Uber lost a mind-boggling $US5.2 billion ($7.7 billion) last quarter, but the company’s CEO, Dara Khosrowshahi, is still optimistic that Uber will be able to make money one day. Khosrowshahi sat down with Bloomberg Technology reporter Emily Chang this week and kept insisting that Uber has the ability to turn a profit, despite widespread scepticism from people who keep shorting the company’s stock since it went public back in May.
This new interview really deserves to be placed in a time capsule to watch 10 years from now. Either Khosrowshahi will be proved right and this interview will look very prescient, or he’ll be proved wrong and Uber will be a punchline about failed companies of the 2010s.
It’s hard to imagine any middle ground, and Chang really does an admirable job of asking Khosrowshahi over and over again how Uber plans to be profitable in the future.
Chang: There have been bumps on the road, and despite all the negative stories, Uber, Lyft, ride-sharing companies, have been transformational. The big question for you is, can Uber be as transformational over the next decade, as it has been over the last decade?
Khosrowshahi: I think so. Really what Uber has done is brought transportation and opportunity at this point to what we believe is a small segment of the population. Listen, we’ve got over four million driver partners all over the world, which is a huge number and it’s unparalleled. But we want Uber to be available to everybody. And what we’re doing now is going into the next step of introducing other transportation choices to Uber.
We’ve always gone with Pool, but for example we’re testing buses in Cairo now to even bring the price of Uber down to the next level… a dollar, a buck 50, etc. We’re introducing bikes and scooters for personal electric mobility so that essentially, any way that you want to get around your city, we’re going to be there for you.
It’ll be mostly Uber goods, but we’ll also have third parties such as Transit, such as Lime is one of our partners as well. Any way you want to get around, we want Uber to be there.
But Chang wouldn’t let him get away with simply saying that they were going to grow. Any company can grow if investors keep throwing piles of money at it. Growth doesn’t do you any good if your business is losing money with every transaction. She kept asking over and over again when Uber might make a profit and Khosrowshahi didn’t really have great answers.
Chang: You’ve said Uber can be profitable, but how confident and how quickly can Uber be profitable? How confident are you that Uber can be profitable and how quickly?
Khosrowshahi: I’m very confident. I think the losses we reported, it was a $5 billion loss from an account perspective. If you live in accounting world, that’s a big loss. I live in the real world.
Khosrowshahi went on to explain how Uber wasn’t actually losing money in the “real world”, which is a bit hard to swallow, but they moved on. Khosrowshahi insisted that he was going to be “demanding” his employees “to be doing even more with less”.
Chang: So is pricing the main lever that you pull to profitability or are there other drivers?
Khosrowshahi: Scale, scale. It’s getting big when you’ve got over a billion rides per quarter and you’ve got trips growing at 35 per cent on a year on year basis. We think we can use technology to be much more efficient.
For example, instead of now you’re having to email a call centre agent or call a call centre agent if you have issues, you can just do it in the app. These are technology innovations that allow customers to have a better experience, and at the same time they bring down costs.
So the combination of growing topline still over 30 per cent, technology innovation to delight the customer and take costs down at the same time, and then good old fashioned efficiency, making sure that our corporate costs down grow as fast as our revenue. All of those together give you a formula to get to profitability.
Uber lost $US3 billion ($4.5 billion) in 2016, $US4 billion ($5.9 billion) in 2017 and $US3 billion ($4.5 billion) in 2018. The company is haemorrhaging money and it’s hard for many outsiders to figure out how that can stop. Khosrowshahi insists that Uber can be profitable through more “good old fashioned efficiency”.
If you’re reading this in 2029, only you know how it all worked out for Uber. You also know how it all worked out for other pressing issues here in August of 2019 — such as Brexit, the global rise of fascism and climate change.
It sucks to be alive in 2019, but we can only imagine how bad things are going to get for the next decade.