| From: Glenn Petersen | 11/1/2022 7:58:43 AM | | | | | | Uber reports another loss but beats on revenue and the stock is up
Published Tue, Nov 1 20226:59 AM EDT
Updated 1 Min Ago
CNBC.com
Key Points
- Uber reported third-quarter earnings that beat analysts' estimates for revenue Tuesday.
- The company suffered a net loss of $1.2 billion for the quarter, $512 million of which was attributed to revaluations of Uber's equity investments, according to a company release. In this article
Uber reported a third-quarter loss Tuesday but beat analysts' estimates for revenue and showed a surge in bookings. Shares were up about 9% in premarket trading.
Here's how the company did:
- Loss per share: 61 cents
- Revenue: $8.34 billion vs. $8.12 billion expected by analysts, according to Refinitiv.
Uber reported a net loss of $1.2 billion for the third quarter, $512 million of which was attributed to revaluations of Uber's equity investments, according to a company release.
In a prepared statement, CEO Dara Khosrowshahi said Uber delivered a "strong quarter" and benefitted from booming travel, easing lockdowns and shifts in consumer spending. He said October is tracking to be the company's "best month ever for both Mobility and total company Gross bookings." However, he cautioned that after the last few years, the company has learned not to take anything for granted.
"With continued rigor around costs, discipline on headcount, and a balanced capital allocation approach, all supported by our leading technical and operating capabilities, we are well positioned to deliver expanding profitability over the coming quarters," Khosrowshahi said.
The company reported a record adjusted EBITDA of $516 million, beating guidance of $440 million to $470 million and ahead of analyst estimates of $457.7 million according to StreetAccount. Gross bookings for the quarter came in at $29.1 billion, up 26% year over year.
For the fourth quarter of 2022, Uber said it expects gross bookings to grow between 23% and 27% year over year on a constant currency basis, and an adjusted EBITDA of $600 million to $630 million.
Here's how Uber's largest business segments performed in the quarter:
Mobility (gross bookings): $13.7 billion, short of analysts' estimates of $13.83 billion according to StreetAccount.
Delivery (gross bookings): $13.7 billion, short of analysts' estimates of $14.01 billion according to StreetAccount.
Uber relied heavily on growth in its Eats delivery business during the pandemic, but its mobility segment surpassed Eats revenue in its first and second quarters as riders began to take more trips. That trend continued during the third quarter, as Uber's mobility segment reported $3.8 billion in revenue while delivery reported $2.8 billion.
Uber's freight business booked $1.75 billion in sales.
The number of monthly active platform consumers climbed to 124 million in the third quarter, up 14% year over year. 1.95 billion trips were completed on the platform during the period, up 19% year over year.
Shares of Uber are down more than 36% so far this year. The stock tumbled more than 10% in October after the Biden Labor Department released a proposal that could pave the way for regulators and courts to reclassify gig workers as employees. The proposed rule could raise costs for companies like Uber, Lyft, Instacart and DoorDash that rely on contract workers to pick up shifts on their own time.
The companies have argued that flexible schedules are attractive to workers, but some labor experts and activists have disagreed, saying the companies use the contractor model to reduce their own costs and deny workers important protections.
Uber has also had to contend with high gas prices and inflation, but CEO Dara Khosrowshahi told CNBC's "TechCheck" in September that its supply side may actually be benefiting from the inflationary environment.
As expenses rise and people are paying more for essentials like groceries, he said they are also signing up to drive for Uber.
"If anything, 72% of drivers in the U.S. are saying that one of the considerations of their signing up to drive on Uber was actually inflation," he said.
Uber will hold its quarterly conference call with investors Tuesday at 8 a.m. ET.
--CNBC's Lauren Feiner contributed to this report.
cnbc.com |
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| To: Glenn Petersen who wrote (238) | 2/8/2023 8:20:57 AM | | From: Glenn Petersen | | | | Uber Reports Record Revenue as It Defies the Economic Downturn
New York Times
February 8, 2023
Uber indicated on Wednesday that it had staved off the downturn that hit many technology companies while posting what Dara Khosrowshahi, Uber’s chief executive, called the company’s “strongest quarter ever.”
Uber reported $8.6 billion in revenue in the last three months of 2022, a 49 percent increase from the same period a year ago, when the Omicron variant of the coronavirus dampened travel. The company made $30.7 billion in gross bookings — the amount of money paid by customers — a 19 percent year-over-year jump.
The company said it had tallied two billion trips in a quarter for the first time, up from 1.7 billion a year ago, and it saw an 11 percent increase in the number of customers who use Uber each month, to 131 million.
The results slightly exceeded the expectations of Wall Street analysts.
Even as other tech companies like Google, Meta and Microsoft have announced widespread layoffs and slashed costs, Uber’s business has stayed relatively steady, and Mr. Khosrowshahi said last month at the World Economic Forum in Davos that he was not anticipating companywide layoffs.
Companies that offer internet-based services, like social media and video conferencing, boomed during the pandemic but have slowed since lockdowns ended. By contrast, Uber, which makes much of its money offering rides to people, cut about 7,000 employees in 2020 while people were stuck at home, but rebounded as the world reopened and people began carrying on with their normal lives.
“All of those other tech companies in hindsight now look to have overhired during the digital boom of the pandemic when we were all stuck inside using digital services,” said Tom White, a senior research analyst with the financial firm D.A. Davidson. The businesses of companies like Uber and Lyft were “depressed” during that time, he said.
Uber reported $595 million in profit thanks to its stakes in other ride-share companies. The company said it expected to achieve operating income profitability at some point this year, which would be a sign of growing strength in its business.
Uber was one of the first tech companies to warn of an economic downturn. Last May, Mr. Khosrowshahi told employees that the company needed to rein in spending and focus on becoming profitable to adjust to a “seismic shift” in the economy and investors’ priorities.
Since then, Uber has enacted some cost-cutting measures. This month, about 150 employees were laid off from Uber Freight, a booking service for long-haul truck shipments. Lior Ron, the Uber Freight chief executive, told employees it was a move brought about by economic conditions. The layoffs were reported earlier by CNBC.
Lyft, which will release its quarterly financial results on Thursday, has also worked to reduce costs. In November, the company laid off 650 employees, and last month it shuttered Lyft Delivery — a small pilot program — because of budget constraints, according to three people with knowledge of the program’s cancellation.
Mr. Khosrowshahi said in a statement that Uber would continue to be careful with spending. “We will maintain this rigor throughout 2023 and beyond to deliver healthy growth with minimal head count addition,” he said.
The post Uber Reports Record Revenue as It Defies the Economic Downturn appeared first on New York Times.
Uber Reports Record Revenue as It Defies the Economic Downturn – DNyuz |
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| To: Glenn Petersen who wrote (239) | 2/9/2023 4:45:12 PM | | From: Glenn Petersen | | | | Lyft Shares Fall After Unexpected Loss, Downbeat Revenue Outlook
Ride-hailing company had reported highest number of riders in three years in latest quarter
By Kathryn Hardison
Wall Street Journal
Updated Feb. 9, 2023 4:31 pm ET
Lyft shares plunged after the ride-hailing company posted an unexpected loss in the fourth-quarter and said first-quarter revenue would come in below Wall Street expectations.
The ride-hailing company said revenue grew 21% to $1.18 billion in the period that ended Dec. 31. Lyft had 20.4 million active riders during the quarter, marking the highest level in nearly three years though still below the 23 million active riders it had in the quarter before the pandemic struck. Both metrics beat Wall Street views, according to FactSet.
“Ride-share is back,” Lyft co-founder and President John Zimmer said in an interview.
Despite strong ridership numbers, Lyft reported an unexpected loss in the recent quarter on an adjusted basis, missing Wall Street estimates.
Lyft and rival Uber Technologies Inc. had been grappling with a driver shortage until recently, which pushed ride prices to record highs. Lyft said that the number of drivers on its service improved in the quarter and that it earned $57.72 in revenue per active rider.
First-quarter revenue is expected to be roughly $975 million, up from $876 million the year prior.
That represents a sequential decline from the fourth quarter, which Mr. Zimmer attributed to a seasonal trend as more people adopt health-related goals at the start of the year that include going out less and walking more. The ride-share marketplace has also improved with enough drivers to meet consumer demand, which leads to lower prices, he said.
Uber’s revenue also grew last quarter as people spent more on rides and food delivery. “Despite any macroeconomic uncertainty, I’m more confident than ever in our prospects,” Dara Khosrowshahi, chief executive of Uber, said on an earnings call with analysts.
For the latest quarter, Lyft’s net loss widened to $588.1 million, or $1.61 a share, from $283.2 million, or 83 cents a share, in the year prior. Lyft said that adjusted for certain items, it recorded a loss of 74 cents a share, missing analysts’ expectation for a profit of 13 cents.
The company reported $201.3 million of stock-based compensation and related payroll tax expenses, as well as restructuring charges tied to recent layoffs. Lyft also strengthened its insurance reserves and other current liabilities in the quarter.
In November, Lyft said it would lay off 13% of its workforce, or nearly 700 jobs. The ride-hailing company’s executives described the move as a proactive step as they foresee a possible recession.
Write to Kathryn Hardison at kathryn.hardison@wsj.com
Lyft Shares Fall After Unexpected Loss, Downbeat Revenue Outlook - WSJ |
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| From: Glenn Petersen | 3/9/2023 6:06:30 AM | | | | | | Uber reportedly considering spinning off its freight business
BY DUNCAN RILEY
SilisonANGLE
March 8, 2023
Uber Technologies Inc. is reportedly considering spinning off its Uber Freight business in a sale or as a publicly traded firm.
Bloomberg, referencing people familiar with the matter today, said the spin-off is being considered as Uber is looking to streamline its focus on ride-hailing and food delivery. A decision to spin off Uber Freight is said to be not imminent and the company’s plan could change.
The same sources say an initial public offering is a more likely outcome and if Uber decides to go with an IPO, it may not happen until next year and will depend on market conditions. Uber has declined to comment on the report.
Founded in 2017, Uber Freight is a logistics and supply chain management firm that connects truck drivers to shipping companies, quite literally Uber for trucks in all but name, with a range of additional services.
The company was partially spun off in October 2020 when it raised $300 million on a $3.5 billion valuation from Greenbriar Equity Group L.P. According to Crunchbase, Uber Freight raised an additional $550 million from D1 Capital Partners, GCM Grosvenor Inc. and the Abu Dhabi Growth Fund LLC in November 2021.
Uber last reported earnings on Feb. 8, with the freight business generating revenue of $1.5 billion in the quarter ending Dec. 31, up 43% year-over-year, But the headline figure does not tell the whole story. In its fourth-quarter earnings call, Uber’s Chief Financial Officer Nelson Chai warned that Uber Freight would struggle going forward from a cyclical downturn in the business.
“We do expect that you’ll see us getting some traction there, but the overwhelming cycle that’s going on right now more broadly on the freight industry is going to continue to impact our business,” Chai said in the call. “And so, that business will continue to lag likely versus where we would have hoped.”
Uber Freight also announced it was laying off 3% of its workforce, or 150 employees, in January, citing headwinds in the logistics market. Like many other companies, Uber also noted that the freight business had accelerated hiring in 2022, expecting a different economic reality.
A downturn warning ahead of a possible sale or IPO is not ideal when trying to maximize shareholder return. With Uber said to be possibly waiting until next year to float the company, it may not be considering market conditions alone and could be hoping that the overall freight market turns around over the next year as well.
Uber reportedly considering spinning off its freight business - SiliconANGLE |
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| From: Glenn Petersen | 3/14/2023 4:56:10 AM | | | | | | Uber and Lyft shares rise after California court victory lets them classify drivers as contractors
PUBLISHED MON, MAR 13 20238:12 PM EDT
UPDATED MON, MAR 13 20238:50 PM EDT
Rohan Goswami @ROGOSWAMI
CNBC.com
KEY POINTS
-- In Nov. 2020, California voters approved Proposition 22, which allowed ride-sharing apps like Uber and Lyft to classify their drivers as independent contractors, limiting the companies’ obligation to provide certain benefits.
-- A group of drivers challenged the proposition, and in 2021 a judge said it was unconstitutional.
-- But on Monday, an appeals court overturned that ruling, allowing Prop. 22 to stand.
Ride-sharing apps, including Uber and Lyft, can continue to treat their drivers as independent contractors, a California appeals court ruled on Monday, overturning a lower-court decision that barred them from doing so.
In Nov. 2020, California voters approved Proposition 22, which allowed ride-sharing and delivery app makers to classify their drivers as independent contractors. A California judge ruled the proposition unconstitutional in 2021, arguing that it infringed the legislature’s power to set standards at the workplace. The state and a group representing the companies and other parties appealed that decision, and Monday’s ruling came down in their favor.
Shares of ridesharing and delivery companies rose on the news, with Uber, Lyft, and Doordash notching gains of more than 4% after hours.
Prop. 22 created a set of criteria which determined whether ride-share drivers were employees or independent contractors> In practice, it exempted Uber and similar companies from following certain minimum wage, overtime, or workers compensation laws for hundreds of thousands of Californian rideshare drivers. Instead, the ballot measure required companies to provide compensation and healthcare “subsidies” based on “engaged” driving time, as well as other benefits, including safety training and “sexual harassment training.”
It was the most expensive ballot issue in California’s history, with ride-share companies contributing over $181 million to the “Yes” campaign. Companies reportedly moved aggressively to prompt their drivers to support the initiative, which passed with 58.6% of votes in support.
A group of ride-share drivers sought to strike down Proposition 22, and won a lower court decision. But in a 63-page opinion issued Monday, California justices from the 1st District Court of Appeal disagreed with that court, and upheld the proposition.
“Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule,” the opinion read.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22. Across the state, drivers and couriers have said they are happy with Prop 22, which affords them new benefits while preserving the unique flexibility of app-based work,” Uber chief legal officer Tony West said in a statement.
Uber, Lyft shares rise after California court upholds Prop. 22 (cnbc.com) |
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| From: Glenn Petersen | 3/27/2023 5:11:40 PM | | | | | | LYFT is up about 4% in after hours trading.
Lyft CEO and president to step down in mid-April, former Amazon exec David Risher named as replacement
MON, MAR 27 20234:32 PM EDT
UPDATED 7 MIN AGO
Rohan Goswami @ROGOSWAMI
CNBC.com
KEY POINTS
-- Lyft’s cofounders, Logan Green and John Zimmer, will step back from their day-to-day roles as CEO and president, respectively.
-- Former Amazon executive David Risher will take the top job at the ridesharing company.
Lyft’s cofounders, CEO Logan Green and president John Zimmer, will step back from their day-to-day roles by mid-April, the company announced on Monday.
David Risher, a former retail executive at Amazon, will assume the CEO position at the ridesharing company. Green and Zimmer will serve as chair and vice chair of the Lyft board. Lyft’s current chairman Sean Aggarwal will step down from his post but will remain on the board, the company said.
Lyft shares rose around 5% after hours on the news.
Green and Zimmer founded Lyft in 2012 and took the company public in 2019. Lyft shares have fallen more than 70% in the last year.
“I am honored to step into the CEO role at such an important moment in the company’s history, and am prepared to take this business to new levels of success,” Risher said in a statement.
Risher joined Amazon in 1997 as its first vice president of product and store development. He was a top lieutenant of Amazon founder and executive chairman Jeff Bezos, and went on to serve as senior vice president of marketing and merchandising before exiting the company in 2002.
— CNBC’s Annie Palmer, Laura Batchelor and Deirdre Bosa contributed to this report.
This is breaking news. Please check back for updates
Lyft CEO, president to step down, ex-Amazon exec Risher named as CEO (cnbc.com) |
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| To: Glenn Petersen who wrote (245) | 4/1/2023 4:53:16 PM | | From: Glenn Petersen | | | | Lyft Staff Pressed Founders for Change as Uber Pulled Ahead
New CEO says he aims to boost employee morale and overhaul customer and driver experience
By Preetika Rana and Emily Glazer
The Wall Street Journal
April 1, 2023 5:30 am ET
Lyft Inc.’s leadership change this week followed months of discontent among some employees over the company’s shrinking market share and stock price.
As the ride-share company has struggled with competition from Uber UBER Technologies Inc., some people within the company had been questioning the leadership of its co-founders—Chief Executive Logan Green and President John Zimmer—for months. Some investors and stock analysts also had urged change.
On Monday, Lyft said the founders would be stepping down from day-to-day management. The company tapped as its CEO a board member with experience working at big tech companies and nonprofits.
In recent meetings and Slack messages, employees had questioned whether Messrs. Green and Zimmer were still the right people to lead the business, according to attendees and messages described to The Wall Street Journal. The board found out about employees’ concerns and discussed the issue, people familiar with the discussions said.
At an all-hands meeting in February, employees asked whether there was accountability from the co-founders, particularly as Uber fared much better, attendees said. That echoed concerns raised at previous meetings, they said.
Lyft’s market value has dropped 85% to under $3.5 billion in two years.PHOTO: KORI SUZUKI FOR THE WALL STREET JOURNAL
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In November, after the company laid off 13% of its staff, one employee asked the co-founders why they weren’t stepping down, attendees said. Lyft’s co-founders responded that they were learning and growing from their mistakes and moving quickly, attendees said.
“Not the time to learn from mistakes. Time for professional leadership,” an employee wrote on an internal Slack channel at the time.
“It seems new leadership may be needed at a higher level. Why are we always 10 steps behind our competitors?” another employee wrote.
While the co-founders had built a scrappy startup into a household name, Lyft lately has struggled with challenges, new CEO David Risher said in an interview.
“It’s not like we’re in a position of immense strength in the market. I wish I could say we were,” said Mr. Risher, who joined Lyft’s board in 2021.
The co-founders said in interviews that they were stepping back for personal reasons. Mr. Green said he wanted to give priority to spending more time with his wife and four children, and that he approached the board about finding a new leader late last year.
Uber has long outpaced its younger, crosstown rival Lyft, and its lead has been widening in recent years. Lyft’s market share has fallen and its market value, nearly $22 billion two years ago, now sits at less than $3.5 billion, an 85% erosion. Uber’s stock price fell around 40% in the same period.
Along with the layoffs late last year, Lyft scaled back on other businesses, such as renting cars to customers, as it looked to weather a possible recession. Uber hasn’t had to be as aggressive with cost-cutting and layoffs.
While Lyft in February reported record revenue for the fourth quarter, investors have been worried about its prospects. Its shares tumbled more than 35% after those results because they included a weaker-than-expected revenue outlook.
Lyft’s “execution has been wildly inconsistent versus Uber,” said Jeremy Abelson, the founder of Irving Investors, which owns shares in both companies. Change was needed at Lyft, he said.
The change was necessary “to begin rebuilding investor trust,” Gordon Haskett Research Advisors analyst Robert Mollins wrote in a note to clients this week. He added that “addressing management’s past failures are a significant undertaking that will likely take time.”
Four years ago, many on Wall Street saw Lyft as a safer bet than Uber. Uber’s food-delivery business hadn’t proved itself, and its ride-share business was facing regulatory challenges overseas. Lyft looked to some like it was in a better position because it stuck to transportation and limited its business to the U.S. and Canada.
Then the pandemic hit both companies, Lyft much harder.
Uber’s food-delivery business boomed during lockdown. Uber later tapped its pool of active delivery drivers to deal with a driver shortage that crippled the ride-share industry as the economy reopened from the Covid-19 lockdowns.
Lyft experimented with delivering goods for businesses during the health crisis but shelved that idea this year. The company generally stuck to its roots of transporting people, but some of its bets didn’t pan out. For instance, Lyft built quick service stations for drivers and a car-rental business for riders. It scaled back on both of those businesses late last year.
“There’s always things we could have done differently or better,” co-founder Mr. Zimmer said in an interview this week. The other co-founder, Mr. Green, added that he regretted not taking Lyft global.
Whether the company’s new CEO, Mr. Risher, will be able to help the company’s share price, market share and employee confidence rebound remains to be seen. He has an optimism and competitiveness that could be the right fit for the company right now, said Dave Stephenson, who sits on Lyft’s board and once reported to Mr. Risher when the two men worked at Amazon.com Inc.
“It’s clearly at a challenging point in the business,” said Mr. Stephenson, who is the chief financial officer of Airbnb Inc. “He’s ready to compete,” he said.
Mr. Risher said he took the position to help the company grow, and that boosting employee morale is a priority. He also wants to overhaul the customer and driver experience on Lyft.
In his first companywide address to staff, on Tuesday, Mr. Risher said he encouraged employees to help him build the company that they envisioned.
“We’re going to figure out a way to do this together,” he said.
New Lyft CEO David Risher, in blue shirt, is taking over as co-founders Logan Green, left, and John Zimmer step down from day-to-day management.PHOTO: LYFT
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Write to Preetika Rana at preetika.rana@wsj.com and Emily Glazer at Emily.Glazer@wsj.com
Lyft Staff Pressed Founders for Change as Uber Pulled Ahead - WSJ |
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| From: Glenn Petersen | 4/8/2023 4:17:15 AM | | | | | | What Happened When Uber’s CEO Started Driving for Uber
Dara Khosrowshahi and other executives realized drivers’ complaints were valid. They revamped the app, helping Uber attract workers and extend its lead on Lyft. Driver pay remains a sticking point.
By Preetika Rana
Photographs by Carolyn Fong
The Wall Street Journal
April 7, 2023 5:37 am ET
CEO Dara Khosrowshahi in the gray Tesla he uses to drive passengers, in San Francisco on Wednesday.
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After five years running Uber Technologies Inc., Dara Khosrowshahi in September got behind the wheel himself.
Using the alias “Dave K” and a gray Tesla Model Y that he purchased secondhand, the chief executive made dozens of trips as a ride-share driver in the following months ferrying people around the hills of San Francisco.
While taking a customer to the airport one evening, he had to ignore frantic phone calls from his chief legal officer who was trying to alert him that a hacker had breached Uber’s network. Another trip took him across the Bay Bridge to Oakland—and he swore never to do it again after getting stuck in rush-hour traffic back to the city.
It was the latest experiment in the CEO’s yearslong journey to reinvent driving on Uber. Along the way, he struggled to sign up as a driver, saw firsthand something called tip baiting and was punished by the app for rejecting trips. Surprisingly hard to take was the rudeness of some Uber riders.
Mr. Khosrowshahi’s moonlighting was part of a campaign by him and his lieutenants to better understand and improve Uber’s experience for drivers, whose scarcity had become a critical challenge for the company after the U.S. reopened from Covid-19 lockdowns. It marked a sharp turn for a company that wasn’t typically seen as being driver-friendly.
The campaign—code-named Project Boomerang—has helped shape what has become one of the biggest makeovers of Uber’s business since its inception in 2009.
“I think that the industry as a whole, to some extent, has taken drivers for granted,” Mr. Khosrowshahi said in an interview. He hadn’t driven on Uber before because it wasn’t his biggest priority—drivers had always been in abundant supply. The pandemic-fueled labor shortage forced a companywide introspection, he said, to “re-examine every single assumption that we’ve made.”
Keeping up with demand
San Francisco-based Uber faced a debilitating labor shortage after the economy reopened in 2021. It figured out that it had to do more to get drivers on board than just offer them bonuses. It adopted some difficult changes that drivers had long asked for, and they paid off.
Crosstown rival Lyft Inc. was slower to introduce new driver-friendly features and bonuses. It lost market share to Uber, and its stock valuation declined by billions of dollars. Late last month, following months of discontent among some employees and investors, Lyft’s co-founders announced they were stepping back from managing the company. They hired a new CEO.
While Uber has long had a larger slice of the ride-share market than Lyft, its driver-focused strategy helped leave its younger competitor behind and put it in a stronger position to weather the current economic tumult, said investors and analysts.
Uber’s ride-share revenue more than doubled in 2022, and the company posted its first full-year adjusted profit since its founding. It now commands 74% of the U.S. ride-share market, up from 62% in early 2020, according to consumer receipts analyzed by market-research firm YipitData.
Lyft’s market share fell to 26% from 38%, YipitData show, its stock plunged more than 70% in the past 12 months, and the company has cut 13% of its staff. Uber’s stock fell less than 10% over the same period and it has shed less than 1% of its staff, defying widespread cost cuts and layoffs across the tech sector.
Lyft said it is committed to doing the best for its drivers. It said its driver pool is growing and that January marked its biggest month-on-month jump in sign-ups since the start of the pandemic.
The ride-sharing business was designed to make money connecting rides and riders without the cost and hassle of having to employ drivers. In reality, Uber and Lyft have had to keep shelling out money to attract both drivers and riders at various points—one reason why they have rarely turned a profit.
As the economy reopened after pandemic lockdowns, riders returned at a faster pace than drivers.
Online delivery businesses that brought groceries and restaurant food to people at home had flourished during the crisis, and gig workers had more options outside of ride-share for the first time. Uber operates in both businesses, which helped it tap some workers Lyft didn’t have, though it was still falling short of meeting ride-share demand. The imbalance pushed ride prices and wait times to record highs.
Uber at first defaulted to an old formula—financial incentives. In April 2021, Mr. Khosrowshahi carved out $250 million in bonuses to entice drivers. When the company revealed in August that year that the spending had weighed on its results, its shares tanked.
Investors hammered Mr. Khosrowshahi on an evening call, saying he was spending too much and needed to focus on reducing costs to turn a profit.
The CEO pinged Uber’s head of driver operations, Carrol Chang, on Slack minutes later. “Getting a lot of questions,” he wrote, Ms. Chang said. “But I stand by the driver investments and fully believe it’s going to pay off.”
Part of Mr. Khosrowshahi’s conviction came from seeing demand bounce back quickly overseas, where Uber now gets 40% of its revenue. He knew he had to move quickly to build back the supply of drivers in the U.S., its most lucrative market.
Hopping on an electric bike
Ms. Chang had been leading the effort to get drivers to return to the ride-hailing service. Her father once worked as a taxi driver after immigrating to the U.S., and she knew bonuses were just a short-term fix. Drivers wanted not only better pay but also to be heard about other issues.
In June that year, she held a four-hour Zoom meeting with company executives and asked them to ferry passengers and food for the app so they would understand drivers’ grievances.
Through a 227-slide presentation, she outlined how the company’s three competing objectives of keeping costs low, avoiding legal risks and attracting drivers had created what she called a “triangle of death,” paralyzing Uber’s ability to do more for workers.
“If you try to do all of those three things at the same time, literally nothing can get through,” Ms. Chang said she told leaders on the call.
The following weekend, Mr. Khosrowshahi hopped on an electric bike and began delivering food in San Francisco. Posing as a gig worker for the first time was a wake-up call, he said.
The CEO delivered food by bike.PHOTO: DARA KHOSROWSHAHI
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Mr. Khosrowshahi struggled with Uber’s sign-up process, which was different depending on whether workers wanted to drive people or deliver food. “The whole experience was pretty clunky,” Mr. Khosrowshahi said.
Uber soon created a single sign-up process for its workers and made it easier for them to toggle between rides and food. It began messaging couriers that they could earn more on average ferrying people.
The CEO also learned navigating bustling restaurants for pick ups was confusing, with little information provided on where to go. Uber designed a video for delivery drivers so they could find their way around restaurants, showing what they should do when arriving and how to manage the app after the food was in hand.
Uber would often match Mr. Khosrowshahi to his next delivery while he was en route to completing an order. One time he clicked on the notification and the app started navigating him to a new address—hiding directions for the current order. New orders are now queued after existing orders, even if drivers click on them, so information about the current order isn’t lost.
On another occasion, Mr. Khosrowshahi showed up to a restaurant to pick up what he thought was one order—only to learn that it involved two separate deliveries. Uber was combining orders along the same route, but the app didn’t make that clear. The company introduced better labeling for trips that involved more than one delivery.
Mr. Khosrowshahi also ran into a problem delivery drivers had been complaining about: tip baiting. Customers would entice workers to pick up their food quickly by entering big tips on the app—but then reducing them after the food was delivered.
Uber is still looking for ways to address the practice. It at first took away delivery customers’ ability in some places to lower tips after an order was placed, only to discover that it reduced overall tipping. People didn’t want to be stuck with big tips if their food didn’t show up or they received the wrong order.
Mr. Khosrowshahi developed a routine: He would spend the weekends delivering food then outline glitches and possible solutions on a Google document. He would tag employees and include photos and screenshots to show the issue.
He said that earlier, Uber believed that if it attracted drivers with money, “the rest will take care of itself.” It dawned on him after his delivery stint that the company “had to fundamentally change how we built our product and do it faster than our competition.”
Then, in September last year, Mr. Khosrowshahi tried out ferrying passengers. He bought the used gray Tesla and began picking up San Francisco riders, and soon experienced some of Uber drivers’ biggest complaints.
One was the inability for drivers to see drop-off locations and estimated pay before they accepted a trip, a restriction that made it impossible to decide if a ride was worth their time. Uber had worried that drivers would cherry-pick rides, avoiding some neighborhoods and discriminating against riders going to those places, so it only gave the information to some drivers with high trip-acceptance rates. The company had started making moves to ease the issue in July, when it began letting all drivers in a few markets—not including San Francisco—see the information.
When Mr. Khosrowshahi tried out driving, he rejected some trips and the app punished him by taking away the ability to see destinations ahead of time. The experience was so frustrating that he asked his team to speed up the timetable for all U.S. drivers to see destinations upfront without any restrictions.
Carrol Chang, Uber’s head of driver operations, asked executives to ferry passengers and food to learn about drivers’ grievances
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To make some destinations more attractive, the company needed to change the way it calculated driver pay. Uber started measuring real-time demand at drop-off locations, to add to time and distance, in factoring pay. Drivers were paid more if they took passengers to areas that were unlikely to bring new rides, such as secluded neighborhoods.
Driver Danny Jacob dumped Lyft after Uber introduced pay and destinations disclosure in Chicago in September. He said the ability to see where he was going and the value of the ride was liberating, and Uber kept him busier because he could switch between rides and food delivery. Mr. Jacob said Uber still has a long way before it can call itself driver-friendly but the move signaled that it was willing to listen “after years of us banging our heads against a wall.”
Driver engagement at Lyft dropped after Uber’s summer rollout, according to people close to Lyft. The company’s product managers scrambled to match Uber’s changes, replicating many features months later.
Other Uber executives were driving, too, and coming up with improvements. Sachin Kansal, Uber’s product head, found the company’s maps could be difficult to read while driving. Arrows marking turns were in colors that made them hard to see when sunlight reflected off a phone’s screen. It was simple to fix—but hadn’t come up when he tested maps in the office.
Mr. Khosrowshahi said the industry had ‘taken drivers for granted.’
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“The devil is in the details and they really matter,” Mr. Kansal said.
Another fix: He forgot a customer’s mango lassi once, leading to a new feature that reminds couriers when drinks are paired with food.
Interacting with riders also showed Mr. Khosrowshahi how difficult the job could be for drivers. Some experiences made him feel slighted, such as when riders discussed personal problems and company secrets on speakerphone, as if there was no one else present.
One passenger recognized the Uber CEO and asked for advice on his startup. Mr. Khosrowshahi said most riders haven’t recognized him, though, and have collectively given him a five-star rating. He said he gets nervous the nights before he drives, out of concern that his rating might dip the next day.
He said he tries to keep riders happy by offering iPhone and Android charging cables and by playing music from the dozens of Spotify playlists that he has curated for his wife, Sydney. His latest driving playlist, named Syd 28, includes songs from Taylor Swift, Australian DJ Flume and rock band The National. Mr. Khosrowshahi is nearing 100 rides and deliveries on Uber.
New safety features
In October, Uber trained its maps to avoid left turns at accident-prone intersections and started testing in-app video recordings of the car’s interior, a safety feature drivers had asked for amid rising crime against gig workers.
Some consumer privacy groups worried about misuse of the feature. Mr. Kansal’s team encrypted the footage, which meant that drivers couldn’t view or store it. Uber would review the video if a safety incident was reported.
Downloads of Uber’s driver app in the U.S. more than doubled in 2022 compared with 2019, according to analytics firm Data.ai. Lyft’s U.S. driver downloads grew 67% over the same period.
Uber and Lyft don’t disclose the number of U.S. drivers they have. Globally, including the U.S., Uber’s ride-share drivers bounced back to pre-Covid levels in September, and it ended 2022 with a record number.
From its maps to driver safety tools, “Uber was one step ahead of Lyft,” said Sergio Avedian, a driver who writes about the business on The Rideshare Guy blog for gig workers.
Drivers said they still want higher pay and are concerned Uber will change its policies when it isn’t hard-pressed for labor. The company is already pulling back on some bonuses, Mr. Avedian said. A recession could leave Uber with a surplus of drivers as consumers look to save money, he said.
Uber has said more drivers are turning to the app as they look to make extra money because of growing economic uncertainty, but that rider demand is holding up so far despite challenging macroeconomic conditions. It said it has wound down some bonuses but that its attention to drivers’ needs will continue.
It is working on new safety features to boost the number of female ride-share drivers and designing more efficient ways for drivers to receive ride and delivery requests at the same time. The company started giving drivers weekly summaries on how fares are divided, showing them how much the company kept and what went to tax and other charges, and said it plans to do more.
“Historically, we’ve always put a premium on the rider experience,” Mr. Khosrowshahi said. Being a non-founder CEO allowed him to challenge old decisions, he said. Uber needs to win the “hearts and minds” of drivers, too, he said.
Write to Preetika Rana at preetika.rana@wsj.com
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Appeared in the April 8, 2023, print edition as 'Uber’s CEO Shifted Focus After Stint Behind Wheel'.
What Happened When Uber’s CEO Started Driving for Uber - WSJ |
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