve a car but it was kind of an on-demand dispatch to try to get you that car when you expected it to be there. We have changed the back end to really drive reliability, 99 plus percent, so we're pre-booking with the driver. The driver accepts. Make sure the driver is there before the reserve. And reserve now is over $5 billion run rate. It didn't exist, you know, five, six years ago and clearly we were able to, if we gave a tangible benefit, in this case higher reliability for higher price, clearly we were able to move both demand and supply. Drivers will kind of pre-commit to your trip. So that gave us the opening to say wow this pre-commit thing is another angle that we can explore and travel became natural for us. So I think the question is, you know, is reserving your ride just fundamentally different from thinking about your vacation two or three months from now? Can we stretch that pre-commit and can we stretch a brand in that temporal direction? I think it's an open question. I think we can. We're giving you great deals to make that plan on Uber, but it's not a slam dunk.

Totally. It's, you know, the surface that we have on this phone is very limited. And I've changed my mind on this. Originally, I had the hypothesis which is the marketing team's job is to get as many people onto the apps as possible and then it's a product team's job to surface the right product to you at the right time. And a small example of that is, you know, with Reserve now, we offer the ability for you to order hot coffee and the driver goes out and, you know, picks up the coffee wherever and then, you know, it's kind of cool. You have a cup of coffee if you're on the way to the airport. The goal isn't to get you coffee on that ride. The goal is to make you understand that you can get coffee on Uber and/or other stuff, right? It's not about the ride. It's about the lifetime value, the interaction, the introduction of a new service, not in a way that feels like an upsell to you, but feels delightful. This is really cool. Uber knows me. Why not do more with them? All of the different interactions that you can drive on the app. I have always been much more product. Let's build this from a product standpoint and the job of marketing is just to get people to the app. But my marketing team, who told me I was an idiot and I loved it. You know, they are building out storylines. Uber Teens getting your kid from their game home and the human interaction of when your kid comes home either if they did well in that game or not well in that game. There are very human stories that are part of Uber in every way. Our marketing team are telling the stories about a teens, about a reserve, about grocery delivery and the convenience then. And those stories are helping people realize that Uber isn't just about getting a ride. It's about giving you your time back across a broad array of services on a local basis.

I think you'll be talking to your apps in seven years. I think you're going to have apps because there are certain circumstances, many circumstances where the communication back to you is much more efficient in the written word or in pictures. It's not compelling to say your Uber is six minutes away, seeing the picture and being able to track the car. So I think the inbound interaction is going to move more and more away from apps. I think people are going to use apps but the inbound interaction is going to be much more unstructured and AI makes it possible. You historically built UIs for a specific interaction based on optimizing for the overall average. Right? Our booking experience on Uber may not be optimized to you exactly, but it's optimized to overall averages through lots of iteration, lots of testing. And there's only one way in. Now, we're going to personalize it. So, when you land in a city, Uber is going to be different for you than when you're going to work. But the interaction that agents are going to make possible through AI and through words are going to be incredible.

He's incredible. He's been my business mentor and in many ways a personal mentor as well. I'd say that the thing that I learned from Barry is the value of getting the truth from the source material. You know, the way that I first met Barry, I was actually an analyst at Allen and Company working on the LBO model for Paramount. There was a hostile tender offer by common and Paramount. I was building out the LBO, right? Yeah. Exactly. You know, Barry didn't want to talk to the MD or the VP or the associate. He's like, 'Who built the model?' And I'm going to talk to that guy because if I'm going to raise billions of dollars in debt, I want to know I'm good for it. And I just remember I was like sweating. I was so nervous. I'm like trying to print out this model. And I took him through it and he wanted to hear straight from the source. And every time I've witnessed them and I worked for him for 20 plus years, you know, it's the filtering that gets the edge out of the story or out of the situation. And it's often the edge that gives you an edge. It's not the average. Everyone is going to have the same reaction to the average. It's what's that 20%. What's that P95 situation, etc. So Barry always insisted on going to the source, getting unfiltered data. It was sometimes unpleasant. It took more time, but that getting to the ground truth would help his decision-making and would allow him to give that edge to kind of go against the grain. And I've taken that with me. You know, I've seen in larger companies, like most people who run companies, they're smart, they're capable, they're driven, and the failure modes that I see with most companies is that, you know, the higher up your organization often, you get like a very thin layer of what's going on. And everything has been processed for you. Like my schedule today, it's determined by a bunch of well-meaning people who want to get me the best information and have me use my time in the best way, but it's processed. And so, it's very important for you to cut through that process sometimes and get to that ground truth. You've got to create some randomness in your interactions and your information flow. And Barry often painfully kind of drove to that source. And it's always for me been a very, very important part of how I manage which is, you know, the best way to get to the truth is first of all as a leader tell the truth. And so I'm brutally frank with my team. What's going on? What's good? What's bad? What's okay? Where do I not know the answers? And that helps me then get that truth back from them. Sometimes requires me to dig and that can be unpleasant both for me and the team. But getting to the ground truth I think is something that I learned from Barry and it's always stuck with me.

Oh. So many. I'd say, you know, Herbert Allen very, very early on he always told me that he makes bets on people not companies. And you see that with Allens, like they're so loyal, they build friendships and then they stay with those friendships. And Herbert always told me like companies can do well during periods or companies can do poorly during periods but great people always stay great. And I'm going to make a bet on people. And I'm like 20-something. I'm like yes sir Mr. Allen. And that has been, you know, it's a great learning that has kind of soaked into me like 30 years too late regardless of the circumstance. Like I made a bet on Barry, you know, I was going to stay at a company for all my life, but there was like, he was the one guy that I told myself if I have an opportunity to work with that one person. And it was nuts. Like my salary was gone. It went through this like completely entrepreneurial new entity that he was building. But I bet on a person and in my life, you know, my bets on people and those personal bets are probably the best ones I've made.

I think number one is the transparency that I talked about, like I want the truth from everybody. I tell the truth. I'm very, very open to the company whatever level that I talk to. I have a lot of fun working with our product leads and engineers. That is the best part of my job. And then the last that I say is you see a lot of random interactions. Like I don't want to have too structured a day. I don't want to meet with just my direct reports. I build out random interactions within the company so that I get that information as well. It's like I look for the troublemakers in the company. As companies get larger, there's always this incentive for people to get along. You know, you have a single culture. Everyone, you know, is true to the culture of the company. There are processes that get built. There are certain ways of interacting and certainly the troublemakers often get chased away. I want to find those troublemakers and I want to bring them in because every company is like an organism, right? And organisms evolve by mutating. And companies that don't mutate, that just sit and with a single process, with a single information flow, those are the companies that die. So I'm looking for those mutations. I'm looking for those troublemakers constantly. And that requires random interactions. They're less efficient than the structured processes that have been put in front of me. But it's those random interactions that often give me the best signal that, you know, sometimes I may not act on it but I'll take it in and I'll at some point if the signal becomes strong enough I'll move.

Somewhere in between. And I'd say, you know, capital allocation I think is more of an art versus a science. You can read papers on it but I think you have to use your judgment in real life. And my view is that my priority is first organic investment and growth. You know, Uber Eats when I joined was doing under a billion dollars in gross bookings. That's over, you know, over 100 billion now. And that took an enormous amount of organic investment. Now the company has cash flow beyond that or organic investment. And you know the math is simple which is you want to make sure that your costs grow slower than your revenue and good things happen over a long period of time. And I think for me because I came from banking I'm very comfortable with the power of compounding. And so the first thing is you just have to get your core metrics right. Starting with the user metrics, get to the financial metrics, make sure your expenses, unless there's a long-term benefit, are growing slower than your revenue. Duh. And when it comes to excess capital today, our priorities are going to be keep building the services that we're building now. Invest in algorithms, invest in more engineers. We are hiring and then really invest in kind of the new realities of AV whether it's investments in our partners or it's making commits to tens of thousands of AV vehicles. Those commitments will be financialized. You know, we just announced the deal with Santander, for example, to finance both EVs and AVs. But we've got to be the ones developing the market so we are going to make those capital commitments and the fortunate thing in all this is we've got plenty of cash left over for buybacks, but I prioritize growth. I prioritize innovation over buybacks. If you're building the company right, you'll do both.

I'm not insecure so to speak because again, what good does it do? But I'm curious. Like I think again, I'll go back to Barry. I found in my life that the more successful you are, the more you tend to talk and the less you tend to listen. Right. Totally. And I see kind of executives who they don't want to be talked back to because they view, don't you know who I am? I've got authority, etc. And authority doesn't mean that you're right. But so many people do. And Barry's the opposite. Like if you get into an argument with him and oh my god it's going to be unpleasant. But you bang it out and at the end of that conversation, the majority of time but sometimes it happens, he realizes he's wrong. He's delighted. He lights up because he just learned. What kind of a world is an interesting world if you're right all the time? Like the magic happens when you learn. And so for me, it's not that I'm not confident. I'm confident. I'm comfortable in my own skin, but I'm a learning creature. And for me, the delight comes from learning. And often that learning has to come with pain. And the pain of being wrong, the pain of hearing something that you don't want to hear, the pain of something unexpected happening today or tomorrow or the next day. So that's what gets me going. And if I'm not wrong, if I'm not making mistakes, it's just not very interesting.

I'm a bit of a student of business. Kind of came from my investment banking background. I just love how companies shape themselves. But I'd say one CEO who I really admire is Reed who, you know, built Netflix into the company that it is. He is so logical. I think I watched like him talking with you a while ago. He is so logical and structured in his thinking but at the same time he's an engineer but then once in a while he's a gambler, you know, when and some of those don't work, like he was talking about some of the gambles that didn't work. So I find that there's a superpower in being structured in your thinking but then not too structured in that you're always going with the flow to be able to again listen to the troublemakers etc and have those wild ideas outside of the conventional wisdom. Those two often go together. You need kind of the crazy scientist to do so. You know, Reed is anything but a crazy scientist, but he has innovated in a very structured, deliberate way, and I love what he did with his company and as a person, I just love how he thinks.

I guess it's Sid, my wife, taking me in. You know, we talked about my origin, where I came from and having a chip on the shoulder and until I met her. I was always kind of living the life that I thought I was supposed to and I was always the person who I thought you wanted me to be. And when I met her and observed her, she was always the same person with me, with the kids, with her friends or, you know, the Sun Valley Conference where there are like these unbelievably accomplished billionaires around. She was always the core, the same core person. She never changed who she was. And meeting her and seeing her operate, I think, finally allowed me to be the person I want to be versus the person I thought I was supposed to be. And that was a gift and a kindness that I could never replace.

Thanks.