Autonomous Driving Is a Trillion Dollar Opportunity With Uber President Andrew Macdonald

0:17Today's show is sponsored by Tucriam. Looking to diversify your portfolio beyond stocks and bonds? Commodities are getting more and more attention as we enter 2026. Tuquium's agricultural ETFs offer a way to access the futures prices of essential crops. These funds may help manage inflation risk and add diversification to your portfolio. Ask your financial advisor or explore Tuquium ETFs on your own. visit to cream.com that's t-e-u-c-r-i-u-m.com click the link in the show notes for more all right hey guys my name is josh brown and welcome to live from the compound uber just reported one of the best quarters in the company's history as a publicly traded stock as good as the fundamentals are there are still large questions hovering over the whole space as investors like us try to figure out how the autonomous driving future is going to play out.

1:18By way of full disclosure, I am a long-term shareholder in Uber, and nothing you're about to hear should be considered financial advice. My guest today is Andrew McDonald, known to his friends and colleagues as Mac. He is the president and chief operating officer at Uber, leading all business initiatives for the company across mobility and delivery, as well as cross-platform efforts like advertising, customer support, and the company's autonomous vehicle strategy. Prior to Uber, Andrew was an entrepreneur and a management consultant with Bain & Company. So I'm going to call you, Mac. We established that.

1:58Works well. Thank you. All right. Thank you so much for doing this. I really appreciate it. And I have so many questions. It sounds like your portfolio at Uber is pretty broad. do they just keep putting more things on your plate? Are you asking for them? Or is there some reason why you have all these tentacles into everything that the company does? Well, I appreciate the question. I mean, I've been with Uber 14 years, and I've never asked for more responsibility, but you just kind of grow up with the company and scale with the company and more comes on your plate. There's no shortage of stuff to get done.

2:36And so it's, you know, I moved into this new role in the spring of last year. And I ran mobility for basically since we went public in 2019. I had the global mobility business. And then with the move last year, took on the delivery and freight businesses. And it's a lot of fun. Okay. It sounds like every day might be different from the day before. So that's cool. No doubt about that. I mean, Uber is a company that has a lot going on. when you're as global as us, you're in spaces that are as competitive as us. It still feels early to me, which means it's a little frantic at times, but it's great.

3:16Okay, so you guys reported last week and we're not gonna spend a lot of time on numbers and financials, although it's worth pointing out, you guys hit a$15 billion annual run rate in trips, surpassed 200 million monthly active users and it was a record gap income number, adjusted EBITDA of two and a half billion, which was up 35 % year over year. Quarterly trips up 22%. Monthly active platform consumers up 18%. Free cash flow for the full year up 42%. Gross bookings guiding to 17 % to 21%. And membership program up 55%. That's Uber One, up 55 % year over year. And those members are now about 50 % of your gross bookings.

4:05I feel like in a normal universe, people look at those highlights and they say, oh, my God, this might be one of the best businesses I've ever seen. Can you talk a little bit about what what what it's been like over the last few quarters delivering at that level and and what it really takes for both you and your team to be able to do that? Because I think I think maybe it's it's one of the more extraordinary stories taking place in the market right now. Sure. I mean, honestly, if you go back even further than that, I think if you go back, you know, post-pandemic, and I'm sort of done using the COVID era as a reference, but if you talk post-pandemic, I don't think there's anybody that would have looked ahead five years and said, you know, Uber is still going to be a 20 % grower and is going to be able to sustain that while marching margins up basically every single quarter.

4:59but that's what we've done. And so, you know, I would have taken a hundred times out of a hundred, I would have taken this last quarter's performance, or even if you go back and say the last year's performance five years ago, coming into last year, I would have taken the year's performance that we got. So I think we're not only beating our internal plans, but sort of doing what we said we were going to do externally. I think we're surprised by the level of new customer growth. We added more customers last quarter than we have at any time since the pandemic. I think people, the average sort of consumer or investor, I think says, well, who doesn't have Uber?

5:40Everyone I know has got Uber. So how much room is there left to run? But when you think about the sort of large tech companies in the world, they talk about billions of users every month. You know, we're still talking about 200 million users every month. There's a lot of people that are still new to our platform, a lot of large markets where Uber is actually sort of a startup still. You think about the places like Germany and Spain and Japan on the mobility side, Argentina. You know, these are huge economies where Uber is just getting going. So we're signing up a lot of new users. And then you'll hear us talk a lot about engagement, too.

6:15You know, people use Uber on average anywhere between five and a half and six times a month. but in our best markets, that's closer to nine, right? And then in the best quartile of our customer, best decile of our customer in our best markets, that's over 20. And my goal is to grow a lot more of those types of customers who are using us basically every day. So I want to share something that came from your, so you guys are definitely listening to the market because with all of the concern or uncertainty about the autonomous future, which we're going to get into, people are, they're asking for more.

6:55You guys dropped 11, you guys dropped like 11 pages worth of charts and data. And, you know, so it sounds like you're definitely responding to what the investor community wants to see and hear. I thought this map was great. John, can you pop this up? So for people listening, not watching, Uber operates in 8 ,000 plus U.S. markets covering 95 % of U.S. population. One of the things that people say skeptically is, well, most of Uber's business is coming out of the top 20 cities. I would say most of everyone's business comes out of the top 20 cities. But when you look at this map, I mean, you guys are literally everywhere where people need rides.

7:39I thought it was a really good reframing of that issue. What would you say about just your competitiveness in the U.S. and the level of coverage that you currently have? So a few things. One is, I mean, I appreciate the kudos on the extra disclosures. And I think Balji, our new CFO, who I think you know well, deserves a lot of credit for pushing us as a leadership team to just talk more openly about not only the strategy, because we've talked at length about the strategy publicly. been very open about our sort of platform approach, but actually show a little more skin, share some data, show what existing deployments look like.

8:21Also show what, you know, what we think the world eventually looks like. And by the way, I think you can expect more of that. So appreciate the push and we'll do more to be more transparent. In the US, and then I want to talk a little bit about concentration, right? So the point, you know, I think it's been well made now by us that even within the US and even just within US mobility, you're talking about 70 % of our GBs and 75 % of our profits outside those top 20. You know, I would first, if I'm looking at Uber as a company, I would start by saying that's true for US mobility. But then of course, about half of the GBs of the company overall are delivery, which has sort of a different disruption risk profile from an autonomous perspective, I think is much more insulated by it from autonomous disruption.

9:12You know, autonomous drone delivery and autonomous bot delivery is a thing and will be a thing, but I don't think it's sort of disruptive at its core to the marketplaces like people view autonomous cars to be. And then if you take even just our mobility business and slice it into, you know, countries where average fares can support autonomy in the next five years versus not, you know, there's a big piece of that business that's not relevant to autonomous cars as they're currently designed today for years, right? How long until you have autonomous vehicles disrupting$3 average fares in Brazil or, you know,$2 average fares in India?

9:51So big pieces of our mobility business, even outside the U.S., I think are just not going to be relevant for autonomous vehicles for some amount of time. So then you get into the U.S. story, and I think we do a good job of saying, hey, this is not a top 20 story. This actually needs to be a nationwide story. And it's much harder for, A, these deployments to get into those cities. And even once you're in those cities or suburbs or near-in suburbs, how long till the economics actually work on a fixed fleet? And the answer, I think, is going to be longer than people think. So even though we're very bullish on the technology, I think the specifics of how it gets deployed and how it rolls out are very different than how most people think about in terms of software disruption.

10:32This is not, you know, you can't just push a button and have, you know, it's not a social network that's available to everyone as soon as you turn it on in a country. Physical, real-world challenges to deployment here. And it'll take time. So I think the main point of that slide is, one, just contextualizing what is, I think, a lot of hyperbole around how fast this happens to our most important country in the U.S. But then, two, you should take away that it's going to take some time. And for us, and very explicitly in our strategy, time means more players get to the finish line and time means more time for our strategy to play out.

11:12So let's talk about your strategy. You guys are pursuing a partnership model for the most part in autonomous. The idea is there will be many OEMs now able to take their cars, plug in software, turn those cars into autonomous vehicles, and Uber is waiting with arms wide open to work with those players. Then you've got software startups. You've got companies making their own autonomous car. You've got like every version under the sun. Some are making the cars and selling them. Some are building taxi fleets. And you guys are basically saying, we will work with anyone who wants to harness the power of a 200 million user network.

12:02And we will find ways to work with even players that are going to compete with us in some markets and cooperate with us and others. Why is that the right strategy? And talk a little bit about some of the things that you're already seeing as these things roll out in different cities around the world. Sure. So I think, I think importantly, the main premise of that strategy is that AV technology gets solved by multiple or many players and not one or two players, right? And I think the most compelling bear case on our strategy has always been, hey, the technology problem from a software perspective is actually so difficult that only one or two large companies are going to actually solve it and are going to be able to scale and commercialize it.

12:54And if that happens, those players are going to disaggregate you Uber because they're going to view what they did as the hard part. And they're going to say, why would I sort of put my cars in Uber's network? I don't need Uber. I'm the only one who has this technology. So that's always been, I think, a valid bear case going back five to 10 years. The challenge with that bear case, in my opinion, is that today there are already many companies that have solved this problem and many that are on the cusp, right? So we have seven deployments live right now globally. We're working with partners outside the US, such as WeRide and Pony and Baidu, who have already solved this problem in China and are starting to take that technology globally.

13:35And I think when you either spend time on the ground in the Middle East, where we've got deployments live with multiple partners, or spend time on the ground in China, and you'll see that while what Waymo is built in the US is amazing technology, I think comparable level of technology exists across multiple players outside the US as well. So once you start getting to a world where you say, okay, there may be five or ten or more companies that solve the software problem. And when you start to see companies like NVIDIA getting serious about, you know, starting to deploy within one to two years their approach and their generalized approach, which will work across multiple hardware platforms, I think you start to conclude that our strategy is the right one because this sort of autonomous driving the L4 software capability ultimately is going to exist across many different companies.

14:29And if you think ahead 10 years, my firm belief, and Dar has said this multiple times, is that every car, certainly every car in Western markets, is going to have autonomous driving capability. And in that world, it just comes back to the core economics of our business today, which are driven by utilization. And on the consumer side, are driven by who picks me up the fastest, most reliably, and cheapest. And I think a network like ours that's aggregating all autonomous vehicles still wins in that world. So that's why I think it's the right strategy. Again, the proof points are already happening today that L4 autonomous technology is largely a solved problem.

15:04And so now it's just a question of fast forwarding to that end state where every car is autonomous, utilization wins the day and consumer experience wins the day. So another thing the bearers say is that there are no switching costs. Somebody can just as easily download a Tesla cyber cab app or a Waymo app and why would they stay with Uber? My argument as a shareholder, as an investor, has always been, how is this not going to come down to distribution? If everyone has technology that works and that seems like that's what you believe will play out, then it's going to come down to, how do I get a ride fastest?

15:45And maybe it's a human and maybe it's autonomous and maybe I don't care. I just want a good price, convenience, I want to get to where I'm going. I want the car to be clean. And I want the billing to be simple. And in that world, it's hard for me to picture how you guys don't win because by bringing on different fleets and different types of autonomous vehicles, it's just expanding choice and capacity in the markets that you operate in. And why would someone opt for an app where there's only one mode and it's not necessarily the most convenient or the fastest? Is that sort of the way you guys are thinking internally about this?

16:27Short answer is yes. And I mean, look, let's ground those same bears in the reality of our business today. Our core human ride-sharing business has very low switching costs, right? You know, this has always been, I think, somewhat of a valid criticism of the ride-sharing industry. And maybe where, you know, some of the folks that thought we would never get to profitability a decade ago got it wrong was, yes, there's minimal switching costs. And by the way, that's true. on the consumer side as well as the driver side, right? And we see a good share of our drivers work across multiple apps and that's fine.

17:01And we see a good share of our customers who may have a couple of ride sharing apps downloaded, but ultimately it's gonna matter who gets the first look, who's being open first, and what they're gonna care about is the same thing they care about today from the consumer perspective, which is price, reliability, which is generally pickup times, And can I count on it in peak periods? Right. And then, of course, safety. Right. Those are the three things consumers choose on today. And on the driver side or the supply side of the marketplace, it's generally about earnings as a primary driver. And then everything else follows.

17:39In an autonomous world, those factors are all going to be the same. Right. On the supply side, it's all going to be about efficiency of asset utilization, utilization, trips per vehicle per day. Like does Uber get me rides or not? If I put my autonomous vehicle on the Uber app, do I make money or I don't make money? That's right. Exactly. And how does that compare to other options? Because of course you can put it on other networks. And of course, I think 1P networks will exist for anyone who produces an autonomous vehicle. But the reality is if I have my own 1P ride hailing network and it's branded AV company ride hailing network.

18:18First person. First person. First party. Sorry. Yeah. Yeah. It's my channel, but I have another channel, which is Uber, which I can plug into instantly. And Uber's channel is 30 % more efficient. My vehicles are going to run 30 % more trips per hour. I am eventually going to also plug my vehicles into that channel. And if I'm a consumer and I have access to all AV supply that exists in the world, I am eventually just going to put all of my first requests through Uber because they will have aggravated all supply. Mac, a lot of people... Oh, I'm sorry. Continue. you? No, look, the analogy that Dara likes, which I think is great, is just think about the delivery side of our business.

18:58And many of our, the largest restaurant chains you will find available on Uber Eats also have their own direct distribution channels, right? Their own delivery. Their own delivery. If you're McDonald's, right? If you're McDonald's, you have tens of thousands of stores and these stores are just boxes and they're just trying to drive utilization of those stores. You can get those stores to deliver to you through the McDonald's delivery app, or you can go to Uber Eats, or you can go to DoorDash or any of our competitors and also get McDonald's delivery. One P first party versus third party distribution is not an either or.

19:34I think it ultimately is both. But ultimately what wins out at the end of the day is just driving the most utilization out of that box. An autonomous vehicle is just another type of box. And I think that's how the world plays out. uh one of the things one of the cases that you guys have made is that uh i think a lot of people think of this as like a a pizza pie and who's going to grab all the slices but you guys have actually made the case that um autonomous vehicles are actually growing the category overall and i want to put this chart up uh john do you have this autonomous vehicles likely to drive incremental category growth.

20:09And this shows Atlanta and Austin, which are the two markets that you are partnering with Waymo in right now. And what are we learning based on the data that you're collecting since this partnership has begun? I think the most important thing is it's not a fixed pie. As the service becomes more reliable, higher quality, as you have more options as a consumer. 40 % of our customers are now using multiple products, right? As you have more choices, you're going to gravitate to using mobility as a service more versus driving your own individual car or using other alternatives. And I think that's really bullish to the long-term category size.

20:51So, you know, the point with that chart is sort of the same thing we said about ride-sharing when it originally debuted. You know, when you think about UberX, which started come into market around 2012, 2013, we always talked about growing the pie, right? The relevant, if you go back to the original Uber pitch deck, you know, it talks about a TAM for this industry, which is smaller than our company today, right? The entire industry is smaller than the company today. You know, it was always about growing the pie. And I think that's true with AVs. And I think the data and Austin - Changing behavior, growing the pie because you're introducing just a new way to do things and a new way to get around and land in a strange city and have reliability and how you're going to get from the airport to the hotel.

21:36Like it's, it's been like behavior altering this, this category. Fundamental consumer shifts, right? And I think over time, what you're going to see is people move away from individual cars because ultimately not driving is going to be more convenient, cheaper and safer than driving. Yeah. I also want to get into just some of the stuff with the other partners that you mentioned. It sounds like you've got different players for different regions around the world, and then you're collecting data from all of this activity and probably bringing some of the insights from one region into another so that globally you will be able to improve your service faster.

22:20than someone who's only operating in a handful of cities. And so you're working with mentioned Avride, WeRide, Pony AI, Baidu, Waymo, we mentioned Wave. There are probably some things about maintenance of these fleets, fleet management in general, combining rides and eats. And in these markets, having both human drivers and autonomous vehicles sort of as an option for the same consumer. And let's put this slide up. You say, we intend to be the largest facilitator of AV trips in the world by 2029. And you're showcasing all of these different partnerships. And we'll talk about the OEM partnership with Lucid in a minute.

23:11But for those not watching, there's a lot of logos on this screen. Mac, what's the idea with doing this globally and not solely focusing on the United States? So a few things to think about. One is, I think with each deployment, our overall portfolio of players gets stronger. And what I mean by that is there's a ton of learning we do with each new city we launch alongside our partners about how to make all our partners and all our markets successful. You mentioned data collection. I think that's a really interesting example. We have almost 10 million drivers and couriers on the road on the Uber platform, doing trips, doing deliveries, encountering every single edge case you can think of that happens when you're talking about the long tail.

23:59Because the long tail is what's really difficult to solve for autonomy. I also think there's a very specific long tail as it relates to ride sharing or delivering things that maybe are not captured with the average consumer driver. So what I mean by that are pick up and drop off experiences, for example, or experiences at large and complicated venues like airports. You know, Uber sees more of these things than any company in the world. And being able to record that data and share it back across our partner network, I think, is really powerful and helps them focus on the things that they're good at, which is, you know, developing the core autonomy software or hardware in the case of OEM.

24:42So data is a really important facet of the strategy. I also think the physical world deployment is more challenging than people understand. Like the long tail to launching a new city might not actually be the L4 software. It may not actually even be the hardware. It may be the amount of power you need to stand up a depot that can house 400 cars at the right location in a new city. And so Uber taking our existing fleet network because we have dozens of large-scale fleets that operate on our core business today and deploying those folks to own and manage assets on behalf of our AV deployments, I think is also really powerful and not well understood.

25:23And then there's a whole host of other things. You think about customer support, payments, identity, risk, all these kind of core capabilities that we can extend to our partners to make their deployments successful, I don't think is well understood. And you're going to see us talk more about that in the next couple of months. So I would love to hear you guys talk more about that because these seem like innate strengths within the company that are not currently being appreciated in terms of how important they're going to be for any player in this space, whether it's a 1P or another 3P app. There's a lot of physical infrastructure that has to exist in order for that customer experience to work.

26:03The last thing I wanted to get to was something that – I mean it seems like a new strategy, but maybe it's not so new. You guys are now using your balance sheet to actively invest in a fleet that's being deployed in partnership with Neuro and NVIDIA. And for the first time, you guys have your logo on an autonomous vehicle. And I was talking with Mark Mulhern, who's an investor who covers NVIDIA. Some would say obsessively. He's a bull. But he asked me to make sure I ask you, are we going to see more of this type of thing where Uber is willing to own a piece of an OEM in the case of Lucid or a joint venture where you guys actually own some of the vehicles?

26:56I think in this case, the goal is to put 20 ,000 of these on the roads. and the Uber logo being prominently featured on the vehicle itself, similar to what we're now seeing with the Waymos and eventually the Teslas of the world. Is Uber going to have their own branded fleet? And is this the first of many? So Uber is famously an asset-like marketplace. It's been, I think, one of the appeals for investors about our business model. And our intent long-term is to maintain that. um you know we don't 10 years from now i don't want to be sitting here as the largest owner of autonomous vehicles in the world even if i am confident that we're going to be the largest uh network for getting autonomous rides you don't want to have a million you don't you don't want to have a million av taxis um on uber's balance sheet i want to have them on our network i don't want to have them on our balance sheet but there's a difference between what we think the end state model looks like and what we think we need to do in the next couple of years to make sure that we lead in that end-state model.

28:01And I think the reality is there's a lot of value in having a company like Uber step up and be able to underwrite some of the asset purchases, or in the case of working with OEMs, being able to help them stand up a supply chain on their side and start mass producing these things, knowing that they've got guaranteed locked-in demand from Uber. So we will play that role in the short term. I think it's actually a really important role for us to play in the ecosystem that makes sure that we're there for that future state where these assets are financialized. They're probably underwritten by sort of more traditional banks or infrastructure investors.

28:36They're owned by either the fleets that are ultimately managing them or financial investors and then held and managed by the fleets. So that long-term model will emerge. Darlax, to talk about the hotel industry and how REITs ultimately ended up being the entities that actually own the properties, which were separate from the hotel management. It may be a model that looks like that. But in the short term, we're going to do whatever it takes to make sure that we continue to be the leader in the space. And that's going to mean being a little bit more aggressive with our balance sheet, being responsible, but aggressive with our balance sheet, and ensuring that both our OEM partners and the fleets that are going to run these vehicles for us have the financial backing that comes from Uber.