Invest Like the Best with Patrick O'Shaughnessy
00:19:30 · Dara Khosrowshahi
[00:19:30] S2: We're dealing with it now. Actually, it blew through our AI budget in a quarter for the whole year, essentially. And it is forcing us to adjust. We are going to meet our headcount increases because to the extent that my engineers are getting much more efficient, their throughput is increasing, they're becoming superhuman in terms of their output. There's a cost to that, and it's a significant cost. And at the same time, we're metering the increase in headcount. So my view right now is drive adoption, encourage usage across the company. We do believe in efficiency here. We've got over $10,000,000,000 in free cash flow, which is great, but it's on well over 10,000,000,000 trips a year. So we are not a high margin business. We want to really drive efficiency in order to lower prices for riders, to get more earnings to our earners, etcetera. So I do think it's a combination for us right now of encouraging adoption, but then driving efficiency. The way that I put it is, we're using the more expensive models to explore. Hey, let's try a new interaction here. And obviously, these frontier models, whether it's an OpenAI model or a cloud model, they really are terrific. And they're great to experiment against. Once we scale some of these experiences and interactions, we'll look to bring in more efficient models that are more efficient on a token basis or open source, again, lower costs. So exploration is go, go, go, but then efficiency and scaling is something that we're also talking about.
00:21:03 · Patrick O'Shaughnessy
[00:21:03] S0: So you're one of the few companies, many of them amazing companies with amazing leaders, that are in this AI meets the physical world where you've got a scaled brand and distribution, you're an aggregator of demand in many ways. And I have so many questions about this, but I guess the first one is just what that is like, how you think about that challenge, that problem, that opportunity as one of the small handful of companies that has the right to win in how that new technology links up to the physical world.
00:21:31 · Dara Khosrowshahi, Patrick O'Shaughnessy
[00:21:31] S2: I think the first is there's an enormous opportunity in just it's boring, but it's wonderful boring, which is just building larger models. So building our models in terms of our feed models or search models now are probably 10,000 times bigger than our older models. They're just able to take much more data about you and make predictions about what are you going to search for. Now we have universal search, for example. If you search for something, it's not just classified as rides or eats or grocery. We can show you everything that we have available across our services. So first, it's just like the tooling has gone better, the capabilities have gone better. And today, we can guess when you take an Uber ride, three quarters of the time, we can guess where you're going and it's just a one tap interaction. That can only improve based on these larger models. And as it relates to the real world, we can anticipate what's happening in the real world much more effectively now. And then the form factor with which you operate is going to change as well. And more and more, and it's going to take a while, you'll have drones getting your food to your home or you'll have AVs delivering you from place A to place B. So everything is changing about it. Some of it is immediate opportunity now, but we think there's a ton of opportunity going forward. [00:22:47] S0: What do you think has to be true for Uber to win the demand aggregator top
00:22:47 · Patrick O'Shaughnessy, Dara Khosrowshahi
[00:22:47] S0: What do you think has to be true for Uber to win the demand aggregator top [00:22:52] S2: slot in AV specifically? Supply. So we are a supply led company. The more drivers we have in the marketplace, the more restaurants that we're wiring up for you, a more latent demand that we have. And it's one of the lessons that I learned when it came from Expedia to Uber. At Expedia, we were really focused on demand. How many consumers can we get to the website, etcetera? And we were demand first company, and then we would build out hotel inventory and flight inventory in response to demand. At Uber, everything is upside down. One of our very, very significant growth opportunities right now is building at our surface, not just in big cities, but in the sparse markets in all of the suburbs of the world and smaller cities of the world, not the top 10 cities in a country, but the next 50 cities, the next 200 cities in the country. The first thing we do is actually go out and recruit drivers, recruit merchants and restaurants, groceries, couriers, and then just the demand shows up. I don't mean it's not that easy, but the biggest opportunity and challenge we have is making sure that we secure every single supply, every single car out there that's going to take you from point A to B, every single restaurant, every single retailer, every single grocer. If we do that, the demand will take care
00:24:09 · Patrick O'Shaughnessy
[00:24:09] S0: of itself. In AV specifically, what does that feel like? It feels obviously like we're just at the very early, early part of the S curve. I'm sure that if the answer is supply, you want to just be the demand aggregator with the most supply. So what does that feel like? What does the state of AVs feel like to you?
00:24:26 · Dara Khosrowshahi
[00:24:26] S2: It's very early, but it's moving very fast. So we've got over 30 partnerships now with incredible partners like a Waymo to a neuro and lucid to an Nvidia that is building not just compute and sensors, but also a software driver now to companies like Wabi and Wave. We Rides of the world, Pony AIs of the world. Just like you're seeing in the foundation model space, there isn't going to be a single winner. There are going to be many players on the foundation models. There'll be open source models as well. We're seeing the same kind of acceleration in the development of AV. And as a result, we want to be your go to market solution for companies that are building out these digital drivers. What we're allowing these companies is to really focus on building the driver. We are building services around them. We're going out and securing depots and charging in cities in which we see the regulatory landscape moving in the right way. We're working with fleet partners. We're securing financing. We just announced a billion dollar financing line with Santander for EV fleets and AV fleets. We're working on autonomous insurance as well. So we're building the entire ecosystem. So someone who builds a driver can get those cars in the road and then we have all the supporting infrastructure. We are collecting data as we speak in the streets that we can feed to the model. And then when they hit markets, we've got instant demand for them. And what we're seeing is consumers love the product and AVs that are on our network are 30% or more busy than, let's say, 1P AVs who aren't using our network. That 30% in terms of trip per vehicle per day, in terms of revenue per vehicle per day can make a huge difference in terms of your ROI of investing in these expensive cars.