How Uber Plans to Win the Self-Driving Car Race

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0:42Tell us about the first time you rode in a robot car. I'm just curious what your experience was like. I thought that it would be a little bit scary. I was just looking around. The steering wheel was moving. People were staring at the car as well as at me. But I'll be honest, After five minutes, it was kind of boring. And it was very clear to me that, look, this is going to be a very important part of the future of transportation. This week on Bold Names, Sachin Consul, he's the chief product officer at Uber, where he thinks about a lot of things, but especially these days, self-driving cars. Uber's getting into the robot taxi business again, this time with a new strategy.

1:28It's partnering with the likes of Alphabet's Waymo and other autonomous car vehicle companies. It's getting those robot cars in its app, that ever-expanding Uber app that wants to do everything in your life. So we talk about the future of transportation and what this could mean even for the future of car ownership itself. From the Wall Street Journal, I'm Tim Higgins. And I'm Christopher Mims. This is Bold Names, where you'll hear from the leaders of the bold name companies featured in the Wall Street Journal. Today we ask, how is Uber preparing for a driverless future?

2:04We're so glad you could come here today. It's been a big few years for Uber. You've announced some big partnerships with the likes of Waymo for autonomous vehicles and some other smaller players like Maymobility. But first, I think we should step back and talk about how we got to this moment. This isn't Uber's first foray into robot cars. A handful of years ago, the company also was pushing into this space. What's different today? What's different today is that we are building a technology platform. So rather than being a software provider that is building its own AV tech and running a vertically integrated service, We are a platform now which has built both demand generation as well as a hybrid marketplace into that platform.

2:53And we are working with 20 different partners in mobility, in delivery and in freight worldwide. And you pivoted because trying to build your own robot car was troubled, right? It was becoming super expensive. There was a deadly crash in 2018. A 49-year-old woman was struck and killed in this intersection in Tempe, Arizona. Police say the Uber vehicle was operating in self-driving or autonomous mode. Today, Uber suspending testing of self-driving vehicles. This was maybe something you all didn't want to get into as deeply as you once thought. We had to make many choices as our business evolved.

3:35COVID happened. There's a lot of impact to our business. and at the same time when you think of both the amount of cost that it involves but also there are pros and cons of being a vertically integrated player. So now what we are doing is we're actually working with companies that are all over the world. We have signed about 20 partners at this point. We have deployed with many of those partners. We have deployed with Waymo in Austin, Atlanta and Phoenix. We have deployed with the likes of V-Ride in the Middle East. It's been a great journey so far and we think that the next few years is going to be fascinating as the number of partners that are deployed grows, the volume grows both on the mobility side as well as the delivery side and our goal is to A, make sure that it is safe because safety is paramount and we have developed sort of a framework which we use to evaluate all the partners that we put on our network and then eventually for us to be able to provide a great user experience.

4:35A lot of users are going to have their first AV experience on Uber. That's already true in cities like Austin, Atlanta, even in the Middle East. Why did you pivot to this partnership approach? We think that there are many, many companies in the world that are building their self-driving technology. And the value that we bring is to be able to provide a platform. and we should talk a little bit more about the platform. This platform is not just a demand generation platform. Of course, we're doing about 36 million trips every single day. So there's a huge amount of demand that we bring to this platform.

5:16But what we also bring is what we call a hybrid marketplace. The hybrid marketplace, meaning that on the same platform, we have AVs, but we also have human drivers. What that allows us to do is to provide the right kind of utilization of all of these assets. These vehicles are expensive, and we need to make sure that they are utilized to the maximum possible, but also being able to manage through the peaks and troughs of demand that we see. The number of vehicles that you need at, say, 8.30 a.m. on a weekday is very different than what you may need at 3 p.m. on that same day as well. So us being able to offer a hybrid of autonomous vehicles as well as human drivers just allows us to balance that.

6:03We already balanced that in our core product today. And we have a pretty evolved mechanisms to make sure that the right number of drivers are on the road and they are in the right places. And that is the kind of value that we bring to AVs as well. Let's focus on Austin for a moment, Austin, Texas, where in a lot of ways, This is a kind of a battleground experiment among a lot of companies doing robot cars. And first of all, how many Waymos do you have in your network in Austin? We have more than 100 Waymos now in Austin. The future of driving through Austin is here, except it comes without a driver.

6:41Uber announcing it's launching driverless cars with partner Waymo in Austin. This really underlines a willingness by Uber to partner with major competitors as it tries to fend off others in this space, namely Elon Musk's Tesla. How does this work for the user? It's a great question. So you open the Uber app and then our hybrid network and our platform makes a decision on whether we should send you a human driver or whether we should send you an AV. So it's not the passenger saying, I want to have a robot pick me up. It's the network is deciding what's the availability. Yeah, I'll explain. So we basically offer them a choice.

7:16We will look at the to and the from. We look at the availability of the AVs as well as human drivers. And we will figure out, based on some models that we have built, on how long would the user have to wait extra if they got an AV? How much will they have to walk extra if they got an AV, both at the pickup point as well as the drop-off point? So based on those, you know, heuristics or models in our platform, we will make a decision to send them an AV. And at that point, you know, their app will pop up and say, an AV will come to pick you up. Do you want to opt in or not? Because we are still at a stage where we want to give the users a choice.

7:57At that point, if they don't want an AV, they can say no. But what we are seeing is increasingly month over month, the number of people, the percentage of people who are saying yes to an AV is actually growing as they get more and more used to it, both because they may have been in one before and also they're just seeing them around and overall the city is getting used to them. What is the reason for people to choose an AV? I mean, it's clear why these are good for you, ultimately in terms of labor costs. But beyond the novelty factor, why do you think riders are choosing these? I think different riders have different reasons.

8:32There's definitely, you could say there's a novelty factor initially, but there are folks who like the fact that these are electric cars. These cars are newer. These cars are cleaner. There's some folks who want to be alone in a car as well. So I would say there's one of the things that we have learned through our core business over time is both on the demand side as well as on the supply side, meaning amongst our drivers as well as riders, there's a lot of heterogeneous preferences. Not every rider is thinking the same thing. They're not wanting the same thing, which is why even in our core product without autonomous, you have multiple options.

9:10You have UberX, you have Uber Comfort, you have Black, you have SUV. And each of those has some trade-offs, could be based on price, could be based on ETA. So we think that people have their preferences. Those preferences could change by person. The preferences could also just change by time of day, by location, and so on. So as a result of that, many of them opt in. So what's the feedback been from users of these vehicles, of these robot cars? Are they able to give it five stars or do they tip? How do you know if they like it or not? Well, they're not tipping the robot, but they're definitely giving feedback.

9:50I would say they're giving feedback in two different ways. One is they can do star rating and we're getting 4.9 stars. 4.9, that's pretty good. The robot gets nearly five stars. Yeah, we have a lot of volume now. We have, you know, overall on our entire platform, we are doing on an annualized basis millions of trips. But in Austin, we have done a lot of trips as well. So we have a good amount of data. And then the second way that you could say they quote unquote vote is the opt-in rate as well as the cancel rate. And both of those numbers are very, very good. So I think all is to say that the user acceptance of this is very good.

10:29And this is where I would mention, it's not just about us offering our platform as a demand generation platform, but there's a lot of things that we have built into our app, which you would see if you were in Austin or Atlanta and you match because the whole user experience now changes because there's no driver to guide you. When the car comes, how do you open the door? How do you start the trip using the app? If in case something goes wrong and you want to pull over, how does that happen? So there's a lot of things that we have built, of course, in partnership with, in this case, Waymo, but a lot of other partners as well.

11:04And we have a fully dedicated team that is focused on looking at the user experience, getting feedback from users and improving it. After the break, how does Uber keep its AV partners like Waymo from eating its own business? We are in a very early stage of this industry. And what you're going to see from us, from likes of Waymo and many other partners, is everyone's going to experiment with different models. That's next.

11:40I'm really curious how the business structure works here. Can you give us any insight into what your relationship is with Waymo? Who's paying whom, if anything? I would say we are in very early days. So, you know, we have different kinds of business relationships with a lot of our partners. And while I can't speak to the specific, you know, agreement that we may have in this particular case, in general, what I would say is this is an ecosystem play. It's an ecosystem play where we want to drive value to the network provider, which is us, to the vehicle provider, as well as, of course, to the software provider and the technology provider, as well as there's a fleet management aspect to it as well.

12:25So we feel very good about where things are evolving such that all parties can derive some value from it. But at this point, we are not really obsessing over that. What we want to make sure is that we can manage these vehicles on our platform and we can provide a great and a safe user experience to our end users. This is going to be a long game. And I would say we are in a very, very early stage of this long game. And over the next three to five to 10 years, as this world evolves, the most important thing for us is that we as a platform, both to our end users, as well as to our partners, such as Waymo and beyond, we show up as someone who's contributing and helping them derive value from this asset.

13:08But just to talk brass tacks, I mean, as I understand it, you get a cut of the driverless taxi bookings, obviously that could change in the future. But that implies that for now you have the customer relationship and Waymo is just another driver on your platform. The structure of the relationship would vary and could be different, but you're right. In this particular case, it is the Uber app and the user is paying us. So we are sort of, you know, taking, you know, we are the merchant of record, if you will. And then it's up to us then to share, you know, the economic outcome of that with our partners, which in this case is Waymo, who's operating the fleet both in Austin as well as Atlanta.

13:56Let's talk a little bit more about Waymo because I'm here in San Francisco. I think you are headquartered in San Francisco as well, though I know you travel a lot. And the situation is a bit different. Waymo has its own app. I see Waymo's on a regular basis every day. I just saw a few when I was out walking the dog. And there's new data that's showing that Waymo has really captured a lot of the rideshare market in San Francisco. Perhaps there's some estimates out there, maybe a quarter of that in under two years. Is this a frenemy situation? On one hand, you're working, your partners in places like Austin, Atlanta, but on the other hand, what's keeping them from just launching their own app and eating your business?

14:41I think absolutely. We are a strong partner of theirs in Austin and Atlanta, and we are in a way competing with them in San Francisco. And that's not very unusual as industries evolve. We are in a very early stage of this industry, And what you're going to see from us, from likes of Waymo and many other partners is everyone's going to experiment with different models. Who owns the vehicle? Who runs the service? Which app is used? What we are focused on is we want to provide the best platform. And I would say that in the ride sharing industry today, we are providing the best platform. And we want to be great partners.

15:23and we become great partners by providing a great user experience as well as great utilization to the vehicles. There's a lot that goes in in trying to make sure that these vehicles that let's say have a total of 24 hours to make sure that uptime is maximized because they have to go back, they have to get charged and so on. Their positioning, where should they be positioned in the city, that is optimized so that the revenue generating time and the revenue generating miles for any particular vehicle are maximized. That uptime thing, I think, is important, right? I mean, these are vehicles, estimates are, they cost maybe$200 ,000 each with all the software and sensors.

16:06Those sensors are very expensive. Now, that's probably going to come down in time, but right now they're expensive and you want to make sure if you're using them, you're deploying them, They're being maximized, right? But you also don't want to have too many of them, I would imagine, if you're a company. So this hybrid approach that you're talking about, I imagine that's kind of the big sell to a company like Waymo, that they can kind of put a number of vehicles out there and kind of maximize their ROI on that. That's absolutely one of the biggest ones, Tim. if you think about it, for anyone to have enough cars on a Friday evening at 6 p.m.

16:42when you both have this combination of commute as well as party traffic that's starting to happen, you just can't have enough cars. Or if you try to deploy enough cars to be able to meet that demand, you're going to have a lot of idle time on your hands because these are assets that you're deploying in the city. Now, we have the benefit of having a flexible supply pool in our core business, and we know when to deploy that supply pool depending on the peaks and troughs of the demand in that particular city. But to be clear, the flexible supply pool is humans, not robots, right? The robots are a fixed cost.

17:16They're always there. Well, there are two aspects to it. That's a great question. So the flexible supply pool is our driver base. And we have now more than a decade of experience on how we work with our drivers to be able to bring them on the platform at the right time. If you look at the driver app, there is so much guidance. You communicate with them a ton, yeah. Exactly. Well, we communicate with them. The app tells them when it is busy, when they should come online, when there are incentives, what the earnings are. So that's a very well-honed system for us on the driver side. Now, you're right that for autonomous vehicles, these vehicles are on the road or they are at least in the city.

17:55Now, there is further optimization that we can do based on our understanding of the demand patterns, which is, look, if a city has 100 cars, but you're at a point of time in the day or the week where you're not going to be able to utilize all the 100 cars, it doesn't make sense for them to be driving around because every mile that they're driving, they're using dollars, they're using costs, they are using charge, and they will have to be recharged. So there's a lot of technology that we are building now to be able to optimize that part of it, both where they should be and when they should be online and when they don't need to be on.

18:32That implies a rosy picture for drivers, right? They are only called upon when they can maybe maximize their earnings because there's peak demand. But there's got to be some misgivings. What are your drivers? What have you heard? Are they afraid of being replaced by these robot drivers? We definitely get a lot of questions, as you may expect. The good news is that what we are seeing in Austin so far, in the last six to nine months of our deployment, drivers have actually made more money because the overall number of trips in Austin has been twice. If you look at our year-on-year growth in a city like Austin, it's almost twice our national average.

19:16So the overall demand level in Austin has gone up. The number of trips that drivers are getting have gone up and the earnings that the drivers are getting has gone up as well. So you're seeing like what, double digit growth in demand for rides in Austin? I don't know the exact number, but the demand in Austin has definitely surpassed our national average. Now, just taking a step back, yes, we are a ride sharing company and a food delivery company, but we also see ourselves as a company that provides an earning platform. And we have, you know, today more than 9 million earners on our platform. And that's a responsibility that we take very, very seriously.

19:56So if you are an earner on our platform, there are many different things that you can do today. You can drive. And even within driving, there are multiple different aspects that you can sign on to versus not. You could have a car seat, for example. You can give trips to teenagers. You can have a large vehicle, which means that you can get Excel trips. But then there's also the delivery side where you can deliver food, you can shop for groceries, you can do orders for third parties, you can take packages from person to person. So if you look at our trajectory over the last many years, the number of earning opportunities on our platform for our earners have grown and they will continue to grow.

20:37Look, we think we are in very early innings. We think that 10 years from now, we're actually going to have more earners on our platform than we have today. And a driving will definitely be a part of it. But there will be many other opportunities that earners are going to continue to have on our platform. Tesla recently launched its own robo-taxi service. After the break, is Uber eyeing a partnership with Elon Musk's company? How often are you sending emails to Elon Musk asking of a partner? I am not sending any emails or any tweets to Elon Musk myself. Stay with us.

21:29you know it's one of the one of the interesting things i think as you push drivers to get into electric vehicles and i wonder what you're thinking about tesla is they are clearly chasing their own robot taxi future. They want to make those robot taxis, but also it seems like CEO Elon Musk has this vision of his own robot taxi service and a taxi app. What's the threat here to Uber's vision of being a platform for all these companies? Yeah, I mean, first of all, we think this is not going to be a winner-take-all market. This is going to be a massive market with multiple players at different points on the ecosystem.

22:10Now, we have established very clearly that we are a platform for demand generation and offering a hybrid network. So we would love to partner with Tesla as their technology matures. Now, whether that will happen or not, you know, only time will tell. But I think it would be great if their technology matures, they're taking a camera only approach in terms of their sensor kit. If that happens, that is great for the overall industry, because that'll actually drop the cost for a lot of these vehicles if they figure it out. And I think for the overall ecosystem, that would be a very healthy outcome.

22:46And yes, we would love to be a part of that platform, because ultimately, whoever owns those vehicles is going to be looking for more demand and is going to be looking for maximum utilization of the asset. And we're going to just continue to keep our focus on making sure that we are the best in the world to be able to enable. How often are you sending emails to Elon Musk asking of the partner? I am not sending any emails or any tweets to Elon Musk myself. Somebody is. So we've been talking about the big pillar for Uber, autonomous drivers or autonomous vehicles, really. But what do you think then the future of Uber looks like.

23:29I think the future for us is 100 % autonomous. When I say 100%, I mean autonomous is a big part of our story. Electric is a big part of our story. Shared will be a big part of our story because with shared, electric and autonomous, we think we're doing the right things for users and we're doing the right things for cities because that leads to safer rides, that leads to cleaner air, that leads to less congestion. And we think that we play a huge role in sort of that future outcome. And that is the ride-sharing part. We absolutely will also be a network that is delivering things. Again, autonomous, we think, will be a huge part of that, not just on the ride-sharing side.

24:15We have Sidewalk Robots. We just announced a partnership with a drone manufacturer called Flightrex. So that's going to be on our platform pretty soon as well. I would say the future for Uber is some of those things. And the network that we bring and the demand that we bring is obviously a part of it. But the technology platform that we are building in partnership with our partners is going to just become a very, very big part of it. So the whole picture that you're painting here, it's very 2016, 2017 vibes to me, right? We were promised that autonomous vehicles were coming soon at that point.

24:56Now, a bit delayed, they're finally here. Also, people were talking about the sharing economy a lot at the time. So a corollary of those predictions was that people were going to stop owning cars, that Uber and Lyft were going to essentially end car ownership in major metropolitan areas. Do you feel like you might be delivering on that future where people don't? own vehicles because they're all autonomous just a little bit later than we expected? I think we have a better chance at that. Now, will it end car ownership? I don't know. People still love their cars. These cars are extremely personalized.

25:35I have all my stuff. I have my kids' stuff in the car. What we have seen, even over the last few years, is when people go out to buy their second car or their third car, there's definitely a consideration. Do I really need it? Or will Uber kind of just do that for me? I think that that aspect is going to increase for sure. Some people may actually purchase vehicles that are self-driving. So I own it, but I don't have to drive it when I'm on the road. I think it's going to be a big shot in the realm in terms of reducing car ownership. I don't know about ending car ownership. I think we are too early in the game to be able to proclaim that.

26:15Robot cars kind of hold this promise of a dramatically different personal transportation world than a century ago, right? And so I want you to imagine we're 20 years into the future, a new generation. What does the world look like for cars? I think the vehicles in 20 years from now are going to come in different shapes and sizes. So I don't think we're even just talking cars. I think we are talking vehicles that look nothing like they do today. They'll come in at different prices for sure. And they are going to be majorly autonomous. But you'll still need an app to be able to, you know, book one of them.

26:59And we think that that app is absolutely going to be Uber. And that's because we're going to be huge participant in building that future with our partners. But from an end user perspective, I think it's going to be amazing. And I think the amount of variety that I will have to be able to move myself around the city or between different cities is going to be huge. It's going to be a great world. Well, sir, thank you for joining us today. It was a great conversation. Thank you. It's a really pleasure to talk to both of you. Thanks for having me on. And that's Bold Names for this week. Our producer is Alexis Green.