Come for the rides, stay for the food. Dara Khosrowshahi joined Uber as CEO when ridehailing was everything. Now he's navigating a multi-product approach. Yet when it comes to profits, Uber's still en route.
Uber CEO Dara Khosrowshahi said his strategy is to expand the mobility company’s delivery business. But Uber won’t expand into selling flights or hotels and Khosrowshahi isn’t interested in mimicking the superapp strategy that he said is better suited to Asia.
“Anything you want to be delivered to your home with a frequent use case, that’s what we’ll offer,” Khosrowshahi said during an on-stage interview at Skift Global Forum on Wednesday. The CEO doesn’t see leisure travel as a frequent use case with local demand. Uber is only tiptoeing into classic travel by adding car rental — where an Uber driver typically brings the vehicle to you, but a third-party brand provides the rental service.
In 2017, when Khosrowshahi left the job of CEO of Expedia Group
to become the leader of Uber, some critics feared he could never reproduce the dynamic innovation inspired by Uber’s founder Travis Kalanick — even though Kalanick departed under a cloud related to his management style.
Yet Khosrowshahi has used incremental product launches, such as adding grocery and pharmacy delivery via drivers, to stabilize the company’s cost basis.
Uber Eats, the company’s flagship meal delivery service, was a huge beneficiary of the pandemic. It went from having a $2.5 billion run rate to having a $52 billion run rate, Khosrowshahi said when speaking with Skift Executive Editor Dennis Schaal on-stage in New York. The CEO expects the pace of delivery usage to remain high even as the pandemic recedes or becomes less disruptive.
“It’s a very sticky product,” Khosrowshahi said.
Looking abroad, the Uber CEO said he was aware that a handful of superapps such as Didi and Grab dominate Asia. Each offers consumers nearly everything bookable online through a single gateway interface.
“The super app strategy is more of an Asia strategy,” Khosrowshahi said. “At this point, we believe separate apps for consumers is the right way to go. But we’ll make it seamless and magical for users to jump between apps.”
One headwind for Uber has been on the worker relations front. The company’s fight to steer away from treating drivers as employees struck some legal potholes this year. However, Khosrowshahi expressed optimism that the company’s approach toward a flexible benefits plan will gain traction with regulators.
Khosrowshahi’s other challenge is making Uber profitable, something that has been elusive through the mobility company’s history.
Lessons From His Expedia Days
Schaal asked Khosrowshahi what he made of Expedia CEO Peter Kern’s recent campaign to simplify that group’s business, given that it could seem like a reversal of what Khosrowshahi had put together through mergers and acquisitions over his 13 years at the online travel conglomerate.
“I’m very supportive of [Kern’s] strategy,” Khosrowshahi said. “You need different strategies for different times. It would be a mistake for Peter to pursue the same strategy I did.”
Khosrowshahi said when he was at Expedia Group, the company was in “land capture mode.” Today, the business is maturing thanks to a more advanced level of internet penetration for online travel booking.
What lesson did he learn from his time at Expedia that he used at Uber?
Khosrowshahi said that in his early days in the top job at Expedia, he made a mistake in trying to make many decisions and operationalize a strategy before having the company’s management “align with the company culture.”
“It’s a mistake to make a bunch of decisions before your team is aligned on what you value,” Khosrowshahi said. “I didn’t make that same mistake at Uber. We re-aligned the company culture very quickly to make it clear who was in and who wasn’t in.”
The other lesson from his Expedia days was about picking your battles in geographic markets.
“Uber has a global position, and my view was that, where we could be number one, we go all-in, and where we don’t think we can be number one quickly, we pull out, as we did in Southeast Asia,” Khosrowshahi said. “Making those decisions early on was a great lesson for me that I brought over from Expedia.”
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Photo credit: Uber CEO Dara Khosrowshahi speaking with Skift Executive Editor Dennis Schaal at Skift Global Forum in New York City on September 22, 2021. Source: Skift Matt Mateiescu / Skift