Dara Khosrowshahi is investing billions in the infrastructure for autonomous driving. He announces the start in Munich - and wants to reduce prices and win new customers with robotaxis.
Uber boss Dara Khosrowshahi: “It will take seven to ten years to achieve real profits.” Photo: Getty Images (2), PR
Munich. Dara Khosrowshahi's appointment calendar reflects how important Europe has become for the group: Last week, Zagreb was on the agenda, then he visited Delivery Hero's headquarters in Berlin - the delivery service is currently being taken over by Uber. And Khosrowshahi is at the head of the mobility group.
The Handelsblatt finally meets the top manager on the sidelines of the “Bits & Pretzels” technology conference in Munich, dressed in a traditional jacket appropriate for Oktoberfest. And in the conversation, Khosrowshahi goes into raptures when it comes to the opportunities in the German market.
Mr. Khosrowshahi, when will the first Uber robotaxis drive in Munich?
We are about to start our pilot operation for autonomous vehicles in Munich. To achieve this, we work with our partners Momenta and Autobrains. Initially there will be limited pilot projects with a safety driver. We want to make sure that we train the vehicle so that it can move safely through the streets of Munich. Safety is of utmost importance to us.
And when are customers allowed on board?
We don't want to rush anything so that we meet our high standards. We first want to open the pilot operation with a driver to a select group of users and then make it more widely accessible via Uber. Only when we are completely confident in the capabilities of the vehicles will we withdraw the safety driver. We have already done this in parts of the Middle East, such as Dubai.
They also have pilot projects in Zagreb and London. What experiences have you had so far?
I just came from Zagreb. I've already driven there without a driver, it was very special. We believe that we now have the capability for driverless operation there. We assume that we will be able to let the robot drive alone in Zagreb next year. It is a partnership with Verne, a Croatian company, and the company Pony AI, which provides the autonomous driving technology.
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What are the biggest challenges before you can start regular operations?
One challenge, of course, is ensuring that the autonomous vehicle is safe. However, I wouldn't call this an insurmountable challenge. There are also investments in infrastructure.
Vita Dara Khosrowshahi
The now 57-year-old was born in Iran and fled the Iranian revolution with his mother in 1975. He grew up in the USA and studied electrical engineering and electronics at Brown University in Providence. He started his career as an investment banker at Allen & Company. In 2005 he became head of the travel booking portal Expedia. In 2017 he joined Uber as CEO.
Uber was founded by Garrett Camp and Travis Kalanick in 2009 as a limousine service in San Francisco. Ten years later the company went public. Today, the company, with 30,000 permanent employees, generates sales of $52 billion as a ride-hailing and delivery service. Uber recently made a takeover offer for its German competitor Delivery Hero.
What exactly do you need in terms of infrastructure?
Uber partners not only own their car, they clean, repair, and charge it. We need to build specialized infrastructure for autonomous vehicles. In this way, we will create many new jobs in Germany with the robotaxis. We are investing billions of dollars in vehicles, depots and the infrastructure necessary for autonomous operations.
Won't technology eliminate many drivers' jobs?
On the contrary. More than ten million people earn money on our platform. Our business is growing by more than 20 percent. I therefore believe that the number of people earning income through our platform will even continue to increase over the next five to ten years.
Will autonomous vehicles form the core of your fleet in a few years?
That depends on the respective city. I think it will take some time. These vehicles are quite expensive. The costs per kilometer driven for an autonomous vehicle are now significantly higher than those of a human driver. So it will take time for the technology to scale and costs to come down. For the foreseeable future, many people will continue to drive and make deliveries with Uber.
Will your business eventually become more profitable with autonomous vehicles than with human drivers?
The next five years will initially not be about profit, but about security and growth. And when technology enables mobility at lower costs, we want to lower prices for customers.
Your shareholders won't like to hear that.
Yes, we are a listed company and optimize for profit. But we also want to expand the scope of our business. Autonomous driving can contribute to this. We have a booking volume of more than $200 billion. Today, people from the middle and upper middle classes in particular can afford our service. We want everyone to be able to use it.
Now to be specific: How long will it take for this business to be profitable?
I think it will take seven to 10 years to see real profits when infrastructure costs are taken into account. Even with Uber's traditional business, it took years before we were profitable - probably ten years. Today we generate free cash flow of ten billion dollars per year.
Currently you are competing with taxi drivers. With autonomous vehicles, your main competitors would be Alphabet subsidiary Waymo and others. Will this make competition tougher?
Taxi drivers used to be our competitors, but today we work with many of them. There are now around 10,000 taxi drivers in Germany alone on the Uber platform. The taxi business is one of our fastest growing business areas. It's similar with autonomous driving: we work with Waymo in Atlanta and Austin. In other cities, we will introduce technologies that compete with Waymo. Ultimately, the world will not be black and white.
They work with quite a few technology companies, around 30 autonomous vehicle providers alone. What is the strategy behind it?
This is a core competency of our company. We are building a platform that brings together offers from the real world. We work with more than a million restaurants and more than ten million drivers and couriers worldwide. Working with 30 partners is therefore not complicated for us – even if it may seem like it.
How would you describe your role in this area?
We bring together supply and demand for mobility and the delivery of a wide range of goods. More than 200 million customers use our services every month. If the takeover of Delivery Hero is successful, another 50 million customers will be added. We bring this demand together with our partners: drivers, couriers, restaurants, grocers and increasingly retailers around the world. Nobody in the world can do that on this scale.
German car manufacturers are very important. They are leaders in engineering and quality. Dara Khosrowshahi
How big is the risk that Uber becomes dependent on its technology partners for autonomous driving and that they end up poaching customers away from you?
We certainly depend on our technology partners, as we do on our partners in grocery and other sectors. However, we do not believe that a single company will master this technology. There are several providers in the USA: Waymo and Zoox, for example. Nvidia is also investing in the technology. Companies like Nuro and Avride are also promising. Outside the USA, among others, Pony AI, We Ride, Baidu and Wayve in Great Britain are working on the technology. We assume that a balanced ecosystem with multiple providers will emerge. The market is big enough for that.
How important are German car manufacturers as partners in this business?
German car manufacturers are very important. They are leaders in engineering and quality.
But they also build comparatively expensive cars.
Of course, in the world of autonomous driving there will be many customers who are primarily looking for the lowest price and reliability. But there will also be customers who value German engineering, sophistication and quality and are prepared to pay more for it. That's why we're partnering with Mercedes and actively working with Volkswagen to bring more of their cars to our platform.
Isn't this just a niche?
The premium segment of our fleet with human drivers is one of the fastest growing areas. We recently announced the acquisition of Blacklane, a Berlin-based company, to expand this premium segment. There is a market for comfort and high-quality equipment - and this will certainly also be the case for autonomous cars in the future.
They are investing billions in autonomous driving. At the same time, you want to take over Delivery Hero for 13 billion euros. Some would say: This is traditional delivery business and not a particularly exciting technology. How does that fit together?
When I started at Uber, the delivery business represented less than 10 percent of our total business. Today it is almost 50 percent. I think it will be bigger than our mobility business. Whether you call it traditional or modern, I think it's an attractive business.
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What exactly will the takeover of Delivery Hero bring to you?
Delivery Hero has excellent talents. The team in Berlin is strong, and we have pledged to invest two billion euros in our German business, our employees and other collaborations in order to continue to grow. Delivery Hero operates in 60 countries – a very international business that we value. The company has a strong presence in the Middle East, as well as Latin America and Southeast Asia.
One key difference is that you only have one brand, Uber Eats, while Delivery Hero operates many brands. Do you want to keep these brands?
We haven't completed the takeover yet and have therefore not made a decision yet. We first want to understand the company better and find out what the strengths of its multi-brand strategy are compared to our single-brand strategy.
What is unusual is that the company has its headquarters in Germany but does not have any operational activities in this country.
We can change that. Uber operates very extensively in Germany.
Delivery service driver Uber Eats: “I think it’s an attractive business.” Photo: dpa
What role could Delivery Hero’s German headquarters play in the future?
Delivery Hero has built large local teams that have developed the respective local brands. At the same time, there is a significant centralized presence in operations, analytics, product and technology. This team will play an important role in our technology and local strategy going forward.
You can now also book hotels using the Uber app. What are your plans? Should this become a super app that can do everything?
Uber started locally: you could get a ride anywhere within your own city. Travelers now use Uber worldwide. The first thing many people do at the airport is open their Uber app. We therefore want to expand Uber’s services to international travel. Hotels are a start. We now also offer train tickets in Great Britain and Spain. As we expand our mobility and delivery offerings and become an everyday service for more people around the world, this could be a major business opportunity for Uber.
We can become the leading technology company building for the real world. Dara Khosrowshahi
How important is the German market for Uber?
He is becoming more and more important. When I started at Uber, we were not yet represented in Germany. This frustrated me quite a bit, but over the years we have invested. The German market is now one of our most important. Tens of thousands of drivers, taxi drivers and couriers are now on the platform and more than 20,000 dealers.
What growth opportunities do you see here?
If you compare the proportion of Uber users in Germany to the total population with that in Great Britain, they are only a small minority here - less than a fifth of the proportion in the United Kingdom. For us, the German market is still in its early stages.
Many people in this country do not share this optimism.
I believe that the potential in Germany and Europe is enormous. The talent base is outstanding and we are investing in it. We have great leaders here in Europe. While some people focus on the negative, I look at the positive and the opportunities we have here.
What kind of company will Uber be in five years?
We can become the leading technology company building for the real world. Many technology companies operate primarily in the digital world; they develop search engines or AI applications. Uber is unique in that we are an important part of people's lives, not just their digital everyday life.
