Uber needs to fix its culture and hit another moonshot beyond ridesharing. Nobody is quite sure where it will come from, but the result of investments in flying cars, autonomous cars, and a logistics network for businesses will be clear soon.
Uber had a very bad 2017. The departure of founder and CEO Travis Kalanick under accusations of improper behavior and discrimination were only the tip the iceberg amid security breaches, violence against riders and drivers, and an inability to turn a profit.
So how is the new regime headed by CEO Dara Khosrowshahi faring? Well, the turnaround is still in process, with a focus on reforming the company’s toxic, sexist culture.
“Clearly, the opportunity for Dara and I to come in and take these roles wouldn’t have happened if there weren’t challenges in the company,” said Barney Harford, Uber’s chief operating officer and former CEO of online booking site Orbitz, at Skift Global Forum in New York on Friday. “(Last year) was a really bad year for the company. Dara has been very clear, he has set a very clear cultural value that we will do the right thing, a new commitment to the right behavior and a commitment to partnership with cities around the world to solve their problems. Twelve months in, we’re making progress.”
Harford detailed the steps the company is taking to attract more women and people of color to the organization to better reflect the customers it is serving around the world. At the same time, the vision of the company is expanding beyond ridesharing to leverage its network of drivers and couriers around the world.
Food delivery has been one of the recent bright spots over the last few years.
“The vision for Uber is redefining urban mobility, we think about mobility as a service, transportation for both people and things,” said Harford. “When we think about the transportation of things, Uber Eats is an incredibly important part of the business, it is less than three years old and is the largest food delivery platform in the world outside China.”
Harford disputed the notion that Uber is still hemorrhaging money to subsidize its market share in the global rideshare sector. Ridesharing is profitable, while Uber’s research and development in the categories of autonomous vehicles, flying cars, safety features, and other areas are contributors to the company’s inability to turn a profit.
“If we think about the business model broadly, it’s important to understand the core rideshare business is solidly profitable and has been for the last five quarters,” said Harford. “We are playing in an incredibly large category, a $6 trillion category, so we see in many of these adjacent areas a lot of growth areas. These are areas it makes sense to continue to invest in. What’s important is to be able to show the path to that profitability.”
Read the full transcript of Harford’s interview below:
Skift: Barney, thank you for being here.
Harford: Absolutely, great to be here. Thanks for having me.
Skift: Barney is number two at Uber, he’s COO and he’s had a very interesting journey. If you don’t know it’s a typical travel industry journey, wink-wink. He started working at Expedia in 1999, became head of Expedia Asia Pacific. In 2009, he became CEO of a nearly bankrupt Orbitz, fought with Expedia, competed against Expedia over booking fees and loyalty programs, you name it. And, in 2015 he neatly sold his company to Expedia for $1.6 billion, made a lot of money for investors. The Expedia CEO first bolted to Uber about a year ago, and Barney arrived there as COO a couple of months later. You arrive at Uber in late 2017. There’s a ton of issues there. Right? It’s a global brand, you’re losing a lot of money every quarter, there’s safety issues, regulatory issues, legal issues, privacy issues, and importantly, there’s a bro culture there, notorious, and an investigation led to the firing of dozens of employees. So, you’ve been there less than a year, what kind of progress do you think you’ve made so far?
Harford:Yeah. Well, thanks for the intro. Great to be here. When Dara took the job we were chatting back and forth very quickly, and by the end of the first week, we were sitting down together, and he was sharing some of the information he was learning about the company, and what really excited me was the scale of the opportunity. This is business that today is doing more rides around the world, 5 billion a year, than all the world’s airlines put together carry passengers. And, we’re just getting started. The opportunity to have an impact on the development of our cities, the way we live in the future was very clear given that scale, and given the expansive nature of the company’s vision. But, clearly it’s not … the opportunity for Dara and I to come in and take these roles at the company wouldn’t have happened, if there hadn’t been some serious challenge in the company, and 2017 was a really bad year for the company. And, we’ve come in. Dara has been really clear about the most important things for the company. He’s set a very clear cultural value, that we will do the right thing. Establishing that we have a new leadership, new CEO, a new commitment to the right behavior, and really importantly a commitment to partnership, so working with cities around the world to help solve their problems. And, I think that is the start. We’ve still got a lot of work to do, there’s still much more that we need to work on, but I do feel that 12 months in we’re making progress.
Skift: So, how difficult is it to turn around a corporate culture, and how important is it to lead by example?
Harford: So, look it’s … turning around internet companies, in general, is tough, it was something that I stepped into back at Orbitz in 2009, and we were successful, but it took a lot of work. Uber, different scale of challenges, and some of the cultural issues that we’re dealing with here are really significant, so as I said, on the external side we’ve made substantial progress in terms of setting out what’s important. We inherited a company where we think internally. I think one of the things, that’s most important is, as we think internally about the culture is the inclusion, and the spirit of inclusion at the company. We inherited a company, that from a representation of women and people of color was really challenged, and there’s a lot of work that we need to do to improve that, to go and create the diverse culture that we want. And, we all know that, that’s incredibly important, if we’re building a service for a diverse group of riders, and drivers around the world, that we have to have that representation of women, of racial representation, and representation of nationalities. So, this is something which is super important. As we think about this, we’ve received feedback, I’ve personally received feedback, I take it very seriously, and it’s something that I am very focused on, it’s something, that a leadership team, as an entire leadership team we’re very focused on, how we are perceived within the organization and how we can be a force for change.
Skift: So, talk about your vision for the company. Okay, so you just did a redesign, you got rid of … now Uber’s spelled out with its own font the whole word, but it’s not just about ridesharing, so talk about what your vision for Uber is.
Harford: The vision for Uber is redefining urban mobility. So, we think about mobility as a service, and this is about the transportation of both people, and things, and those are the two parts of the business that we really think about, and there’s obviously a lot of interaction between them. When we think about the transportation of things, Uber Eats is an incredibly exciting part of the business. The growth rates we’re seeing, the business is less than three years old, it is already the largest food delivery platform in the world, outside of China. And, we are growing, every week we’re launching into new cities, and transforming the way that eaters around the world interact with food, building a really fascinatingly complex three-sided marketplace, where you’ve got the restaurants, eaters, and couriers. When it comes to the transportation of people, the opportunity for us to stitch together a broad suite of modalities to really nail the opportunity to provide a compelling alternative to car ownership, that’s the vision that we have. So, it started with the car, it started with Uber Black, and your alternative to a limo, Uber X is now far and away the largest product, but as Dara says “Cars are to Uber, like books are to Amazon.”
It’s just what is getting started, and so we have iterated on the core car product Uber X, using pool and ride sharing, so getting two bums in seats, three bums in seats to allow us to bring down the price, while at the same time maintaining earnings for our drivers, and dealing with issues of congestion and pollution, but then we’re going beyond that, so we made an acquisition of Jump for e-bikes, we now have Jump bikes in ten cities, including a number of burrows here in New York. We are getting into the scooter business, and we are looking around the world at new modalities that we can tap into, for example I was in India recently, uberMOTO, you’ll have a motorbike driver, he actually drives around with two helmets and a little blue cover, and then the passenger will don a helmet and ride on the back of the motor bike.
Skift: What about logistics for business, is that part of the vision?
Harford: So, the way we … we also have an organization called Uber for Business. Uber for Business has got 65,000 organizations, today, around the world, that are using Uber for Business to procure transportation services for their employees and their customers, and, or food delivery services through Uber Eats. And, what we believe with Uber for Business is, we can really streamline and enhance the control that a company, a corporation, a university can have over the spend for it’s transportation. If you think about the old world, where people would pay cash and get a receipt, and have to go to expense it, now that process can be streamlined, and one of our expensing partners Certify announced in 2016, that Uber is now the most expensed item across the United States.
Harford: And so, ensuring that seamless nature is super important.
Skift: So, it’s no secret, that an IPO is on the horizon, it’s probably not a lot you can say about that, but how does Uber start making money? How does Uber become profitable? I believe you’re on track for about $10 billion in revenue this year, but you lost $660 million in the second quarter. So, how does Uber get profitable and in the short term, do you have to get profitable?
Harford: Great question. So, you’re right I don’t have any specific comment on the IPO at this stage. But, if we think about the business model broadly, I think it’s important to understand the core rideshare business is solidly profitable, and in fact has been solidly profitable now for the last five quarters. Now, we are playing in an incredibly large category. The global transportation category is a $6 trillion category, and so we see in many of these adjacent areas substantial growth opportunities. I talked about bikes and scooters, we are investing substantially in the development of autonomous driving technologies, we are building an ecosystem with Uber Elevate to create urban flight transportation of the future. And so, these are areas, that we think it continues to make sense to invest in. What’s important for us is to be able to show the path to that profitability and to show the profitable nature of the core business that we’re building, while at the same time we invest into these new categories.
Skift: I did give a shout out to my drivers before, and what I hear is “We’re not making enough money, Uber promises us this percentage, and we’re not getting that percentage.” And, I’ve seen you guys advertising about drivers being stakeholders, so how really can you improve the lot of drivers, and why shouldn’t drivers be employees of Uber?
Harford: So, look, our driver partners and career partners around the world are an incredibly important part of the business, and the relationship that we have as an organization with them is very important to us. I think, when I sit down and talk with drivers, one of the most important things for them is flexibility. The ability for them to set their own schedule, and to allow the work that they do on our platform to line up with their other commitments in their life. Also, when I’m traveling around the world, I think one of the things that really stands out, talking to both drivers, but also governments is, the role that we play in creating micro-entrepreneurship opportunities around the world. I was in Egypt a few months ago, and sitting down with one of the representatives of government, and just being able to talk about 200,000 Egyptian drivers that we have on the platform, many of whom had been structurally unemployed before. Similarly, in France, conversations Dara’s had with President Macron, how we’re helping address the issues of structural unemployment in the outside of Paris. Similarly, I was in Saudi Arabia, 100,000 Saudi drivers. This ability to create economic growth and bring folks who have been previously unemployed into the workforce, I think is a really important part of-
Skift: That’s no doubt that you’re creating opportunity, but you’re saying that the flexible nature of the job precludes them becoming employees. Is that what you’re saying?
Harford: So, to the question of independent contractor as an employee.
Harford: Look, I think if you look at this industry, if you look at the people who are providing transportation, taxi drivers, et cetera, these are self employed people, and I think we’re very clear in the independent nature of the work the drivers have, and we know the value that they place on flexibility, and I think we’re very clear, both from a legal perspective, but also from a philosophical perspective, the types of opportunities that we want to provide, and we’re able to provide through the platform.
One other point I will say on that. I think, one of the areas, one of the reasons why this is such an important area, if we think about the policy debate is around the provision of benefits to gig economy participants. And, I think we’ve been at the forefront of that. Earlier this year we announced a partner protection program in Europe, whereby we are providing a set of on-app, and also off-app protections for our driver partners, and courier partners, that will give them protections if they are injured while they are driving, but we’ll also give them important benefits, such as maternity and paternity benefits. These are really important ways, that I think we’re leading in creating these protections for new economy workers, and I think that’s the kind of thing that we would like to be the forefront of around the world.
Skift: Speaking of protections, let’s talk about the safety issue. There was the notorious rape in India of a passenger, I’m sure there have been plenty of other incidents. What’s new on the safety front, both for drives and for passengers?
Harford:Sure. So, when Dara came to the company it was very clear, and he articulated very quickly, that the most important priority for the company was safety. Safety is our number one priority. It is something that we are deeply committed to investing behind and we are committed to using technology, and investing in technology to make this a true differentiator for Uber. If you think back to the world before ride sharing and the lack of protections, the lack of GPS tracking of where you were, the lack of visibility into use of a ranging system, or the lack an ability to share your positioning with a loved one, there’s been substantial progress, that has been made as we’ve ushered in the world of ride sharing. But, we are committed to making ongoing investments to make it safer.
For example, we rolled out a pilot now in 30 different jurisdictions, whereby … it’s called Ride Alert, a number of different components to Ride Alert. One of them is, if you were to call 911, we would on the back end be able to share your precise location with the 911 dispatch center. We also have crash detection, so if the driver’s half suddenly decelerates, we say “Hey, is there something happened?” And, we’ll initiate a call. Also, looking to see whether there are anomalous location information we’re receiving from the rider app and the driver app. There’s a number of things that we’re able to go and do. In Brazil for example, we have brought together our data scientists and our engineers to develop machine learning algorithms that can allow us to prevent certain potentially unsafe trips from happening. So, there’s things, that we believe we can do, given our scale, given the ability to use data to really transform this safety landscape and it is something, which is incredibly important to us.
Skift: Is there anything you can do to transform the airport experience?
Harford:Yeah. Does anybody care about that? Yeah. Yes, absolutely, it’s an area I am super passionate about, coming from the travel space, and I thought we might have a few people here who’d be interested in that. So, we believe that … I mean, if you look at the scale of our airport engagement today, it’s kind of mind blowing. I had the team pull the stats, I don’t think we’ve shared this number before, we do 250 million trip, either to, or from airports every year. And, while that seems like a large number, we’re still actually only scratching the surface. That represents about 5% of the departures/arrivals into airports around the world, so there’s a lot of opportunity to improve that. Some of the things that we’re doing … again, this is the opportunity to use technology to enhance the experience. So, we’ve got a product called Rematch, it takes a driver who is dropping a passenger off at an airport, and makes the immediately available for a pickup from the airport, and I’m sure any of you who have used Uber at an airport, typically you’ll be pulling someone from an off location lot, and it could be a 5, 6, 7, 8, 9, 10 minute ETA.
Harford:In tests at Newark, we’ve been able to reduce the average ETA from 8 minutes when it’s a regular dispatch, to 3 minutes when it’s a rematch, and we rolled out Rematch this week across 250 airports, it’s a real opportunity to improve. We’re putting beacons and Wi-Fi access points around airports to allow for that location to be better served, and to know where people are going. So, it’s something we’re super excited about, we think it can get so much better and we are excited to work with airport authorities to enhance that experience, and to work with airlines to create a seamless experience from your home to your destination, and back again.
Skift: Let’s go to some audience questions. Lyft, arguably has a friendlier brand presence than Uber, do you have plans to try to change that and how? I hear this from some drivers too, that they do both, and they sometimes like working for Lyft better.
Harford: Yeah. So, we’ve spent a lot of time over the course of this year thinking about how to evolve the brand. I’m really excited we announced just a week, or two ago, that we have appointed a chief marketing officer Rebecca Messina, who’s joining us. She used to be CMO at Beam Suntory, before that 20 years at Coca Cola, and so I’m super excited to have her come in and be able to bring together the marketing organization for Uber around the world. Right now we have groups in different mega regions, but one of the things that we wanted to do in terms of our brand architecture this year was, first of all to make it clear, that we do have a new CEO, new management, and a new direction, and we accomplished that with the ads that we ran a couple of months ago, that Dara featured in.
He’s very happy that we have a new set of ads that no longer feature him. He didn’t love being the talent, although I think he did a pretty good job. The new set of ads that we’ve got though are very much designed to create an emotional connection between Uber and our riders, Uber and our drivers, and to emphasize the idea that comes from our mission, like a movement ignites opportunity. The way that we help connect rider and drivers with opportunity in their lives, and that’s what we’re trying to establish that emotional connection.
Skift: We’ve talked a lot about drivers, but isn’t the future of mobility driverless? You had that tragic accident in Arizona, what about driverless cars?
Harford:Sure. So, I think, when we look at the autonomous future, it’s not something that’s going to happen overnight, it’s not something that’s going to happen in the next two, or three years, this is a long term evolution. As a company we think it is important for us to be investing in this area, because we want to make sure, that there’s not one company that monopolizes the autonomous technologies. At the same time we’re doing it with the spirit of partnership. We announced a half a billion dollar investment from Toyota, and the fact that Toyota is going to be one of the OEM groups that will be using our technology … our goal is to create technology that can be deployed across multiple industry participants, and I think it’s going to be a long process. There’s a lot of mapping that needs to be done on a street by street basis. For a long time autonomous vehicles are going to sit alongside human-driven vehicles, it will be an evolution over time. If you think about the road fatality rates, over 40,000 fatalities on the roads in the US, every year one and a half million around the world. I do believe that an autonomous future will help bring that down, but it’s going to take a long time.
Skift: We have 20 seconds. What steps are you taking to recruit and hire women and diverse employees, and also on the board bubble?
Harford: Sure. So, this is super important to us, we are doing a lot of things here. As we think about our recruiting processes, as we think about how do we prioritize diverse candidates, how do we create a diversity window, so a few weeks at the beginning of roles being posted to allow us to prioritize diverse candidates. As we think about our processes for interviewing both, and making sure that we have diverse loops, diverse panels, so not just the candidates, but also the folks who are interviewing are actually diverse. And also, really thinking through some of the processes within that recruiting process, and to what extent that those can be introduced in subconscious biases. For example the use of the panel interview and certain other criteria. We’re also however … it’s not just about recruiting from the outside, it’s also about what we’re doing in terms of promotion, and so we’re being very analytic about understanding promotion velocity across our organization, and in fact just this promotion cycle, we actually achieved equal promotion velocity for men, and for women across the organization, which you know shouldn’t be groundbreaking, but it is real progress-
Skift: Barney we have a bunch of questions for you, but we’re out of time.
Harford: Thank you so much.
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Photo credit: Uber COO Barney Harford, right, at Skift Global Forum 2018 in New York City. Skift