You can do the same thing at Uber in a way that your competitors on both sides of the business can't, right? Because you can cross market rides

and eats. Exactly. And especially in the US, there's a much more crossover between couriers who deliver food and then drivers who drive people. There's a much larger crossover. And we can actually use eats almost as a recruitment tool. In that moment, when someone says, I am interested in earning money, gig money, on demand, et cetera, with all the flexibility, freedom, et cetera, the faster you can get that person earning money, the higher the conversion rate. And because of EATS, you don't need to get your car inspected. There's a lot of steps, additional steps, background check, et cetera, that's required for driving. Those steps don't necessarily need to be completed to deliver food. You can get people into the food ecosystem. They can start earning on the Uber platform, and then you can upsell them into additional opportunities, driving people, shopping, et cetera. It's a structural recruitment advantage we have in terms of building up supply. And as you build up the supply, the liquidity in the market case gets better. Surge comes down, pricing gets better, ETA gets better, your ability to price gets better, and the demand shows up to some extent. So everything

you just said, that's always been the story. It seems like in the past few years, though, especially relative to your competitors, it's actually become more of a reality. And I'm curious, maybe you talked about booking being execution machines. What has the Uber execution machine looked like since the pandemic to maybe make that more of a reality?

Well, I think that there's always a delay between inputs and outputs, right? Which is you can start changing the inputs in terms of how you build a system, etc. It takes a while for the outputs to become emergent. We did take a big step post-pandemic, once E got to size to merge all the teams together, the technical teams together, the marketplace teams together, single earner team, et cetera. When Eats was small, it needed its own dedicated teams. Because if you had one team doing rides in Eats, like all the attention would go to rides. Once we combined the teams, that allowed one technical team to really focus on the demand side. Eats is the recipient. So the rides business has most of the audience. And generally, we move more people from rides to Eats. So it's an almost free customer acquisition tool for Eats.

It's your largest customer acquisition channel for Eats, right? Yeah, we get more

new customers from Arise than we do from Google, Meta, Instagram, you know, all of these other channels combined. It's pretty nice to own your own media. It's awesome. It's crazy. At a quarter of the cost. So it's like, it's a proprietary channel and it's cheaper. And then on the supply side... Do like charge internally for totally oh yeah totally totally

well it's an it's an even advertising business right so it's an ad unit like any other exactly

exactly and and so and we're gonna have to start charging each other for plugs on it okay we

can tell you a little bit about internal pricing mechanisms. But, you know, all of it sounds great. But the fact is that whatever pixel that you put on the Rides app to promote Eats is taking something away from the Rides app, right? So there's a bunch of experimentation that had to be done, which is what are the right surfaces? What are the right messages? How do you target it? How often do you target it, et cetera? So there's a bunch of machinery that you have to build to do this stuff successfully. And for the benefit that Eats gets to be significantly larger than the detriment that rides gets and to not get in the way of the rides experience. You don't want to screw up that experience. So to the question of why is it happening now is one, it looks great on paper, but then to build the machinery to actually do it effectively takes time. And then if Eats has this new customer acquisition source, every year, new customers for Eats account for less than 10% of the business, of the overall business, because it's a big repeat business. So in year one, hey, is it nice? Yeah, it's nice. But it doesn't really show up to investors, external investors. But then once, you know, it's the saying compounding is the seventh wonder of the world, the eighth wonder of the world, what's happening now is the compounding is happening, right? So we've had like three years of the machinery working. So one year may not be noticeable, two years may not be noticeable, but three, four years, what we're doing is essentially our margins are growing faster than our competition because we have a bunch of proprietary traffic that's coming over. And then on the ride side, there's proprietary supply coming over from Eats, again, compounding. Is it still

that supply acquisition cost is bigger than demand acquisition cost for you guys? Yes.

Yeah. Yes. I mean, it is. We are a supply-led business at this point. Probably two years ago, we could have added % more drivers and couriers into the platform. They would all be like super busy instantly. Right now, our supply generally is growing faster than demand because it's catching up to demand. And the average driver who's on the platform is working more because the experience is better. Earnings levels are really good. So at this point, probably supply is still trailing demand by 5% or so. But the marketplace is now getting to a point where it's balanced. But it's that compounding that really starts working. I

was reading through the most recent earnings and you have a chart where on average over the last five years or so, drivers make more money per hour. If we entered some economic environment where a whole bunch of people were out of work and they wanted to become Uber drivers, but that would make it so that the average earnings across the whole platform would plunge because you have a whole ton of new drivers coming on, would you guys sort of gate it and be like, hey, we want to make sure that we don't sort of flood the supply side of the marketplace? No,

because one of our core philosophies is this is an open platform. And if your background check comes in okay, et cetera, then you can have access to earnings opportunities. That's a core belief for us. The economics take care of themselves, right? When you look at mid-cycle, long cycle, if earnings come down on the platform, then it becomes a less attractive platform to drivers and they will do something else. There is this counter-cyclicality about our marketplace, which is during really good times, it becomes harder for us to recruit drivers. So the cost of supply goes up. So while revenue and gross bookings are growing and unit volumes are strong, our supply base becomes more expensive. During softer economic times, you get more drivers coming into the platform. ETAs come down, prices come down, the price becomes cheaper. So actually our unit volumes accelerate. So if you look like our Q1 unit volumes, they grew 24% versus 19% in Q4. So we accelerated, you know, trip growth, which is not something that you see at our scale. But it's some of this stuff working out.

Right. So it's sort of the invisible hand of the market theory that

sort of self-regulates this for you. Yeah, it's not a theory. It happens.

Yeah, I guess like, yeah. It's this very cool experiment. Yeah. Economists like to talk about like things in theory, but like you actually have one of the largest data sets in human history of, you know, people doing work and other people consuming services.

Yeah, if you ask our top economist at Uber, he would say that we actually don't control the price to the consumer. That it's actually the spot price for this kind of labor the marketplace sets based on the supply of labor coming in and the demand for transportation. And so there's this, you know, people say like Uber's setting prices. He'd say, we're not setting prices. The marketplace is setting its own price.

So what do you do then? Like you have to have some levers at your disposal. You're getting a lot more profitable. Yes. I mean, certainly, I think in 20, whenever we did the IPO episode, Uber had lost like close to $3 billion the year before going public. You said in the

episode that it was the most that a company had ever lost before going public in history. Yes. I don't know if that's true,

but attributed to Ben Gilbert at the time. But now- Order

of magnitude, that's true.

Depending on what profitability metric you look at, you guys are a break-even or slightly positive business and increasingly getting more profitable and looking like a self-sustaining business. So what can you do then if you aren't in the business of deciding what a ride should cost? Well,

I think we're in the scale business, right? Which is we essentially wire up every form of transportation of whether it's people or things. And, you know, it's increasingly people and then shared taxis, et cetera, right? There are four and a half million taxis in the world. Who would imagine that Uber would be working with taxis? But we're going to wire up every single taxi in the world, right? And then on the- The curbs and the cabuluses and the flywheels. And by the way, we work with them, right? A lot of times we will connect through them as intermediaries, again, to wire up these taxis. And then we've gone from food to alcohol to groceries, et cetera. And then we have a freight business as well. So the more we wire up, the more demand- You guys have boats now? I'm sorry?

You have boats now, I

hear? We have boats in Mykonos, which is pretty cool. We have boats on the Thames too. It's just like, if it moves and it carries people and things we're going to wire it up and make it available on demand that usually brings in the demand for transportation etc and then it's like math you have to do it in a more and more efficient way i think one of the secret sauces that we have is we have a very large and capable marketplace team. These are ML engineers who are building out the systems that match price all of this connectivity. And when you're, you know, working over an ecosystem of 2 billion transactions a quarter, the data sets that we have, the experimentation that we can do in terms of what's the most optimal match, how do you price, etc., it's just a bigger database than anyone else. So every year when I can't speak to how our competitors are matching and pricing, but every year matching and pricing probably improves by 5% a year. So you improve the marketplace throughput by about 5%, everything else being the same. And that's like free growth. And when it's on top of, you know, call it $120, $130 billion run rate, it gets big. And again, it's compounding like every year this machinery gets better. So

then just to make sure I'm understanding right, the reason why, because you talk to anybody and you're like, oh, what should I ask Dara? And they're like, ask them why Ubers are more expensive than they used to be. And I'm like, because it's a good business now. But actually, I don't think, it sounds like that's not actually the right answer, that the reason rides have gotten more expensive over time is A, inflation, but B, just that there is more demand for those rides than there is supply to serve them.

Correct. The cost of labor has gone up, right? I mean, how much you have to pay for any kind of blue collar job, you know, everybody's talking about it, right? The bunch of retailers were having trouble hiring enough people, restauranteurs, et cetera. And then it did become more expensive to bring drivers into the Uber ecosystem. Earnings expectations have gone up. And by the way, I think that's a healthy thing, right? It's if you kind of step back, you know, the increase in salary and wages for blue collar jobs hasn't kept up with the salary of tech workers or capital, et cetera. So I think the catch-up is a really healthy catch-up. That is the reason why Ubers are more expensive now. Now, in this environment where we are adding supply faster than demand because the supply is really coming into the marketplace, in Uber now, year on year, are down.

So

it is a supply demand. Yeah, my Uber to the airport in San Francisco this morning was the cheapest it's been in months.

So thank you. Pretty cool. Well, specifically not thank you, thank the invisible hand at

work. Thank you, Mr. Market. Yes, exactly. How has the complexity of Uber relative to Expedia matched up with your expectations coming in?

So there's complexity in terms of all of the stakeholders that you have to think about. And that's like, it's a difference between chess and like four-dimensional chess. It is like Expedia, travel agency, you're bringing demand to your supply base, et cetera. And you have to think about the travel ecosystem. But with Uber, Uber is like a incredibly important service to the cities of the world. And also Expedia,

you weren't providing the service. Yes. You were a- We were demand- A marketplace layer. Exactly. You're not operating the airplanes. Exactly. You're not, you know, making up the hotel rooms. Exactly. You know, the drivers are providing the

service, right? But it's, we're much more responsible end to end. But, you know, you're responsible for your customers. We have a very, very important responsibility to driver and courier community, these over 5 million people who are making an earning or making kind of a side earnings on Uber. And then the responsibility in terms of like regulators and governments, et cetera, that consideration set is just, it's so much bigger. So from that standpoint, it's tough, but also really interesting and satisfying in some ways. Were you ready for it? Was I ready for it? Yeah. No. I had no idea.

Is this one of those, like, if you knew you wouldn't have done it, but now you've done it, and so all this value's been created and, like, great. I'm so glad I did it. It was a friend of mine. I was like, hey,

are you having fun? I'm like, no, I'm not having fun. Like, I love it you know like the job is too hard to like it's not fun but it's so cool it's such an interesting space you really feel like you're having impact everyone at uber like we always talk like you don't come to uber for easy like you don't come here for an easy job it's complicated it's hardcore people work their asses off but like you love it and it's not fun like it ain't fun but people love being at the company that's something i didn't know and then and then the the dynamic real-time nature of the marketplace and how we balance the marketplace and the pricing, etc., is unique, right? It's Thursday night, there's a Taylor Swift concert, all hands on deck. We got to figure things out, that operational nature, but how dynamic and fast it is. Does Uber HQ plan for Taylor concerts ahead of time as they're happening? Yeah, I mean, Uber HQ doesn't, but there are ops teams on the ground. Yes. And, you know, they're the heroes. Like, they're on the ground, city by city, work their ass off, and they are kind of where the rubber meets the road, so to speak, to use a transportation metaphor.

So, David asked this interesting question that I want to dig a little bit deeper on, the were you ready for it? What kind of diligence did you get to do on the opportunity when this job came on the market in the national news in a very prominent way, in a very short time period? First, when

did

you first get contacted about it? How did you enter the uber orbit so um i was reading about the news just like everyone else was right it was just all over the place and it was it was meg whitman jeff ml it was a public guy everything going on and what led to it you know the the battle between travis andmark and all that stuff. It was fascinating as an observer. I never, ever, ever imagined that I would then play a part. And a headhunter called me about this role. So not a board member directly, a headhunter. Headhunter. Whoa. Headhunter called me. It was a structured process. I'm like no way like no thank you goodbye happy in seattle yeah 13 years i got my place on wimpy yeah i love working for barry like it was i was good this is fun yeah and then and then we exactly it was fun and then i i was at the sun Conference, the Allen& Company Sun Valley Conference, and having drinks with Daniel Leck. And he's like, Dara, you know, did you get the call from a headhunter about the Uber job? I think you'd be perfect for the job. And I didn't know where the headhunter, why the headhunter called. It turned out Daniel. I'm like, dude, why would I ever do that? Like, I'm happy. Like, why would I ever jump into that mess? So Daniel

gave the headhunter your number. Yes. And I'm like, no way. He tipped him off. No way. And

he looks at me like with those like piercing Scandinavian eyes. He's like, Dara, since when is life about having fun it's about having impact it's important like you can do this and i'd had a couple of drinks and the alcohol was flowing and we were having fun and my wife says like yeah you can do this i'm like yeah i can do this so uh the next day i called the headhunter back and I said, let's talk. And the next step was for me to meet a board member. And we had dinner. And he was very charming. And he kind of started the recruitment. It was pretty cool. And

how long between then and when you accepted the job? God, I think it was

about two months. It was over the summer. Wow. How do you keep it secret? Nobody knew. I told them, I said, listen, up front, I have a job and it's a great job. So the nanosecond that my name shows up in the news, I'm out of here. So I just want you to know, like the nanosecond it shows up in the news, I'm out of here. But I had to be realistic that it could show up in the news. It's amazing that it didn't. So actually, at that point, I called up Barry. Because I couldn't put Barry in a situation or myself in a situation. Like I've worked with him 13 years probably 20 years at iac and then even before as a banker like he and i have an incredible relation i always like so much to him i couldn't take the risk of his seeing it in the press and you know the consequences of that um and and the and the loss of trust so i called him up i said barry had on and call me about Uber. I'm going to talk to them. And he's like, you're effing crazy, hung up on me. I told Seth, like, oh my God, I'm going to get fired. And nothing, dead silence. You weren't going to get fired because what was Barry going

to do, like step in and be CEO himself?