Invest Like the Best with Patrick O'Shaughnessy
00:27:38 · Patrick O'Shaughnessy
[00:27:38] S0: I'm so interested by the whole build, partner, buy decision that I'm sure you're making in a million ways every day. You've got these advantages. You've got all this capital, all this free cash flow you can allocate, all this infrastructure, and of course, the demand aggregation that you've already built, which are huge advantages for creating liquidity, etcetera. How do you think about partnering with companies like a Waymo or something that you could certainly see being a competitor in part of what you do if they get a big enough network and the service is good enough, people are always going to buy for huge markets. What is that like navigating that specific example or in general right now with AVs, partnership versus having your own fleet?
00:28:12 · Dara Khosrowshahi
[00:28:12] S2: It's a coexistence that frankly I'm quite used to coming from the travel business. If you think about OTAs, these online travel agents, they compete with a Marriott, they compete with a Delta for the consumer. They compete with an independent hotel as well, all of whom are building a direct channel for the consumer, many of whom have loyalty programs. But at the same time, they want incremental consumers coming from the platforms because they have a big box to fill they and want to drive as much utilization of that box as possible. The returns for a hotel that has 70% of its rooms filled versus 90%, it's night and day. You will take the 90% every single day. The same is true for example in Uber Eats. We work with McDonald's, we work with Starbucks, we work with Chipotle. All of these companies to some extent also compete with Uber Eats as well. And the same will be true of a subset of AVs, which is a Waymo. Of course, they want to build their own brand and their own channel, but at the same time, we are able to drive more utilization for them when their cars are on our network. The same will be true of Zoox. The same will be true of neuro, etc. So we're going to have some players, for example, a wave who's focused on building one end to end model that they license to OEMs. And we will be responsible essentially for all the demand. So there are going be lots of bottles, but I don't think it's going to be black or white, is do we only compete or do we only work together? We think there's going to be an amalgamation of business models. There already is in travel. There already is in food. Same thing will happen in transportation.
00:29:52 · Patrick O'Shaughnessy
[00:29:52] S0: What's your pre mortem for this going wrong? It's five years from now and Uber has screwed up this opportunity. What do you think the most likely reason for it is?
00:29:59 · Dara Khosrowshahi
[00:29:59] S2: I don't think it's necessarily an Uber thing. I have a big question for the industry. You've seen how powerful AI is, but at the same time, how unpopular it is with the general public. And folks like you and me in the corporate world, we're just amazed that we're driving utilization. The way that these AI models interact with the average person is, yes, search got a little bit better. But if it's driving up or I think it's going to drive up my electricity costs or if it's going to cost my cousin's job, that doesn't feel that good. And I think the same will be true of AVs, which is it's terrific technology. It is going to be safer than human beings. But how does it interact with emergency service providers? How do we make sure that the technology is available to everybody, not just the wealthy? We've got to have these dialogues with regulators, with real people living in cities, with our drivers whose earnings may get affected. Now, drivers in Austin and Atlanta, where we have two big partnerships with Waymo, drivers on the Uber platform, they're making more money. The number of drivers joining the platform is increasing because it looks like AVs are actually adding incremental demand to the platform. So we have good news early, but we've got to communicate and we've got to go at the pace that society is prepared for us to move. Otherwise, there will be a backlash and you're kind of seeing in some of the public perception out there. I'm sure your answer is something like not on my watch,
00:31:28 · Patrick O'Shaughnessy, Dara Khosrowshahi
[00:31:28] S0: but if I were to assume that the public out of your control thing is solved, can you imagine what the same primordial answer would be through something that you do control? [00:31:38] S2: I think it's what I said, access to supply. And that's why we have a partnership with basically every AV provider, whether it's in mobility or delivery or even freight. We need access to supply. We're investing time, we're investing capital. And I think we're in a great position to make sure that we are the largest amalgamator of AV supply, just like we are the largest amalgamator of transportation services around the world. [00:32:04] S0: We now assume the success scenario where Uber is the clear demand aggregator winner What of does that unlock, do you think, on the other side of that, whether that's consumer experiences or other things that aren't currently possible?
00:32:04 · Patrick O'Shaughnessy, Dara Khosrowshahi
[00:32:04] S0: We now assume the success scenario where Uber is the clear demand aggregator winner What of does that unlock, do you think, on the other side of that, whether that's consumer experiences or other things that aren't currently possible? [00:32:17] S2: We think it's another trillion dollar marketplace. We think that over a long period of time, as we see the cost of AV software come down, and usually we see the cost of hardware come down, this is universal, but usually 30% to 40% per generation. We think the Lucid midsize that they are building for us and neuro together, it'll be 60,070 thousand dollars car. At those kinds of prices, you can actually bring the cost of transportation down for the population. What we see is as we bring the cost of our services down, demand goes up. Uber was introduced early on. People were sizing the market based on the taxi market. We're multiple times bigger than the taxi market. And I see the same potential with AV, both in terms of the cost of transportation, reliability, safety, all of which are going to improve. And then think about delivery. If delivery is done with a drone and instead of a twenty five minute to thirty minute delivery, you get habituated, the magic is a ten to fifteen minute delivery. Cheaper, faster, better. It will change how society operates.