From Iranian Refugee to Uber CEO | Dara Khosrowshahi - HD in HD: Summary & Transcript

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Podcast Episode Summary: From Iranian Refugee to Uber CEO | Dara Khosrowshahi

Overview In this episode of the HD in HD podcast, Henrique Dubugras interviews Dara Khosrowshahi, the CEO of Uber. The conversation spans Dara's remarkable journey from his family's escape from Iran to becoming a prominent leader in Silicon Valley, touching on themes of leadership, culture, and the evolution of Uber under his guidance.

Key Themes and Discussions

Early Life and Background

Immigrant Experience: Dara Khosrowshahi shares how his family lost everything during the Iranian revolution and rebuilt their lives in the U.S. He emphasizes the importance of education instilled in him and his siblings by their parents.
Cultural Values: Growing up in a successful industrial family, there was an inherent expectation to work hard and succeed academically, which shaped his future endeavors.

Career Journey

From Allen & Co. to IAC: Khosrowshahi discusses his early career at Allen & Co., where he learned the importance of personal relationships in business and how to "bet on people" rather than just financial models.
Leadership at Expedia: His transition to CEO of Expedia is marked by initial challenges, particularly around leadership failures, which he learned from as he developed a more disciplined approach.

Transition to Uber

Taking the Helm During Turbulence: Khosrowshahi stepped in as CEO during a tumultuous time for Uber, marked by public scrutiny and internal strife. He outlines his focus on rebuilding company culture and safety.
Vision for Uber: He highlights his long-term goal of transforming Uber from merely a ridesharing platform to a comprehensive real-time logistics network.

Key Lessons on Leadership

Importance of Safety: Safety became a core tenet for Uber under his leadership, emphasizing that safety measures should never be compromised for efficiency.
Operational Discipline: Khosrowshahi emphasizes the need for strong operational discipline, especially in a capital-intensive business, to foster sustainable growth.

Financial Strategy

Turning Losses into Profitability: He reflects on guiding Uber from significant annual losses to achieving profitability, citing an increase in operational efficiency and strategic capital allocation as crucial factors.
Future of Delivery and Mobility: Khosrowshahi discusses Uber Eats and other delivery services as key growth areas that complement their mobility services.

Reflections and Future Outlook

Mistakes and Learning: He candidly reflects on past mistakes, such as focusing too heavily on urban markets and missing out on opportunities in suburban areas.
Technology and Innovation: Khosrowshahi speaks to the importance of leveraging technology, such as machine learning and algorithms, to enhance Uber's operational capabilities.

Key Takeaways

Adaptability: Dara's immigrant background instilled a sense of adaptability which has been crucial in his leadership roles.
Relationships Matter: Building personal relationships and fostering a strong company culture are vital components of successful leadership.
Long-term Vision: The shift from a reactive to a proactive business model is essential for sustained growth, especially in technology-driven markets.
Embrace Change: Being open to learning from mistakes and adjusting strategies is crucial for navigating the complexities of business.

Conclusion Dara Khosrowshahi's journey from an Iranian refugee to the CEO of Uber exemplifies resilience, strategic foresight, and the importance of a strong ethical foundation in leadership. His insights provide valuable lessons for current and aspiring leaders in the fast-paced world of technology and business.

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Transcript

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0:28Oh, I heard about the company as a customer. eats and not just mobility for people, but mobility and delivery of anything and everything. He stepped into Uber at a pivotal moment in 2017, taking on one of the most visible leadership transitions in Silicon Valley. There was this drama in terms of the delete Uber days as to who was going to run the company. I was having drinks with Daniel Ek and he's like, did a headhunter call you about Uber? And I'm like, yeah. And he's like, well, I said, no way I'm doing that. I'm at Expedia, 13 years. I've been working with Barry. There's a lot of trust there.

1:00I love it. I'm happy. And he like looks at me. He's like, you're right for this company. You can have an impact. Since when is life about happiness start? I'm Enrique Dubugras and welcome to HD in HD. This episode is brought to you by Brex, a brand I'm proud to have co-founded and one that's shaped by the same journey many of you are on. Brex has everything startups and fast growing companies need to make every dollar count from modern corporate cards, banking, and treasury to accounting automation, travel, and expenses. Over 25 ,000 companies, including DoorDash, Scale AI, and Anthropic, spend smarter using Brex.

1:37Dara, thank you so much for doing this, man. Really appreciate it. Happy to do it. Absolutely. I was trying to think about the first time we met, and I don't remember if this was the first time. It was one of the first times. I think we met in Davos. Yes, yes. In the snow and running from meeting to meeting. Exactly, exactly, exactly, exactly. And I'm curious, like, what do you make of that conference? You know, like, it's such a, the first time I went, it was the spring one. So it was very nice. But then it got kind of like, not as nice. And I think people think it's just like, super fancy thing.

2:07Yes. People go there for the world. But it's a grind, man. Totally. No, it's exactly, I was going to say, use those words. It is an absolute grind. It's highly efficient, right? Which is, you have meeting after meeting. It's like speed dating, other businesses, government officials, regulators, et cetera. And for us, it gets us, it gets me a lot of exposure to the European markets or other European partners who we might have. But it's exhausting. It is absolutely exhausting. But, you know, it works. It's efficient. I wish it weren't in that faraway land, but it is. And everyone comes there. And at least everyone comes there.

2:45Everyone's like engaged with each other. There's nothing to distract you in the outside world. What's your view on how that came to be? You know, like it's such an odd thing to have happen in the world. Everyone just convenes in this place in Switzerland. You know, I'm actually reading the Steven Pinker book. It's, I think it's called Common Knowledge. It's about how these systems appear in societies or creating societies where people essentially agree to certain rules that are essentially made up that then makes society kind of move forward. You know, the concept of a company, you know, why is Uber a company?

3:24Why am I the CEO? There are like these kind of accepted rules that allow people to organize in certain ways to be more effective than they would be on a standalone basis. And then you see it like in retail in New York City, where we are now, there's a, I think it's on like somewhere on Canal or something like that. there's this area where it's all these lighting shops, right? And it's like one store after the other, like you go into a store and it's like 28 ,000 pieces of different lighting fixtures and all of them are on the same street. And you're like, well, why would you put a lighting shop next to the lighting shop?

4:03Cause that's the most competitive street out there. But it's a category that anyone who kind of knows New York is familiar with. And if I need lighting, I should go there. Right. And so there's kind of a mass that creates versus Joe's lighting shop. I'm never going to remember that, but that's a lighting district. And I think the same is true in terms of conferences, Davos, et cetera. Like there's a magic that you have to create. There's a liquidity that you have to create to get a group there. But then once there's a spark, then you can kind of keep it going. And I don't know how Davos came to be, but the staying power is extraordinary.

4:42Well, I have a theory that, you know, this is my theory of how it came to be, is that it is like an all paid vacation for ski trip for government officials. So they go there because, you know, like you're some, you know, minister of something in Pakistan and like, you know, you get a Switzerland ski trip. And because every time I go there - like skiing. They like skiing. There we go. And you know, that's good. And then, you know, all the CEOs of big companies go there to, you know, policymakers. And then all the CEOs of the smaller companies go there to hustle the CEO of big companies, sell them some stuff, you know, like just like one giant hustle around like a paid ski trip.

5:23I have not been skiing in Davos yet. I swear to myself, I'm going to get one day of skiing in and it's impossible. I went one day. It turns out it was only government people there. That's how I came up with this theory. That's the evidence. That's the evidence. There was like no private sector. It was only government. You got to have pull to pull the government folks and then everyone else follows. Exactly, exactly, exactly. But was that, you know, was post-Uber the first time you went or previous in your career? No, I started going as a result of Uber. And obviously Uber, you know, I was running Expedia before, but and Expedia didn't kind of have to deal with the regulatory frameworks that Uber has to, right?

6:01We're highly regulated business, country to country, state to state, city to city, sometimes even airport to airport. Regulations can be different. So having dialogue with regulators and talking about what our perspective is and what their perspective is, it's super valuable. And again, really, really efficient. Yeah, no, I got it. But it was totally foreign to me at the time. Like, what is this Davos get together? Why am I talking to government officials? Like, it's a muscle that I've had to build over time. And it's pretty cool learning things, you know, as you get into a new role. Yeah, no, it's definitely part of the life experience.

6:43One day I'll get a ski in. Exactly, exactly, exactly. Maybe let's, you know, go back to your history. One of the things I remember seeing some tweet about the history of your family. Yeah. Like how many people in your family from Iran came here with basically nothing. And then like a lot of you just like crushed it in life. Maybe tell that story a little bit. Like, how did that happen? Well, we've been very lucky. We have a big family in Iran and it was, it was kind of a merchant family. It originated in the North. My, my great grandfather was, and his brothers were merchants. We came to Tehran, which is capital of Iran and built a company that is, that was manufacturing pharmaceuticals and other consumer goods that we licensed in the West and then manufactured them, distributed them all over Iran and the Middle East as well.

7:36Uh, was one of the largest companies in Iran when the revolution happened. And we weren't a political family one one way or the other. But you know, revolutions structurally don't like people in power. And we were one of the biggest families in Iran. My grandfather, great grandfather started the company and it continued, you know, every generation was involved in, in the business in a different way. My father was an engineer, so he designed factories, or manufacturing factories. He was in charge of designing and running the factories. The revolution happened and we all had to leave the country.

8:17And essentially the government took over our company and we lost everything. And what was the culture of the family, right? Like if everyone was kind of working in the family business and, you know, what was being passed down to you guys at that time? I think, you know, one, it was a super successful business, super well known locally. and there was always this feeling of responsibility to helping Iran grow and the local economy grow. The Shah was trying to modernize the economy, was trying to modernize society, and being a part of that, being one of the industrialist families in Iran, one of the leading industrialist families in Iran, was a super important position to be in.

9:05And I think that the kids, you know, all of our parents, one way or the other, worked at the company. So that was expectation that we would go to school. I think we will probably go to boarding school someplace in the West and have kind of the Western education that's prized in a lot of these other countries. And then come back and be a part of the family business. It was always a part of expectations growing up in Iran. And so it was the culture is like you, you can be in a family, but it was like, hey, you have to study really hard. You have to work really hard. Those are values that kind of pass down.

9:41Education is everything. Education was absolutely everything. That was kind of the gateway. And then, you know, I think for my dad, I honestly didn't see him a lot. He would kind of show up at dinner once in a while. He was always working. So you were born there. I was born in Iran. Yeah, I was born in Iran and the business, you know, just identity was we were always with family and family kind of ran this business. So it's part of life for us. And how old were you when the revolution kind of happened? Nine years old. You're nine. Nine years old. I was young and, you know, young kids can adjust much more readily than older folks.

10:22So I think the revolution was while we lost everything as a family, I think the kids were able to adjust in a much more ready way, so to speak. But in practice, when you say you lost everything, do they just like take it? Say, hey, this factory is now mine. How did I even work? We left the country. My father did not take much money outside of the country. He identified with kind of the mission of building industry locally. We thought we would go back. We didn't expect the country to essentially take our company. And the company still operates. It still operates to this day? What? Yeah, yeah. Yeah, it's a big company in Iran as we speak.

11:02It's just the government took possession of it. Wow. And so we just lost it. And so for my family, for the grownups in the family, they lost everything that they worked for. We went from in Iran living in a mansion and staff and all that to living in a three-bedroom condo in Tarrytown, New York. It was just a total shock to the system. We had enough money for my parents to pay for a private education. So it's, I think we were luckier than most people, you know, just to put things in perspective. But where we came from was some seriously rarefied air. And that was a tough adjustment for my parents.

11:40That's so interesting. And how did it, like, how do you think it changed your parents? It hurt my dad a lot because he was, work was his whole life. And he tried to establish businesses here in the U.S. It really didn't work out. So he wasn't the man that he was in Iran. You know, it really changed his life and for the worse. And my mom had to get on with it. You know, my mom, my dad actually went back to Iran and he wasn't able to leave Iran for six years. Oh, wow. So my mom was raising three boys by herself in the U.S., had to get a job. She worked at a sales clerk at Bloomingdale's and then Celine, et cetera.

12:23So this is a woman who like, you know, shopped all her life and then actually had to work behind the counter. And so for her, it was just, you know, do what she had to do and raise these kids and hopefully hope that the kids didn't turn out to be terrible kids, which we didn't. Thank God. She was a great mom. And when you say that your dad couldn't leave, what does it mean? They took his passport or something? Like what was that? They just wouldn't let him out of the country. They detained him. Uh, he went there because his father was at his deathbed and his father miraculously recovered, but he just couldn't leave the country.

12:58Uh, and then I still remember he, he finally got out of Iran. It was a flight through Paris. When he was on the flight, a person from the revolutionary guard came onto the flight and asked for him. So they were going to pull him off the flight. Uh, he obviously didn't volunteer his name. He had a heart attack on the flight. No. Yeah. On the flight, went to Paris, had like three hours of time to change the plane, then Paris to New York. The minute he arrived, he was just like blue. And my mom took him straight to the hospital. He had triple bypass surgery. And he lived until he was 91. Wow. Were you aware of everything that was happening?

13:37I saw him come. And obviously it was like, you know, hugs to dad. But we had to rush him off to the hospital. And it was a shock. One, it was a shock seeing my dad after so many years because he had been someone who I looked up to and I'd grown so much. All of a sudden he was just a much smaller person. Yeah, that's right. And then seeing the vulnerability of your father in the hospital is just something you can't prepare for. You know, thank God he was fine and it changed his life. He lived a healthy life, etc. But it's a real shock to the system because I idolized my father. And at that moment in time, did you also realize the difference in rarefied air at that age?

14:17We knew that we had lost our business or we thought that we were going to lose our business. But I'd also tell you, I had a happy childhood. You know, I went to a great school. We always had family around us. Family has been the constant in my life growing up in Iran, my early years in the U.S. So I'd say we had a happy childhood. At the same time, we knew that we had lost the family business. And I think that immigrants kind of have a chip on their shoulder. And for us, it was a bigger chip because not only were we immigrants who had a chance to prove ourselves in the US, we were immigrants who had come from a background of a family who was incredibly accomplished.

15:04So I guess I had a chip on both shoulders. And as a result, I think a lot of my other family members, my brothers, my cousins, et cetera, have done really, really well. But there's a very large kind of immigrant Iranian population who has gone into technology, who's gone into medicine, and has, you know, is a big part of the tech ecosystem to this day in the US. So tell us about your other family. So you have, you're one of how many brothers? I'm the youngest of three total of ours. I have two older brothers. Makes sense. So what, you know, what do your brothers do? What do your cousins do? Just tell a little bit, like kind of like what, you know, so people can understand how accomplished your family is, you know, as a whole, which is really impressive.

15:48Yeah, absolutely. So my oldest brother, Merod, works at OceanX, which is a very, very cool company exploring all the oceans and helping keep them environmentally sound. Kaveh, my older brother, middle brother, I think you know, he works at Allen & Company, which is my first job, my first full-time job once I got out of college. And then I've got a ton of cousins. And like Iran, you have, you know, enormous amount of cousins. But, you know, a couple of them, Hadi Partovi started code.org, which is offering coding to teach kids in public schools all over the world, not just in the U.S. and then Adley Partovi is a part of Accelerator Neo and has done great.

16:36So we've got a big family. We've got lots of accomplished cousins and brothers, et cetera. Yeah, I know. That's really impressive, you know? And as you know, I'm having a kid soon. So I'm trying to learn about these family cultures, you know? There's nothing you can do. It is like you have in your mind an exact game plan and then these children grow up and they take unexpected turns uh and you got to be there for them and to love them and to teach them but they're gonna you know your little creature is gonna turn into his or her own person despite what you may dream about it's really humbling being a parent yeah yeah i'm about to go through that experience so let's talk a little bit about then your your your high school year so how were you in high school um how was i in high school I was a good student and that was kind of an expectation.

17:31I was a good athlete. So soccer, with what you call it here, was, you know, that was Iran's national sport. It was often the national sport of many countries outside of the U.S. Brazil as well. Yeah, exactly. So we were ace soccer players when we came into the U.S. and that was a great way to fit in, right? It's we're, we're foreigners. We don't really speak the language, et cetera. But on the soccer field, we were absolute stars. My brother Kaveh was like absolute killer of a, of a player. Um, but it was, it was a great high school education and I was strong in sports and I was strong in academics.

18:10Um, and you know, I kinda, I'd say I was kind of your average high schooler, so to speak, shy, um, didn't really feel comfortable on my own skin, but I got through just fine. And do you think that if you asked your teachers back then, Hey, you know, will this kid be like as successful as you are today? Do you think your teachers would have said yes or no? I think they probably would have said yes. I mean, I was, um, in, um, I was a respectful student, so I kind of, I didn't, um, uh, I wasn't a rebel one way or the other, and I was always a good student. And, and I think in Iran, just because of society, you really respect your elders.

18:47You listen to your elders. So I was one of the good kids in, uh, in school. And then, uh, how was the college application process? Like that's the whole thing for immigrants. Yeah, yeah, totally. So I took a, I don't know if you call it unusual route. My oldest brother, Murad, went to Brown University, uh, and I worship him. So I'm like, if Murad went to Brown, I'm going to go to Brown and apply to early Brown and got it. Uh, and it was simple. And, um, I remember I, at the time you hand wrote your, your application, you didn't have this like whole machinery designed to get to kids into college.

19:23So I don't know if today I get into Brown, but I was lucky that I did. It's getting harder every year, man. Yeah. It's terrible. It's terrible. Yeah. Makes sense. And then how was your Brown experience? It was great. Um, I studied engineering. I studied bioelectrical engineering. My dad said I could study anything I wanted as long as I could either become a doctor or an engineer. So it was a perfect hedge of bioelectrical engineering because I could go to med school or not. And I loved engineering, just the learning how to build things, the rules around math, problem solving, etc. Engineering for me was a really, really great background for me then to go into business.

20:04But I really enjoyed it. And did you know what you wanted to do already at that point in your life or no? No, no. I mean, just being honest, I knew I needed to make money, right? Like my parents spent all their money sending us to private school. They were very clear. So I always worked in school. I worked as a teacher, as associate. I had to pay for, you know, food, all that stuff. And so I knew I had to have a job getting out of school and I had to have good grades to get a job. And that was my mission at the time, so to speak. I was going to go into kind of an engineering fellowship with a manufacturing company.

20:49But then I fell in love with a girl in New York City who was a commodities trader. And I racked my brain. How do I find a job in New York? There weren't engineering jobs in New York. So that was actually what led me to investment banking, to Allen & Company. I was falling in love with a commodities trader and kind of chasing her in New York. No, she was downtown working. I think it was like Makata or something like that. She was a commodities trader there. And I followed her. You know, as you would have it, I broke up with her six months later. But it got me into investment banking in New York City.

21:19So how was, what was Allen Company back? Which year is this, roughly? This is, I graduated in 91. I had been an intern at Allen Company previously. How did that happen? My brother hooked me up. Yeah. Yeah. Totally. He got a job there. He got a job there. And we knew the Allens, the Allen family at Hackley. They were dear friends. Kaveh was best friends with Herb Allen, who runs the firm. I was best friends with Charlie Allen. So we knew the family very, very well. From where? From school, from high school. From high school? Yeah. Yeah. So it's just luck of the draw. Oh, wow. Like literally, literally luck.

21:57And it was Herb's parents that started the firm or grandparents. I think, um, Herbert Allen. So Herb's grandfather and Charlie Allen started the firm. Uh, and then, uh, Herbert followed and then Herb, uh, after him. So it's a family business kind of stayed the same size for years and years and years. Um, and I, my first job was at the risk arbitrage desk. So risk arbitrage is a form of trading where when one company announces that they're going to buy another company, you buy kind of the stock of the target and make some kind of arbitrage between signing and closing. Four machines did that. Well, you know, at the time, Allen & Company was not automated at all.

22:45And there was a little Mac in the corner and I was an engineer. And I remember at the end of every day, there are these like giant panels where you would allocate the trading to the various accounts and people will be like using their calculators, adding, subtracting. I like wrote a program to automate all of it, you know, pretty simple stuff in terms of programming. And like they thought I was a wizard. So that was, that was, I just got lucky because I found the computer and I kind of did some simple programming and you know, that, that kind of got me a decent reputation within Alan and company.

23:19And what was their business back then? It was mostly investment banking. It was like, yeah, it was the business. It was, I mean, they had institutional sales and risk arbitrage trading. So there's trading side of the business, but the bigger side of the business was mergers and acquisitions, um, advice, and then raising capital IPOs or private capital for folks. And I jumped into that side of the, uh, of the equation, which is, you know, I, I kind of risk arbitrage is trading on M and A. So I understood the markets pretty well, but I want to understand what is it that makes a deal successful? Why does one company try to buy another company.

23:56And I had an interesting viewpoint of the markets because I knew how markets viewed M &A. Now I wanted to advise companies on, you know, how to buy, how to sell, or sometimes not to buy. At that time, like M &A and investment making was the hottest career we have, right? Totally. Yeah. So you're probably thrilled at that moment. Oh yeah. I mean, it was, it was a great ride and Allen and company had a specialty, if you want to call that, of media. And so they were very embedded into the Disney's of the world, ABC's of the world, Sony Pictures, et cetera. So it was, you know, the media companies were the kings of the world and these media executives were all larger than life figures.

24:39And I got to work for them. It was a really exciting time. Was Sun Valley already a thing back then? Oh, yeah. Yeah. I was... Did you go back then? Of course. I worked at the Sun Valley Conference and I was setting up all the meetings, all that stuff. It was a really exciting time. That's awesome. That's awesome. What did you learn about business working at Allen? About the way they did things that kind of stuck with you after? You know, it's funny. Probably the most important lesson I learned at Allen & Company wasn't mathematical. It wasn't based on models, etc. It was, I remember Herbert Allen always talking about how he bet on people.

25:17is that good companies come and go, good people stay good and just bet on people in your life and you'll be fine. And so it is a bank and they make money the way banks do through fees, et cetera. But they really build their relationships, personal relationships with their clients over a period of time that they tell clients what they don't want to hear. And so for me, an appreciation of these relationships and betting on people in my life, both personally and professionally, it's probably the biggest lesson I, I, I learned it now, funny enough. And did you learn what kind of people to bet on? Like what was the learnings and like, Hey, these are the traits, you know?

25:56I think for me, the most important was people who are loyal and people who told the truth. You know, there are, were certain clients who you saw who, um, you know, were, were, they would sell you in terms of expectations. They would sell you in terms of what they were going to do. And then there were some executives, who I saw who, yeah, I mean, there's some selling going on in the executive, but they would tell you both the good and the bad of their company. And they came from kind of this truth telling place. And those were the people who I was always attracted to. Makes sense. No, super awesome.

26:30So how long were you there and what happened after that? I was there for eight years and it was a great run. I thought I was going to stay at Allen Company my whole life. Like it was, I was the youngest VP there. I had my own book of business. I liked kind of video games and so I and technology. So I started shifting more towards a technical client base than the traditional entertainment client base there. And then I met Barry Diller. And I was a junior banker originally on this deal, a Paramount deal where he was running QVC at the time and he made a hostile tender offer for Paramount. Which side were you on?

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27:12I was on Barry's side. I was on, yeah, I've been on Barry's side for many, many years. And it was so fun. It was really thrilling, which was like, it was just this whole bidding process, you know, it goes in on Tuesday and then we put in another bid on Thursday. It was just incredibly energizing, worked incredibly hard. We lost, but I got to know Barry and he, I was the analyst working on these M &A models and he wanted to really understand the model. So we, after that deal, even though we lost, I kind of became his banker. And he started over again with Home Shopping Network and decided to do another roll-off, Silver King to Home Shopping was TV stations, then buy Home Shopping.

28:00And he wanted to buy a bunch of other companies. He bought a company called USA Networks and he had no infrastructure. He didn't have anybody. He had like a couple of folks working for him. And he said, you know, I want you to work full time for me. And at that point, I kind of, I'd always looked at Barry and I was like, if there's one person that I want to work for in my life outside of Allen & Company, it's that person. So when I had the chance to go full time, it's, you know, what was, he was charismatic and he was fun. You know, I was always, I was more of a shy kid. I was the youngest brother I was we have thousands of cousins I'm one of the younger cousins and so I always wanted to kind of fit in I was a fit in kind of kid and I did well but Barry was this like larger than life figure and he when he walked into the room the whole room lit up and he didn't suffer fools he would call bullshit out on anybody and I was just attracted to him, honestly.

29:11You know, he, I knew he was smart, but he was a guy who succeeded everywhere he went. And then the way that he failed at, at Paramount, which is we lost the bidding war, uh, Sumner Redstone, uh, won the prize, so to speak. It was like they won, we lost next. Right. So it's people show their best selves when they're winning. I think the test of who you really are is when you lose. You know, that's when you show kind of your worst self. And I was like, huh. It wasn't some like made up PR announcement. We did our best. They won. We lost next. And to me, that shows someone who is indefatigable, you know, like they're not going to step down.

30:01So I wanted to hitch my little train on his locomotive. And it was a great decision. You know, I've only met Barry last couple of years. You know him for a long time. Did you get to know him when you first joined the Expedia board? Or did you know him before? I met him maybe, yeah, like maybe a year before that. Okay. Yeah. So not, not super long ago, maybe four or five years ago. And how different he is today than back then? Or is it exactly the same? He's chilled out. Chilled out. He's chilled out. I mean, he's still intense. Wow, this is a chilled out version? This is a chilled out version.

30:38I mean, Barry was really intense, just went all out. He loves confrontation. He loves pushing people to their limits and seeing whether they come up with a better idea and who they are. So he's definitely chilled out. He's definitely chilled out. But there's always an intensity about him, as you know. So, yeah, I mean, I'm surprised this is a chilled effort. It's definitely a chilled effort. So when did you work for it? What was your position, I guess? What was the first time? Since I was a banker, I was leading strategic planning and mergers and acquisitions for them. So we went and started with Home Shopping, USA Networks, and then we started buying a bunch of companies.

31:18Ticketmaster. This is already IAC. Yeah, it was the pre-IAC, right? So it was called USA Networks and then USA Interactive, and then it became IAC. So lots of name changes. Which year is this? This is like 90, let's see, 98. I think I joined IAC, 98, 99. I joined IAC. Yeah. Yeah. And then we bought a bunch of companies, Ticketmaster, Match.com, Expedia, Hotels.com, Hotwire, kind of serially moving more into the interactive space. And then we sold, the design spec was, let's have a company that's both in media and is in internet transactions at the same time. Um, what we, the conclusion we came to is we couldn't get to scale in media.

32:03And if you can't get to scale on the media business, there just wasn't enough for us to buy. The prices were all wrong. If you can't get, uh, scale in media, Barry said, well, then let's get out of media and let's completely focus on internet and internet commerce. Tell me more about that. Like, why couldn't you get to scale in media? And what, why would that, did that matter? The assets were too expensive. Um, so we tried to buy a bunch of assets and we kept losing, so to speak. Like Paramount, that kind of assets. Yeah, yeah. Like Paramount, other cable companies, et cetera, they come up for sale and either we were too cheap or the assets were too expensive.

32:36And I think probably in hindsight, we were a little too cheap. And you needed, especially in the cable programming business, which is the business that we were in, you needed to have large portfolios of programming to go and negotiate against the cable operators in terms of how much they would pay you, right? So a cable operator might be willing to not carry USA networks and sci-fi networks that we have. Maybe explain just for the audience how the cable business model works. I think it's like that super. This is a long time ago and the business model is getting disrupted. But basically the network business originally was built on advertising.

33:20You carry a network on a bunch of TV stations and they use advertising to bring in money. Early on, as the cable ecosystem was developing, the cable networks didn't have nationwide coverage to build a robust advertising business. So they needed the cable operators. This is, you know, Comcast and TCI at the time who were making money from, you know, wiring up households with cable. They needed these cable companies to pay them carriage fees in order for them to get big enough to invest in programming to then get nationwide coverage to build an advertising business. Once you did get nationwide coverage and you built an advertising business and you had these cable subscription dollars coming in, it became a dynamite business.

34:11We saw that and a lot of other people saw that. but you needed to package a bunch of networks together to be able to go to these cable operators and negotiate a good deal. Like even now, YouTube TV, which is call it a next generation cable operator because they distribute over the internet. They're having a fight with Disney now, right? And so Disney, all the Disney channels are off and it becomes a game of chicken and basically size matters in those kinds of negotiations. So we couldn't get to scale there. We thought we'd be one of the smaller players. Assets were getting too expensive. And at that point, Barry decided to get out.

34:48And at that point is when we renamed the company Interactive, IAC Interactive Corp, because we went fully into interactivity and internet commerce. So you mentioned that maybe you were a little bit too cheap. I guess, what are the M &A lessons from that moment in time where, you know, obviously they're, they crashed a little bit after the internet stuff, but you mentioned that maybe you could have gotten to scale, Like what were the learnings and lessons? You know, I'd say one, we did pretty well because ultimately the full bet to on all things, internet worked out. And you could say either we got lucky or not.

35:22So I think we, we accidentally got lucky shifting towards the internet. But I do think one lesson that I've learned is, you know, I'm a very mathematical person. Like, you know, I, I, I love math. I'm able to, you know, see, see patterns in math very, very quickly. and the most, the best deals that we, that Barry and I kind of embarked on were deals where we actually overpaid, but recognize that this was a great asset that would have growth, compounding growth for years and years and years. So coming, coming to kind of growth assets with a strict valuation framework of like, you know, how much is this asset worth now?

36:07often misses the point, which is it's not about how much asset could be worth now or next year. How is it going to compound over the next 10 years? You know, you could argue we overpaid for match.com. We overpaid. We were the, you know, there's auction for hotels.com. We were the top bidder. We were convinced that the compounding of offline travel to online travel, it was just very, very early. We were convinced that it was going to continue for 20 years. And that allowed us to overpay. So I think over a period of time, as we move from traditional assets that have kind of more traditional metrics, growth metrics to Internet assets that can compound for a really, really long time, we kind of learned a lesson that it's not about identifying what's cheap.

36:53It's about identifying growth opportunity and kind of compounding on top of compounding. It's it's magic when that happens. And do you guys usually buy control, right? Yes. Barry was very big on control. So we didn't want to be an investor, so to speak. We wanted to be an operator. And what did you do, I guess, once you bought these companies? Were you guys able to inflect enough change? What did you actually do? So we brought capital and we brought scale to these businesses. So usually we would bet on entrepreneurs and allow these entrepreneurs to continue. you know, a Rich Barton, who was the entrepreneur who founded Expedia and then after that Zillow, or a Dave Littman and a Bob Diener who founded Hotels.com.

37:46We would keep them on. We would just put more fuel under the fire. We had a big balance sheet. These companies sometimes as a standalone subscale operation didn't have the capital to invest that we had. So we had a hypothesis and then we put money behind that hypothesis. But typically we let the entrepreneurs grow the business. So it was still a bet on the entrepreneurs, but with control. Correct. More of a holding company that allowed entrepreneurs to not worry about all the fundraising. Like when you were founding Brex, how much time did you spend raising money? A lot. Yeah. Yeah. So it's like, throw off that BS away and just focus on your operations.

38:24And we have the capital. That was the formula. So how did you grow within IAC? What was your kind of like? So I started with deals, but then I wanted to get into operations. So once we sold our media assets, it's more fun. It's more fun to build things. You know, it's kind of my engineering background there. I was interested, you know, for a while it was like satisfying what deals work, what deals didn't work. But often deals work because you had operators who then operated the company effectively. And I was like, well, I want to learn about that. So once we sold the media assets, I began CFO of the company.

39:03I wanted to get more involved in kind of how you run these companies. And I was more technical than most people. What was the CFO of a holding company job look like? I mean, you are a holding company, but it's establishing budgets, investing capital in various teams and holding them accountable. And, you know, with Barry there, you could really hold them accountable. Uh, and that was really fun for a while. And then, uh, we came to a point where the, the CEO of Expedia, we kind of took a bunch of travel businesses and put, put them together. Um, and the CEO at the time decided, you know what? I don't want to be part of a big holding company.

39:42I want to, I want to kind of do my own thing. And we didn't have a succession candidate. Uh, and I was CFO of IIC at the time. and I kind of came into Barry's office and I said, you know, what about me? I think I can do this. You know, I've been a pretty good CFO for you. Were you nervous for that meeting? Um, I don't get nervous. No. You know, like try stuff. The worst that can happen is he says no and you're an idiot and you don't send me back off to my office. Yeah, I don't know. In theory, that makes a ton of sense, but a lot of people would get very nervous still, you know, when they're about to like do that.

40:16My wife calls me a robot sometimes. Like I just like stressing out about stuff. It just makes things worse. Like what's the point? Yeah. And, and so for me, well, this is kind of interesting. I love travel. I was deeply embedded in kind of a bunch of the travel M &A. I knew those teams really, really well. I really admired them. And I was like, yeah, I think I can run this thing. I was totally wrong because I was a disaster of a CEO for the first couple of years. But Barry, you know, he has this saying, he said it before, like he'll throw you into the deep end to see if you swim. And I think it was a combination part of desperation because we didn't have a successor.

40:57And I think he saw in me the potential of someone who could do something great. And, you know, he and I had worked together for a long time. So there was a lot of trust between us. So I got lucky. He said, yeah, go ahead and run it. How big was the company back then? Oh God, I have no idea. It was pretty. Like order of magnitude. 20 billion in bookings probably, which was small compared to where it was. It was a holding company. And then what happened was that... Now it's like a hundred-ish billion or something, right? So a fifth of the size. Yeah. Maybe even smaller, I'm not sure, but it was a long time ago.

41:32And at the time, the first kind of winners in online travel were the online travel agents. But the supplier directs, the Uniteds, the Marriott, et cetera, the world, they started building out tech and they started going direct to consumers as well. So OTAs, the growth of the OTAs started slowing down. Which year is this? This is probably early 2000s, my guess is, or probably mid 2000s. That was in pre-financial crisis? Post-financial crisis. Post-financial crisis, pre-September. No, no, post-September 11th too. So actually the mid-2000s, right? Yeah, 2010, exactly. And so travel started slowing down and travel was half the portfolio of ISEE.

42:21Travel really started pulling down ISEE. So it was at that point, and ISEE had Match and Ticketmaster, a bunch of other stuff. At that point, we decided to spin off travel to ISEE Travel. We renamed it Expedia because it was kind of the ugly duckling in the portfolio, so to speak. How many assets were there at that point? Expedia, Hotels, Hotwire, TripAdvisor. So all the M &A have been done already. I mean, most of the M &A. There was M &A afterwards, but the shape of the entity had taken. We called out IC Travel, and then we renamed it Expedia, became a public company, and I moved to Seattle to run that company.

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43:36So whether you're just getting started or you're ready to take on the next big thing, Brex has your back. Check it out and see why the world's most innovative startups like Anthropics, Scale AI, and Robinhood trust Brex. And why did buying hotel.com and Expedia make sense at the time? Like why were you kind of buying like to some, or they weren't competitors or like how? Oh no, they were competitors and they hated each other. So it was a consolidation thing? We like the category. Like we're just like the hypothesis was travel is moving online and we want to ride that wave. It actually, it's funny how things work.

44:15Kind of one thing leads to the other. We first saw it in Ticketmaster. All right. So we had Barry bought Ticketmaster from Vulcan Ventures, Paul Allen's company. And what we saw with Ticketmaster, Ticketmaster at the time was 50 % of their sales were in Ticketmaster outlets in record stores. There were these things called record stores way back then. Have you been to a record store? I have been to one, yes. You're not that young. Yes. There you go. And then half were sold over the phone. Ticketmaster did a deal with America Online. And whoosh, volume started going online. So we're like, what other categories look like ticketing where it's virtual goods?

44:54We don't want to take an Amazon and like fulfillment, building and fulfillment ecosystem. them. Virtual goods where you needed advanced reservations, where the channel were phone or in person. Travel, right? So it's like you need a travel agent. You went to a travel store, you called a travel agent. You need a reservation, no fulfillment costs whatsoever. So it was a bet on travel overall, the category. The two management teams, Expedia and Hotels.com, hated each other. But we as owners could benefit from the growth of both. Makes sense. Makes sense. Okay. So you moved to Seattle, you went to be CEO, I guess, like what were some of the biggest like expectation versus reality of like operating and being a CEO?

45:37So for me, originally, even though I was CEO of a company, I was still running the company as a holding company. You know, the Expedia was a holding company. We had Expedia.com, hotels.com, et cetera. I, we hadn't integrated anything. Uh, and for, for us then the, the big challenge was actually Expedia was a part of the business that was doing the worst because it was competing against the airlines. Um, we had to, I had to fire my president who was running Expedia twice. I got it wrong. Um, the third time I went to the board and I said, you know, clearly I haven't identified what's needed to be the president of Expedia.

46:19If I failed the third time you guys should fire me barry of course in the meeting you've been on expedient board of me he's like yes we will you know if you get it wrong again so at that point i decided i was going to run expedient myself i'd be the ceo of the holding company and i would run expedient myself and understand what it takes to be president uh kind of an operator um and i discovered i was having so much fun. Like this holding company thing, eh, running a business, building a culture, you know, working with your technical staff, like that was a really, really fun stuff. Building product was, was, uh, was amazing.

46:56And so I kind of discovered that I actually enjoyed operations a lot more than, you know, financial holding company stuff. And that, that kind of got me started. You know, if, if we look at the Expedia story, right? Like I would say elephant in the room is like, obviously the whole booking situation. Yeah. And you know, you've now with the benefit of hindsight, they maybe explain to me like what happened? Like what, what is your version of why kind of booking is where it is versus Expedia? Yeah, definitely. Painful story. And, and, you know, during my years, both companies did well, but booking did better.

47:33And I think two lessons there. Uh, one is that, uh, if you're building, um, an aggregation platform, uh, supplies came, uh, expedienthotels.com kind of built more. It was more about audience. Hey, how do I build audience? How do I build a brand? And then if I build audience and a brand, what supply can I bring on board to fulfill that demand? So to speak, booking.com started with supply first, which is, Hey, I'm just going to go out and add every single hotel in a particular marketplace. and each hotel is another opportunity to sell to a new audience. And the more hotels, you know, if Expedia kind of had 50 hotels in a market and if Booking.com had 200 hotels in a market, that market would convert better for Booking.com than Expedia.

48:19So supply, you know, running a supply-led business was a lesson for me. And the second was actually starting from a low margin position. Expedia at the time when I joined had a take rate of about 30%. Booking.com had a take rate of 15%. We thought 30 was better because we could make more money per transaction. We could put that money into advertising, build more audience, and we would beat Booking.com at the audience game. But what Booking got right was because they were charging 15%, they were able to sign up more supply. And again, supply brought them audience. So the two lessons are one is start from a low margin position and build up your margins over time.

49:04And they have at Expedia, we had to reduce our margins over a period of time. And then second is supply is king. So I guess like, you know, obviously you are extremely smart, very, super smart. You're kind of going through it. What were the decisions that you were like, look, these were the right decisions for us, but it turned out to be kind of just a bad outcome and which ones were like, Hey, actually with the information we had, we could have made this decision better. Yeah. Yeah. So I, I think, um, in hindsight, we could have, we, we, we got the supply memo a bit too late, a couple of years too late.

49:40And then once we started organizing against it, we had like a great five, six year run against bookie.com and, and, and price line. The toughest part was actually the margins, you know, is taking down revenue margins from 30 % to 15%, literally cutting your revenue as a public company, incredibly painful. So every year, and, and you can identify what you're losing, which is a huge amount of profitability when you cut margins, you can't identify where you're gaining, you know, supplier may be a little bit less angry at you, for example. It's just hard to identify the return from cutting your margins.

50:18And that was, again, six, 70 year journey that we went through, cutting revenue margin, cutting revenue margin. That was really painful as a public company, but we had to do it. In hindsight, I wish we had done it faster. And do you think that maybe the right decision back then was it had been to take the company private to go through this? Maybe if it would have let us execute on the transition faster. Yeah. Because like, I can imagine like, you know, being CEO is like, man, like if I was up my margins by half my stock is going to drop totally 80 percent or something like that you know like it's going to be this asking the employee comp everything right like and and that is i i think that the employee comp and kind of the stock price etc you know employees take stock price as a shortcut for success and no matter how many times the ceo i told them don't look at the stock price next thing they would do is look at the stock price so it was um a tough transition to maneuver through, but over kind of the years that I would speedy, the stock did great.

51:16Um, but you know, if we had been supply first, they could have done, they could have done a bit better. Makes sense. Makes sense. Um, in terms of MNA, right. That you did during that time, what were your lessons then about that? Um, my lessons then were that to have ultimate clarity and M &A as to what your plan is early. And that the middle is a killer. So I've seen circumstances where companies try to integrate some parts of the business and then not all parts of the business. And that nowhere land is a disaster. So either you have to decide, I'm not going to do it at all. So for example, when we bought TripAdvisor, we ran TripAdvisor as a separate entity right up until the very, very end.

52:03We actually spun off at one point. It was really successful because Steve Coffer, who was the entrepreneur there, he was truly independent. Like he could do what he wanted and we supported that. And it was clear from the very, very beginning. Contrast that with we bought Travelocity, which was looked a lot like Expedia, different brand. We integrated that company in nine months and the company went from like 3000 employees or so to a couple of hundred. It was a big, fast integration, incredibly successful as well. When we got into the middle, that's where things became muddy. And when things are muddy in business, you know, it's the beginning of the end.

52:44That's a great lesson. So how many years were you running Expedia for? 13 years. Almost 13 years. It was a long ride. It was awesome. So tell me, how did the Uber start happen? Like, how did that whole story? Yeah. Yeah. So, um, you know, Uber at the time was, was a basket case. It was like in the news all over the place. What's the first time you heard about the company? Oh, I heard about the company as a customer. Like I use Uber all the time, but whenever I came to New York to meet with investors, I was on Uber constantly. Like I loved the product. It was magic, absolute magic. Um, I had actually seen, uh, Travis at one of the Sun Valley conferences.

53:25He made a great presentation, very charismatic uh person there and then uber kind of fell into this negative cycle in terms of the delete uber days uh etc and there was this drama as to who was going to run the company you know this drama between benchmark and travis um and it was actually at the sun valley conference i was having drinks with daniel ek daniel myself and my wife said and he's like did um did a uh headhunter call you about Uber? And I'm like, yeah. And he's like, well, I said, no way I'm doing that. Like I'm at Expedia 13 years. I've been working with Barry. There's a lot of trust there.

54:06I love it. I'm happy. And he like, looks at me. He's like, since when is life about happiness star? You can, he's like, you're right for this company. You can have an impact. Um, and maybe it was a drinks or talking to me, but my wife and I were like, all right, let's check this out. Uh, and so I called the headhunter back. I remember the next day in the parking lot of Sun Valley, I called the headhunter back, um, and got into the process, uh, very with a lot of trepidation because it was a public process. It's like Jeff Immelt was part of it. And, um, Meg Whitman. Yeah. Good memory. Meg Whitman was part of it.

54:46So I didn't want to be thrown in this public spotlight. And there's always like, who's going to be the next one. Um, and so, and it's a public company too, right? Exactly. Yeah. But you know, it's just a different scale and different, you know, I was not Jeff and Meltzer, Meg Whitman in, in, in terms of my profile. And that's fine. I was very comfortable with that. So I was really worried about, um, about it becoming public. So, so I decided to call Barry, uh, and I said, Hey, Barry, this is something I'm thinking about. Um, I didn't want you to find out about it. through the press. He hung up on me and I told my wife, I'm like, all right, I'm out of a job.

55:29But then he called me the next day and he's like, okay, I would do the same if I were you. How can I help? Oh, wow. So actually through the whole process, Barry was, Barry and I, you know, I honestly didn't expect to get the job. Again, I was this third candidate against some legendary business figures. And just to give people some context, right? I think they probably won't know the names, like tell a little bit, who are these other two people? So if you're, I mean, Jeffrey ML had been the CEO of GE, which was, you know, one of the biggest companies, the company, uh, and Meg Whitman had been the CEO of eBay, which is a marketplace company and had really taken eBay to, to its heights at the time.

56:10You know, now eBay has, um, competitively suffered a bit. So they, they were, you know, huge, huge business figures. and so barry and i you know we would have fun like chatting about it and gossiping about it um and i actually remember the final presentation i made to the uber board barry helped me on that presentation so it just tells you a lot about the person which is it wasn't in his um financial interest or business interest to help me out but as a person he was there for me what was the process like you said you had to do a presentation like what was the I don't even can't even imagine what the process looked like.

56:47So I think everyone comes and does their presentation. I don't know really, but I showed up. It was on a weekend. I think it was a Sunday. I showed up to a Sunday or Saturday to a law firm office and the board was there. And I made my presentation. It was it was controversial. And they asked me a couple of questions. I remember one of them asked me what my Uber rating was. and I looked at my Uber rating. I think the Uber rating was like a four, seven, eight or so. And there was this hush went over the room because I guess that's not a very good Uber rating. So I'm like, all right, I'm screwed.

57:25I'm out of this. But one way or the other, they picked me. That's awesome. How was it when you got the call that they were picking? It was, I got the call from Ariana Huffington and she goes, I'm not going to try to pretend I'm her. She goes, Dara, I've got good news and bad news. Which do you want first? I said, give me the bad news. She said, well, the fact that you are a candidate has already leaked. And I'm like, oh my God, I can't believe it. I looked at my New York Times notification and it's like, and what it said is, Dara Khazr-Shahi is going to be the candidate to be the Uber CEO. So she's like, the good news is we want you to be our new CEO.

58:07And I'm like, Ariana, I haven't accepted yet. You know, how can you do this to me? You can't put me in this position. I have no idea who, who, you know, leaked it, but it, it put me, myself, Barry in a very, very tough spot. We got through it. Yeah. No, I can't imagine. Weird way to figure out. It was parking lot. I was grocery shopping at the time. So you were more happy or worried? I was happy. I was, I mean, I was, I was, I was excited, you know, that this was a new challenge and I knew that it was going to be a big challenge. Uh, and it was a turnaround, but some extent Expedia was a turnaround for me.

58:47And, and so I had turned a company around. I kind of knew that it had it in me, I guess, but I felt really badly for Expedia because it's not the way that I wanted to go. Right. I've been at this company for 13 years. It was, it was my baby. And for the company to find out in that way was, wasn't great. And like what, compared to the presentation you had and the plan you had in your head of what we were going to do, like what turned out to be like expectation versus reality? You know, it was actually from an, from an operational standpoint, the, I was pretty on, which is I want to work with the engineering teams and the product teams to continue to innovate the way that Uber had innovated.

59:34And I thought there was a lot of potential in mobility and delivery as well. So that operationally, like I was looking at the presentation four or five years ago, I'm like, hey, this was pretty on. Because it was like innovation to drive growth, but then also discipline. And I had the I was a more mature CEO to bring discipline and get the company into profitability. The parts of the business that I was completely unfamiliar with were being in the public eye. It was just something that was really different. Like I was on CNBC at Expedia, but the media glare on Uber at the time, and to some sense still was something I never experienced.

1:00:14Working with regulators, you know, working in a regulated industry was something that was really new. And then raising money. I never had to raise money. And it's a really important skill set for a private company and a CEO. So those were all kind of new muscles I had to learn. That's super interesting. So how long before you joined in the IPO? I think I joined 2017. I think we went public two or three years later after that. And it was a tough IPO because it was an incredibly competitive segment at the time. Lyft was throwing a bunch of money into the market. Didi was throwing a bunch of money into the market.

1:00:55So it was not an IPO that was up and to the right. People were really questioning at the time whether Uber could ever be profitable. But we proved them wrong. What do you think is the, if you had to like get the ride sharing industry journey, right? And separate into a couple of phases of maturity, like how would you break it down? Yeah. So, you know, first thing I would say is that ride sharing rhymed a lot with travel, which is it was all about supply, right? It was a supply led business. And one of the things that Travis and team got right is like they went out there and established market and grew the supply base very, very quickly.

1:01:34Um, second was that it was planning flags market after market after market, you know, so they Uber expanded incredibly quickly. And basically an Uber GM was the CEO of the business on a local basis everywhere on a local basis. And these were empowered teams who grew up very, very quickly. That was a model that really worked well in terms of early, um, adoption, so to speak, but it wasn't a business that could scale because every single GM was doing their thing differently. There were huge local teams. And so over a long period of time, we have automated a lot of what was happening on the ground in terms of pricing and matching and surge, et cetera.

1:02:21Essentially, algorithms have replaced people to some extent and we built algorithmic pricing, algorithm matching in a way that has allowed the business to scale and then scale in a way that's been really profitable as well. And then after that initial phase, we kind of transitioned not just from mobility, but to mobility of multiple types of transport. So X and then Reserve and Black, two-wheelers, three-wheelers. Uber now even has taxi on the platform. You know, we used to be the enemy of taxi. Now we work really closely with our taxi partners. So then the expansion of kind of the product that we had on the ground was another phase that we went into.

1:03:03And then, of course, eventually getting into Uber Eats and not just mobility for people, but mobility and delivery of anything and everything. I think like what Travis did wrong got like widely reported over the years. But I'm curious from your perspective, when you got to the company, like what are the things you think he got right? He got a lot right. Um, I would say the most important thing that he got right was Travis had an eye and a deep appreciation of talent. He would find, you know, he would ask his network, who is the best, uh, uh, economist out there who can help me in terms of marketplace dynamics, because there are a lot of second order effects to building out a marketplace and pricing out that marketplace.

1:03:47and he would go get that economist. And so the talent bar that we have at Uber to this day remains very, very high because A players hire A players. And I think that came from Travis and I recognized that and kind of kept it going. But it's very easy with companies, especially when companies that are in a herd to grow, to lower the talent bar to actually kind of bring in a lot of team members. We were never willing to lower the talent bar. If it took eight months to find the right person, we'll find eight, you know, we'll take eight months versus a month to find a B person. So that was definitely something that he had.

1:04:27And then, you know, to this day, one of our values at the company is go get it. You know, it's literally what we do, but go get it is a statement about the culture of this company. This is a company that is going to be aggressive. We are going to go after every single opportunity that we have. We'll do it respectfully. We'll work with regulators, et cetera. But it's a company that at its core is entrepreneurial and aggressive and loves to build. And again, I think those were all characteristics that Travis and he had a lot of people working with him, that founding team kind of imbued within the company.

1:05:06When you joined Uber, how much money was the company losing roughly back then? I think it was losing about two and a half to three billion a year. And now you're just really starting. It's like, how much are you making a year in cashflow? We're free cashflow for the past 12 months has been eight and a half billion. You know, it'll easily see 10 billion next year. So how did that happen? Like, what were the main things that like you did that took a company from losing three billion to like making a half billion, still growing bottom line, what, 15, 20, 25, something like that. No, bottom line is 30 plus percent.

1:05:41Yeah, 30 plus percent growing. Like, what did you do? And top line 20 percent. So it's been good. One is, you have to grow the top line. We're a growth company. So I think when I took over, the business was doing about 30, 35 billion in gross bookings. The business now is at a$200 billion run rate. So this is a business that has kept compounding and it's moving into other forms of transportation. We're constantly finding other ways of transportation to wire up. Started with cars, went to, you know, restaurant delivery. Now we're going grocery. Now we're going to go to all retail. So the opportunity to kind of wire up all movement and build this next generation kind of on-demand logistics platform is awesome.

1:06:21And we're like nowhere close to any kind of a slowdown as it relates to growth. And then the second is, you know, I brought operating discipline to the company, which is, um, I do think that ourselves and a, and a bunch of other companies went through a phase where capital was a weapon. And basically it was about how much money can you raise in order to spend to capture market markets. And the, the having a, an enormous amount of capital to spend actually hurts operating discipline because you can't, you know, it's, it's painful. to optimize these businesses. You know, if you build an incredible algorithm that is able to predict demand versus let's say, you know, you can match based on actual demand in a market.

1:07:15You can match based on predicted demand in a market. And if you match on predicted demand, that is more efficient than based on actual demand. That's one little product that the team has built. It's actually a pretty cool product. That kind of efficiency can bring, let's say 1 % efficiency into a market, and then you have 15 of those projects and lo and behold, you're growing the company, kind of compounding the company at attractive rates. In the early days, someone would throw$100 million into the market and all of that work would be blown away. So to some extent, the excess capital actually worked against excellent operations.

1:07:54And so for me, the art was kind of pulling the capital back over a period and then driving excellent operations and efficiency across the company. And it's something that we've been able to do now, which is we're able to keep innovating, build out new products like teens or, you know, getting into autonomous and at the same time have a bottom line that grows significantly in excess than our top line. So let's talk about it. So, you know, if we just look at total kind of like costs or like, let's call it SG &A for the company. Yeah. What's that roughly that number? It's probably disclosed like order of magnitude.

1:08:34Yeah. I mean, the company does about, you know, will run rate of 200 billion. Our take rate there, true take rate, because accounting is a little funky, it's probably 20%. Um, so that's about, you know, call it 40 billion that we, uh, bring into revenue and profitability off of that as probably eight and a half, uh, to 9 billion. Uh, so overhead is about three to 4 billion for us. So that means like that's three or 4 billion that you're kind of allocating every year, right? Like you're basically like allocating capital. How do you do that? Right. Like, how do you do that at scale? And like, what do you think, you know, when you were kind of operating a holding company or allocating capital in some way now, in some ways, also allocating capital, like what's different about those two ways?

1:09:23And like, how do you do it today? Well, allocating operational capital is harder. And listen, there isn't a science to it, you kind of can look at it and come up with all kinds of fears. But throughout my career, there's no perfect way to allocate capital, there's, you can be informed, and then there's, there's judgment. And I would say the pattern for Uber in the past six, 70 years is use technology to allow you to essentially automate a bunch of color overhead functions and or improve customer service, reduce error rates, match more effectively, price more effectively. So and if you're able to use tech to do so, you can grow revenue without growing your overheads.

1:10:07How does that process actually work? Like someone shows up and that's like, hey, like I want to automate this part, give me some engineers. Like how does that actually work? I mean, you have engineer, you have engineering teams. So you may have a team that you may have a hundred people working on food and grocery search. You may have 200 people working in customer service, et cetera. So you have pools of engineers, essentially, who are focused on different teams. And each of those teams will have priorities that they're running through. hey, here are the 10 projects that we can get done. Here's a cut line based on the number of engineers that we have.

1:10:42And then below the cut line, there's always like amazing ideas below the cut line that we're not funding. And I think that's actually a good sign. It's frustrating. But to me, a company that has more ideas than it has capital, that's kind of a good signal in terms of its growth. And we will then look at where the cut line is for the different groups, you know, customer service, marketplace, rider experience, driver experience, eater experience, eater search, et cetera. We look at all the projects below the cut line. And that is probably the biggest indication of where we're going to allocate capital.

1:11:14If there are projects that look like they're home runs, but they don't hit the cut line, that's where we'll put more engineers. And in the past five years, most of our, the vast majority of our growth in headcount has come on the engineering product design side. So one of the things that I remember early in tech, I think it Peter Thiel or Eric Schmidt. Someone was talking about Google, which means like, if you make too much money, it means you probably ran out of good ideas kind of thing. And, you know, clearly like there's, there was something not exactly right about that, you know, like, and, you know, you have this now companies in eight and a half billion of cashflow.

1:11:51You're saying that like, there's some stuff below the cut line. How do you choose? Like, what's the right level to invest? Like why not just do everything and just hire more and all that? Well, because one is having that cut line forces a discipline. You know, if you can get everything done, then you get messy, teams get too big. So part of what you're trying to do is psychologically, you want teams to want to drive that cut line lower with the same team that they have. Instead of having 10 engineers work on a project, have eight engineers work harder on that project. So I think that discipline, like this is a place that we were hard, you know, like I tell people, Uber is not a place to come to if you want work-life balance.

1:12:35Like it's just not. You're going to work your ass off. You're going to be expected to work some weekends, you know, not every weekend. We're going to give you flexibility, but you're here to work. This is not a lifestyle company. So I think it creates a culture of people hustling, so to speak. that's the big benefit. And then, you know, I think that if you have that cut line at a level where there's some good projects that are missing, it just forces the best ideas to be the ideas that you're executing on because, you know, we fail like probably a third to a half of our projects don't work. And so that the more capital you throw at something, the higher the percentage of the stuff that's not going to work.

1:13:22So it drives the best ideas. The best ideas, it's kind of this competition amongst Darwinian competition amongst the best ideas. And I think that Darwinian competition, if every single idea can survive, then you're not going to have the best ideas make their way to the top. So maybe as the way to think about it, it's like almost like, hey, you want to do the most amount of work that you can still keep an excellence bar for. You don't want to like let it get sloppy because there's too much resources. An excellence bar and then a bar for people working hard. Yeah. I think that culture, you know, again, as companies get larger, some of the work culture can get softer and that's not something we want here.

1:14:02And what would be the sign if you went too far on this and being like, oh, we're being too stingy or like, how would you know? I don't know. You know, and that's where like business people think you can reduce business to numerical elements. And there's a bunch of judgment there. Um, this is a, our culture is a culture that loves rallying. Um, and for me, it is, it's having that rally culture and having the hard work culture is what allows me to know that kind of we're, we're skating on that edge that I want the company skating on. Um, let's move to AV, which is obviously like a huge, huge topic, right?

1:14:41Um, I guess like one of the things that I think you did was you eventually decided to cut Uber's AV program directly. Looking back, was that the right decision? I think so. Yeah, I think so. But you know, time will tell. We cut back on AV during COVID, which was an emergency for the company. We went from losing 2 billion to losing 3.5 billion or so. And we only had so much time to get to profitability. We were going to run out of cash. So there was a necessity there to some extent. But the other factor for me is that, you know, companies have cores that they're great at. And we were a software company.

1:15:19We're like, we're great at building algorithms, building search, matching, et cetera. We weren't a great hardware company. And hardware is, is really tough. The cycles are different. It's multi-year cycles versus, you know, multi-week cycles, so to speak, which is how we operate at. So I kind of concluded that it wasn't something that we were truly going to be great at. There was a set of companies that were just working on AV and it was life or death for them. For us, it was important, but it was a little bit of a side project. And then the necessity of COVID forced us to get out. And the other element that was really important to me is that because we were building our own AV, no one else in the ecosystem wanted to work with us because they were competitive with us.

1:16:06And so our hypothesis was that AV was not going to be winner take all. There are going to be multiple players who were going to win. And in order to play with the greatest talent base in the ecosystem, we needed to become neutral party and that we would actually go and actively kind of fund the ecosystem and build up the ecosystem and be a participant in it and help the ecosystem grow versus trying to build our own competitor. So I think it's the right decision, but only time will tell. Do you think that the AV thing is going to happen kind of like little by little, then all at once, or it will be incremental over like some period of time?

1:16:45I think the way I put it is little by little by little, and then all at once. In that if the vehicles are cheap enough and safe enough, then the economics of AV are spectacular. And not only will they be, you know, huge opportunity for ride sharing as it exists, they will extend the TAM hugely of the overall mobility pie. But it takes hardware platforms that are both safe and cheap. And we're probably two generations away from that hardware platform. What's the bottleneck right now? Um, the bottleneck right now is a lot of the, uh, the sensors compute, um, and, and then the software are essentially intermingled.

1:17:33You know, you don't have industry set APIs, uh, that, that are formulating it. It's, it's as industry matures and standards are going to come into play. So, for example, we announced a effort with NVIDIA where, you know, they are building the next generation AV stack with Hyperion. And they are building their own L4 software that they're going to essentially offer to all of all vehicle operators. And we will bring the network, we'll do data collection, and then we'll run fleet management as well. And then the OEMs can focus on manufacturing cars. And if you have a future where 10 years from now, every single new car sold comes at L4 ready and is$50 ,000,$60 ,000, that is a very, very compelling economic proposition.

1:18:25But you need a couple of generations of cars and computes probably there, but a couple of generations of cars to get there. And what do you think of the arguments around Tesla, around the kind of like vertical integration and the data collection and the manufacturing in the US and all these things? Yeah, and I put them in a good spot. Well, I mean, there's a lot there, but I think Tesla is they have gotten the hardware bill of materials to an industry leading level in the US. You know, the Chinese OEMs can match it and then some. But in the US, I think in terms of bill of materials, Tesla's the leader.

1:19:02What they haven't yet proven is that a camera-only system can be safe enough as it relates to AV. And, you know, time will tell on that one. Why do you think that's the hill Elon dies on? I think that he thinks from a first principle standpoint. And the fact is human drivers have two eyes and they can drive. So why can't a car, which is a computer with wheels, have eight eyes and do the same. Now, eventually, that sounds right. But the question is, over the next five years, over the next 10 years, as AV is developing, are you going to get there quick enough? I think the other thing that probably has taken some folks by surprise is that the cost of these alternative LIDARs, for example, and radar, the cost per lidar has come from like 40 ,000 a lidar now to a couple of hundred.

1:19:59So the hardware curves have come down probably faster than industry expected. Yeah. So like, why not just add a lidar there to be better than humans, I guess, you know, like if we could have eyes on our back, it'd be probably better off. Yeah. I can't speak for him. I mean, the one thing I would say is Tesla is economically motivated to make L3 plus or L4 work for the fleet that they already have on the ground. True. So that could be a factor. But again, I think Elon is probably convinced, you know, it's also possible scientifically, which probably is something that he cares about. And for food delivery is a different situation, right?

1:20:37Very, yeah. Yeah, food delivery is going to be a combination. There isn't going to be, you know, with mobility, autonomous vehicle can work on most use cases. Now you have to map out your domain, et cetera. So it's going to take some time for autonomous to get there. And certainly it's going to take time for the hardware costs to come down. We think delivery is going to be a combination of sidewalk robots that we have in place. We've got 10 partnerships now all around the world, you know, CERV, Cardigan, AvRide, AVRide, and a bunch of others. And these are like little cute. I don't know if you've seen them.

1:21:14These robots that walk along the sidewalks for short deliveries. They're not around in New York yet. So that's one. And then there'll be drones. So there'll be drone delivery that gets you deliveries longer distances in the suburbs. And there are a number of players there. We recently made an investment in fly treks who we're going to partner up with. And I think we'll have some other partners. And then there might be an in-between, which is like bike lane robots, or maybe, you know, cars. Although I think that's probably too much of an, too expensive a, a bill of materials to carry around food.

1:21:49And, you know, you always ran companies that I would say were, they were tech companies, but like, they were somewhat not like the most advanced technology. If you think about it, like, you know, with Expedia compared to self-driving cars, which is like at the, you know, like forefront of, uh, of technology. And, you know, I would put Brex in that category too, right? It's all kind of known tech compared to bleeding edge foundational model tech. How do you like, now that this is such an important piece for the business, how do you like learn about it, manage it? You know, how do you like decide how to make these bets and this such technologically complex part of the business now.

1:22:29I mean, I'm definitely moving up on the technology curve coming to Uber because Uber really does work with bleeding edge tech, especially like if you think about the scale in which we operate, right? Like we're, we got models that are making like 10 million predictions per second as far as what the next most efficient match or the price is going to be. So I think there's, there's really cool bleeding edge tech at Uber that works in the real world and can adjust instantaneously to the real world, which is really cool. It's a different skill set, but one that's like really, really cool from an edge build kind of a perspective.

1:23:11So I do think that Uber comes with it kind of a, you know, it is a heavy, heavy tech business. And then what we do is we hire from industry. So we've hired a bunch of folks who worked at Cruise or Waymo and other AV shops. And the combination of that technical know-how with the operational and scale kind of technology that we built, those engineering teams come together and then I get to jam with them on what the future is going to look like. It's part of the business that I have the most fun with. How do you know who to trust? Um, I think that getting to know your engineers and who are the ones who don't bullshit and the ones who deliver, uh, you know, you, it's just like anything else in business, which is, which is track record, uh, as well.

1:23:58You know, one thing I found with engineers is there are some engineers who overcomplicate. And so they'll get into the technical depth and, you know, confuse things. And then there's some engineers who simplify. And so those are the kind of engineers who they can very, very simply explain kind of deep technical concepts. And in the end, these concepts are that difficult. They're just hard to execute. Those are the engineers that I tend to kind of work with. But we've got a great team here. We've known each other for a long time. We've been through battles. Like Uber has not been up and to the right.

1:24:37Like it's been a kind of bumpy run. And you get to know them and you trust the ones who deliver, just like you trust anyone in business. As we're kind of getting through the end here, wanted to ask a little bit about the reflections and learnings now on Uber, which is like, what do you think if you had to boil down to, let's say, three decisions that you got right and then three decisions that you got wrong and you had to adjust in your Uber journey, like what would they be? In my Uber journey? Yeah. Obviously, you made a lot less mistakes in Uber than you did in the past as you have more experience.

1:25:13Yeah. So one, I would say decision that I got right was betting on safety. early on. We weren't as tight on our processes as I think that I wanted to be. And it was standing for safety was like one of the first things that we stood for. And, you know, to some extent safety, like making sure that you, every single driver that you bring on board is background check, et cetera, it can slow down processes. It can add cost, but when it comes to safety, you can't cost out safety. So that was, I think, I think a really great bet. Um, second bet was actually when I first came on there, there was a lot of like, who's pro Travis and who's anti Travis.

1:26:02There was a lot of political BS going on. And I was like, I don't give a shit who's pro Travis. Like I want to, if you're pro Uber and you're good, I'm with you. So I, I kind didn't play those games one way or the other. I just, um, you know, I'm going to meet you and I'm going to judge you based on what I see and what someone else tells me about you. So I was able to take some of that political edge off. And then the third, I would say that we definitely got right was, um, was betting on eats like in a big way early on, it was losing, uh, billions early on, uh, and, um, it's now making billions.

1:26:36So that was an important bet where the only player that's a very big in mobility and very big in delivery as well. Mistakes. God, you're making this painful for me. I'd say one mistake was that we focused too much on the big cities. Uber was in the big cities. Uber was a big city business. That's where mobility was. Started in Paris and then New York and Sao Paulo. Those are our biggest cities. London. And it turns out there's a huge market outside of the large cities, especially with delivery suburbs, less sparse areas. It's actually one of our top growth areas now, you know, seven, eight years in, we're still growing at like one and a half to three times, um, the speed that we're growing in the big cities.

1:27:23And, uh, we could have focused on that earlier. Uh, so I think that was a mistake. And then, you know, we made some moves that I regret, like we got out of food in India. It's a huge market. It's a challenging market. But I would have liked to be multi-platform the way we are in mobility and delivery in the US and the UK. It gives us, the platform gives us huge advantages in terms of Uber just being a part of your everyday life. And while those were good financial decisions at the time, boy, I'd love to be in food in some of the countries that we pulled out of. And if you had to like encapsulate some of the learnings that you had from those two and you know what for future decisions like what did you learn that you're going to do differently as like more of a framework is there anything that so i think one is um uh don't allow your business to over overfit your current market we overfitted to big cities and we completely ignored the suburbs because we just made assumptions about the suburbs that turned out to be wrong.

1:28:30So I'd say that's the biggest one. You know, would I have truly, truly, truly at the time, would I have made a different decision on India based on the competitive environment? I don't know. It's just, I wish I didn't have to make that decision. It could have been the right decision. It makes sense. Super, super helpful. Dara, this was amazing. You were like so candid and, you know, I learned a ton from this, so I really appreciate you making time. I'm glad. It was a pleasure. To do this with us. And I'll see you at the next board meeting. Exactly. I'll see you soon. Take care. Awesome. Thanks to our friends at Atomic Growth for helping with production and distribution.

From the publisher

When Uber needed a reset, only a disciplined leader could see the path forward.

Raised in one of Iran’s leading industrial families, Dara Khosrowshahi watched everything disappear during the revolution as his family rebuilt their lives in the U.S.

In this episode, he shares how, with education as the only constant, he rose to become the youngest VP at Allen & Co., played a defining role across IAC and Expedia, and ultimately led Uber from deep losses to a profitable business.

We also get into:

the immigrant childhood that trained him to adapt faster

why betting on people, not models, became the most important lesson of his career

the early failures at Expedia that hardened his decision making and leadership style

how he rebuilt culture at Uber while operating under intense public scrutiny

the long term vision of turning Uber from a rides company into a real time logistics network

ABOUT US:

We’re proudly sponsored by Brex—a brand I co-founded, now supporting over 30,000 businesses like Anthropic, DoorDash, and Scale AI, helping them make every dollar count.

I’m grateful for their continued support as I bring you all conversations with some of the most exceptional founders of our generation. For more information, please go to: https://www.brex.com/?ref_code=bmk_audio_HDinHD

Connect with us here:

1. Dara Khosrowshahi- https://x.com/dkhos

2. Brex- https://x.com/brexHQ

3. Henrique Dubugras- https://x.com/hdubugras

This episode was produced and distributed by our friends at Atomik Growth.

From Iranian Refugee to Uber CEO | Dara Khosrowshahi

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