Dara Khosrowshahi has spent the last year pitching to the public and regulators a more responsible and better behaved Uber as the car-booking company seeks to move on from a tumultuous series of scandals and boardroom drama.
Entering his second year as chief executive, Mr Khosrowshahi has to tell a new story to a different audience.
As Uber gears up for what is expected to be one of the tech world’s biggest public flotations, its leader says he will focus on demonstrating the long-term value of a business whose investors will be asked to shoulder big investments and hefty losses for the time being.
“I think the real trade-off is going to be between profitability and growth, especially as a public company,” Mr Khosrowshahi said in an interview at Uber’s San Francisco headquarters.
“The fact is, because of the addressable market here, there’s been a huge amount of capital invested in this space. That investment is going to have to come with return over a period of time,” he said.
The key phrase is “over a period of time”. Mr Khosrowshahi, whose mandate upon joining Uber included setting a timetable for an initial public offering, must now convince investors that delaying profits in order to ramp up investments will result in an even bigger pay-off down the road.
Silicon Valley entrepreneurs frequently complain that public markets are too focused on short-term profits at the expense of long-term prospects. Uber’s anticipated public debut will break a long streak of big tech companies that have achieved eye-popping valuations from private investors while remaining shielded from pressures to translate outsized revenue growth into profitability.
Mr Khosrowshahi said he was confident Uber had a “compelling” story: ploughing money into bets beyond car-booking will pave the way for a portfolio of multibillion-dollar businesses, from food delivery to bikes and scooters to freight brokerage, that the market will deem “very valuable”.
Dressed in a dark sweater over a plaid collared shirt, the bearded 49-year-old is relaxed by typical corporate standards but still a bit formal among the casually clad population of Uber’s open-plan main office. The former Expedia chief’s measured tone suits the role he was hired for last summer: to calm the waters after 2017’s turbulence culminating in the ousting of Travis Kalanick, his predecessor and one of the company’s founders.
Mr Khosrowshahi has notched some notable achievements in the past 12 months, including filling holes in Uber’s top management team, pulling out of lossmaking markets, winning back its licence to operate in London, and settling a messy lawsuit with Alphabet’s Waymo. He finalised a big investment led by SoftBank, undertook sweeping governance changes on the once-fractious board, and recruited a seasoned executive, Ron Sugar of Northrop Grumman, as independent chairman.
He has also taken steps to heal deep fissures inside the company after allegations of a sexist and toxic culture under Mr Kalanick. The company is paying $10m to settle pay discrimination claims from hundreds of current and former employees, including $1.9m earmarked for harassment allegations.
Uber is still grappling with workplace issues, however, including the resignation of its human resources head, Liane Hornsey, following complaints over how she handled employee grievances. One of Mr Khosrowshahi’s own hires, chief operating officer Barney Harford, has been accused of making insensitive comments about women and minorities.
The Uber chief said his entire executive team has gone through diversity and inclusion training and the company has begun reporting about its efforts to staff monthly.
“The internal work on culture remains incomplete. And the fact is that it’s going to take years,” Mr Khosrowshahi said. Uber is also still the subject of multiple federal investigations over gender discrimination, price transparency, foreign bribery and other matters.
Still, Bill Gurley, whose venture firm Benchmark is one of Uber’s biggest investors and who was involved in the messy battle to replace Mr Kalanick, said Mr Khosrowshahi had checked off the first critical task of Uber’s new chief executive: “You have to put to bed the issues.”
Now Mr Khosrowshahi can turn his focus to strategy and growth “like any other CEO”, Mr Gurley said. “Most of the clean-up work is behind him at this point.”
Mr Khosrowshahi made one of his most consequential moves last week when he named Nelson Chai, a Wall Street veteran, as chief financial officer, following a lengthy search for a position that has been unfilled since 2015.
Mr Khosrowshahi, who also has a background in finance and was previously chief financial officer at Barry Diller’s IAC, has brought financial discipline to Uber, narrowing its losses and brokering an exit from south-east Asia that left it with a $2bn stake in rival Grab.
Uber lost $4.5bn in 2017 and is still far from profitable, however. Mr Khosrowshahi has vowed to keep investing in new ventures as part of his aim to make Uber a transportation hub for car rides, bike and scooter rentals and even public transit, reminding investors that big bets are necessary to conquer the market Uber is aiming for.
“There’s a $6tn mobility market, and no one product is going to be serving that whole market,” he said. “The ultimate competition here is car ownership, and boy is that a big market to go after.”
He is also continuing a push by Mr Kalanick into transporting not just people but things. Uber Eats, its food delivery service, is growing at 200 per cent year on year and expected to reach annualised revenues of $6bn before year-end. Mr Khosrowshahi said he expected to increase investment in Eats over the next two to three years.
Uber hopes to repeat that model with Uber Freight, its brokerage that matches cargo shippers with truck drivers, which is on pace to generate $500m in revenue in the next 12 months.
One big question for investors about Uber’s cash-intensive investment strategy concerns its autonomous driving efforts. Earlier this year, a self-driving Uber car struck and killed an Arizona woman, in what was believed to be the first pedestrian death involving autonomous technology. Uber suspended its public road testing and, while it is planning to return to the road, will do so at a much smaller scale than before.
Mr Khosrowshahi said he is committed to investing in self-driving technology while also open to partnering other companies working in the field, even as some observers question whether it makes sense for Uber to continue the project at all.
Mr Khosrowshahi said he was willing to make cuts where necessary, emphasising a “disciplined” approach thanks to his financial background. The company’s investment committee holds monthly reviews, on top of strategic evaluations taken quarterly.
“One of the core tenets of innovation and making bold bets is also being willing to kill things that aren’t working,” he said. “In this business things change so fast that everything’s got to be on the table.”
On the whole, he said, “there haven’t been any decisions that I’ve agonised over. I think that while we haven’t gotten everything right, I like where we stand, and when I look back on the year, if next year can be like this year, then I consider that a victory.”
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