Uber (UBER) CEO Dara Khosrowshahi said Tuesday that President Donald Trump’s trade tactics hurt the company’s initial public offering.
“The timing of our IPO was very much aligned with our president's tariff wars – the same day. So I think we got caught up in a bit of market swirl, and there’s nothing you can do about it,” Khosrowshahi said at an Economic Club event in Washington, D.C.
“If we work on building a great enterprise, the market will take care of itself,” said Khosrowshahi.
Uber Technologies Inc. CEO Dara Khosrowshahi, (C) Chairman Ronald Sugar (L) and Board Member John Thain (R) stand together on the trading floor of the New York Stock Exchange (NYSE) during the company's IPO in New York, U.S., May 10, 2019. REUTERS/Andrew Kelly TPX IMAGES OF THE DAY
Uber reported a loss of $1 billion in its first quarterly earnings since its market debut, in line with analysts’ expectations, and total revenue of $3.10 billion. Investors punished the stock for weeks after its IPO as, like other big tech companies going public this year, Uber has no immediate path to making money in a hyper-competitive sector.
When pressed on how long the company can continue to lose money, Khosrowshahi said the ride-sharing giant is “incredibly well capitalized” in order to keep investing.
“We think it’s time to lean forward. The business itself can be quite profitable — we’re confident about that — but the next 2 to 3 to 4 years are about growth,” he said.
Autonomous vehicles and helicopters
Uber plans to soon offer helicopter rides from lower Manhattan to JFK Airport, through its “Uber Copter” business.
Khosrowshahi said he eventually wants the pricing of the helicopter service to be accessible to the masses. He said the trip from lower Manhattan to JFK will cost about $200, which he says is comparable to the price of taking an Uber Black car.
“The magic about being able to do it in a helicopter, is we’re bringing in demand from thousands of users who are going to JFK and we’re matching 3-4 users and we’re putting them in the same vehicles,” said Khosrowshahi. “Essentially what Copter is, is Pool for the air. What we see is that these helicopters are going to be replaced by a generation of electrically powered vertical take-off and landing vehicles,” he said.
Khosrowshahi said Uber Copter will “absolutely” start with pilots flying the helicopter, but they could eventually be autonomous.
The CEO said he expects some sort of autonomous vehicles to be on the road in the next five years, and predicts it will be much longer before there are no drivers at all.
“There are a set of routes that are incredibly easy to drive,” he said. “We will get the machines to do the simple stuff and we’ll have the humans do the difficult stuff. The two are going to coexist for 10-15 years, for a longer time.”
Departures of the COO and CMO
Last week, Khosrowshahi told employees the company’s chief operating and chief marketing officers are departing Uber. Khosrowshahi plans to oversee the core functions of the company.
“I really wanted to get closer to the company and organize the business in a bit more of a business unit basis,” said Khosrowshahi. “I think circumstances change. “You really have to consistently take a look at building your team based on what it looks like for the next five years.”
Graphic by David Foster/Yahoo Finance
Khosrowshahi is not replacing the outgoing executives, but promoting two longstanding executives to fill those responsibilities.
“These are changes that we made – they’re tough changes, but they’re absolutely the right changes for our company for the next 3-5 years,” said Khosrowshahi.
Working with Travis Kalanick
Khosrowshahi admitted it’s a little awkward working as chief executive of Uber, while his predecessor and Uber’s cofounder, Travis Kalanick, is still serving on the board.
“Is it weird? Yes,” he said. “Are we in a situation where we are respectful, comfortable and he’s there for me when I need his advice? Yes.”
Khosrowshahi relates to Kalanick, he said, because he still sits on the Expedia board — where he used to be CEO.
“Being the former CEO, it’s a little weird sitting there and having someone else do something differently with your baby,” said Khosrowshahi. “I think Uber feels like Travis’s baby and Expedia felt like mine.”
When asked about how long he’d like to stay at Uber, Khosrowshahi said he took the job at Uber expecting to be in the role for the next five to 10 years — but he has not thought about his next steps.
“Right now, I’m 100% focused on the job at hand,” he said.
Other highlights from Khosrowshahi’s appearance
Regulation: According to the CEO, the “increasing regulatory burden” is Uber's biggest challenge.
“There is an increasing regulatory burden that is coming on some of the tech companies — some of it deserved,” Khosrowshahi said. “Making sure you’re able to build a business, but then build a business within the context of the cities in which you operate, the regulators with which you work with, for us, our driver partners... balancing all of those needs and being a public company is a challenge.”
Graphic by David Foster/Yahoo Finance
Scooters: Khosrowshahi said Uber wants to come up with alternatives methods of transportation that are more environmentally friendly. He says Uber is working on technologies to prevent injuries, like slowing the scooters down when they get to busy areas of a city. The company is working with cities to determine how fast is an appropriate speed.
“When you deal with people in the real world, sometimes accidents happen and you have to teach your users to be as responsible as possible and this is a new mode of transport and I think over a long period of time, people will learn,” said Khosorowshahi.
Uber Eats: Khosrowshahi says Uber Eats represents 20% of Uber’s bookings. He says there are people within the company who believe Uber Eats could become as big as the ride-sharing business. He says the average delivery takes 30 minutes and the average order in the United States is $20-25.
Driver pay: How much a driver makes depends on how often and where they drive. Khosrowshahi says the average Uber driver is in their forties and 70-80% of them drive part-time. Typically, he says drivers make $20 an hour. Most riders do not tip, though he says the number of people tipping is increasing.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.
