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Friday, April 12, 2024

One Year In, the Real Work Begins for Uber's CEO

Dara Khosrowshahi stands in the wings of an airy, modern corporate event space in Manhattan’s Chelsea neighborhood. It’s the first anniversary of his taking the CEO reins at the iconic ride-sharing company, and he’s celebrating like a Silicon Valley suit—with a set of product announcements. Men dressed in black are serving avocado toastettes, tiny scoops of salmon tartar, and caramelized-onion-and-cheese biscuits to a crowd of journalists filling in a dozen rows of blond oak chairs. At exactly 10:30, the thumping of the bass softens, and he springs up to the stage, looking like the most boring tech executive in the room. Jeans. Black wingtips. A suit jacket over a white button-down shirt, no tie. “I’m officially no longer a rookie CEO,” he declares, “and there’s no place I’d rather be!”

Khosrowshahi has been perfecting his brand of boring for 365 days, and adhering to brand, he’s using this anniversary to promote a new set of safety features. It’s a bit like serving spinach and broccoli at a children’s birthday party. To my right is is a “museum” of exhibits dedicated to them. There’s the Ride Check feature, set to roll out in pilots later this year, which provides tools for Uber to check on riders and drivers when it detects an accident, and follow up afterward with a phone call, among other things. There’s a hands-free feature that lets drivers accept rides and communicate with passengers with voice messaging. Uber has also added two-step verification for accounts, and expanded its 9-1-1 integration to several new cities. And it’s taking steps to better protect passenger safety by concealing specific pickup and drop-off addresses, and providing approximations of locations to drivers.

They’re smart and necessary changes—changes, one Uber employee points out to me, “that Lyft hasn’t made”—but none seem exceptional. These are the types of features one should expect of a ride-sharing company valued at $72 billion that aims to vault itself into everyone’s subconscious as the definitive app for arranging all types of future transportation.

The event, like most corporate product launches, is just more than 30 minutes. No one mentions #BoycottDidi, the social media hashtag that took off in China last week as people deleted the Chinese ride-hailing app after one of its drivers raped and murdered a young female passenger. (Uber owns 17.7 percent of Didi Chuxing.) No one brings up concerns about women’s safety generally. Instead, they keep the conversation upbeat, focused on both accountability and privacy for riders and for drivers.

Khosrowshahi has been on a first-anniversary media tour this week, and after the event we grab a few minutes to chat. Khosrowshahi understands implicitly that he is the best face of Uber’s future—reliable and dependable, he’s a guy who makes dad jokes and tends to stay on message. But as much as Khosrowshahi has cleaned up the company’s culture and addressed some of its emergencies, Uber is far from the market leader it was two years ago. For Khosrowshahi to grow Uber into a company that is worth the figure at which it is valued, and that can make good on its promise to be the de facto transportation application for bikes, buses, scooters, and any other here-to-there alternative, he will need to confront some significant challenges in the year to come:

Self-driving technology: After a fatal crash in March, Uber paused its self-driving program, and shuttered its Phoenix testing site, before resuming driving in manual mode (with human drivers) on public streets in Pittsburgh in mid-July. In late August, Toyota invested $500 million in Uber for a partnership that will combine the Toyota’s carmaking expertise with Uber’s autonomous tech and ride-hailing platform. The companies have announced plans to develop self-driving Toyota Sienna minivans and deploy them on Uber’s network, starting in 2021. The company will continue to partner with other companies as well, Khosrowshahi tells me.

But the—very expensive—question remains: what’s Uber’s endgame with self-driving technology? The longer it restricts its testing, the farther behind its peers, namely Google’s Waymo, it falls.

Khosrowshahi wants to make it clear he’s committed to continuing to build the technology, rather than simply partnering with other companies. “There are very few companies—you can count them on one hand—that have the operational technology capabilities that we do,” he says, “And we have the advantage of building self driving under the same roof. We know what it takes in terms of the skill sets of a human driver to operate our network, and we can translate that into a self-driving or a robot driver, so to speak, on our network as well.”

Liane Hornsey’s Replacement: Uber’s human resources chief resigned in July after concerns emerged that she’d systematically dismissed complaints of race-based discrimination. “We’re actively looking for a chief people officer,” Khosrowshahi says. “We're making sure that we look at a diverse slate, but you know, people are a huge part of what we do, and we need leadership there.”

Drivers: No matter how much Uber improves its app, and the safety features are part of that push, many of its drivers are still balancing many apps as they look to make the most income. There’s a limited number of drivers. And they need to make a living. In early August, in Uber’s first big lobbying setback, the New York City Council approved several bills that, in addition to a number of other things, put a cap on the number of ride-hailing vehicles for a year while the city studies their impact, and allow New York to set a minimum pay rate, further squeezing Uber and potentially setting a precedent for other cities.

Uber fought aggressively against the measure, and a spokesperson told The Wall Street Journal after the fact that the company "will do whatever it takes to keep up with growing demand."

Lyft: There was a time not so long ago that Lyft didn’t factor on Uber’s radar. In mid-2016, The New York Times reported that Lyft was searching for a buyer. But Uber’s great stumble has become Lyft’s good fortune. As analyst Ben Thompson wrote in his newsletter, Stratechery, “As long as drivers are independent contractors, Uber can’t do anything to prevent them from multihoming, that is, being available on both Uber and Lyft’s networks at the same time.” Drivers often use multiple apps and will go where the riders go, and as the tumult of last year unfolded, riders went to Lyft. Writes Thompson: “Lyft was ready and able to absorb unhappy Uber riders, because they were effectively using Uber’s drivers to accommodate them.”

Uber is slowly starting to shed its image as a toxic company run by an impulsive bellicose bro—but now it has problems unrelated to image and branding. It’s trying to compete in a saturated market in the run-up to an initial public offering. Any misstep or failure to anticipate a market turn might spell disaster. In this context, the safety improvements are significant to Uber. They stand to further differentiate Uber’s service from those of its competitors and, potentially, to win the loyalty of those who worry about getting into a car with someone they haven’t met. And they signal to cities that Uber is a responsible service, capable of contributing to public safety, perhaps softening relationships with regulators over time.

It’s clear Khosrowshahi has a vision for what Uber can be and a strategy for how he hopes to get there. But if the first year involved fixing the dramatic problems of Uber’s past, his second year must be dedicated to charting a course for its future.

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