Within Uber's plan to take over city life with CEO Dara Khosrowshahi

Uber CEO Dara Khosrowshahi is about to cross a busy street in Lower Manhattan, but he stops short. "Is jaywalking allowed, or is this …"


Jaywalking is practically encouraged in New York City, I say.

"Okay, here we go," he says, cautiously walking into the street. "I used to live here before, so if I don't do a jaywalk, I feel weird."

Once upon a time, a Uber CEO would not think twice before passing the law; he would just do it, the consequences are damned. But Dara Khosrowshahi is not Travis Kalanick, a clear fact that he has nevertheless tried to prove over the past two years. Kalanick is responsible for Uber's lasting reputation for lawlessness and tech bro douchery. Khosrowshahi is the man who says things like "We put safety first" and sounds genuine.

However, Khosrowshahi is still promoting Kalanick & # 39; s goal to become the mediation of all human movements in cities. Kalanick called it "transport just as reliable as running water." Khosrowshahi brought it to the "Amazon of transport", and now he has polished it up again: Uber wants to be an "operating system for your daily life in a city," he tells me during a recent interview on The edgeThe office.

But it's an operating system with a buggy-as-hell backend: huge losses ($ 5.2 billion last quarter); chronic non-profitability; huge security obligations; and an unstable business model that could collapse if California and other states force the company to treat its drivers as employees. The app may work great, but the company behind the app is still moving. Anyway, you need iOS or Android to use your smartphone, but do you really need Uber to live in a city?

Khosrowshahi and I walk to Bowling Green subway station to take the 4 or 5 train to Grand Central, and we use the Uber app to get there. I already know the way, but Uber's CEO wants to show off the latest tricks in the app: public transport instructions. A small dotted line gives us the road and the estimated departure time of the next train. (Khosrowshahi is starting to go north instead of west, so I do my rude New Yorker thing and steer him in the right direction.)


We are using a beta version of a new feature that will be rolled out later this year. Uber already offers directions, timetables and even ticket sales in cities such as Denver and London. From September 27, the feature will go live in San Francisco, Mexico City and Paris. New York City will be added later this year, along with six other unnamed cities.

Car rides are of course the backbone of the Uber company. But cars and cities are increasingly at odds. I interview Khosrowshahi a few days after the Global Climate Strike when millions of people walked into their schools and workplaces to protest against doing nothing about the climate crisis. Uber and Lyft are bound to increasing autocongestation in cities, just as they are stuck to decreasing driving behavior of public transport. Uber wants to correct that by equating mass transit with car journeys.

The idea is: if a choice is made between a $ 2.75 metro trip or a $ 30 car ride, most people will take the metro. Unless, of course, that metro is delayed. Then the car ride becomes the more attractive option.

"To a certain extent we are competing against ourselves," says Khosrowshahi. "But we have the philosophy that if there is a better product for the user, and we think that an integrated motion solution is better for the user, we must be the ones competing against ourselves versus others who do it."

Uber not only adds metro & # 39; s and buses to its app. It also raises awareness of bicycles and scooters, adds a host of new safety features and brings Uber Eats, the food delivery product, to its main driving app, so that both services work under one umbrella.

It is an ambitious game to become the actual transport and delivery service in every major city. But the real price for Uber is not just a fairer system or fewer cars on the road; it is your data.

2019 was a challenging year for Uber. Once a & # 39; unicorn & # 39; darling of Silicon Valley, it went to a lower valuation than expected, and then stock continued to fall. It has fallen 30 percent since the IPO in May. The company lost a record of $ 5.2 billion in the last quarter and has struggled to prove it can be profitable. The bulk of the loss, around $ 3.9 billion, was share-based compensation with regard to the IPO, and the company says this should only be seen as a one-off hit. Even if we disregard this, the $ 1.3 billion loss on everything else that Uber did last quarter was 50 percent higher than the year before.


There is reason to believe that it can get worse. Large investors in Uber were not allowed to sell their shares to the IPO, a contractual obligation whereby the share price can ideally find its balance without the influence of insiders. That lock-up period ends on November 6, and it may mean that early investors can decide to aggressively dump the share until the end of the year.

And that's not all. On September 18, Govin Newsom, California, signed a bill that could ultimately undermine Uber's entire business model. The bill, AB5, makes it more difficult for companies to classify employees – for example Uber drivers – as independent contractors. It could seriously raise Uber's costs in California and eventually spread to other states.

"Employers are evading responsibility for safety net programs such as employee benefits and unemployment insurance," Newsom wrote in a Labor Day op-ed in The Sacramento bee. "Taxpayers are left to pay the bill."

Meanwhile, New York City has moved from the east to fight Uber and impose new rules aimed at reducing autocongestation and increasing the wages of the driver. Uber and Lyft responded by limiting when drivers & # 39; s can log in to their apps. Uber also prosecuted the city for the second time this year to destroy these new regulations. But the city does not seem discouraged. "We will continue to fight for the people of New York City against a company that puts profit first, and the people and drivers they serve last," said NYC Mayor Bill de Blasio spokesperson about the lawsuit.

The Democratic presidential candidates for 2020 have welcomed these movements from the sidelines. Massachusetts Sen. Elizabeth Warren hit Uber & # 39; s "business model (that) partially dependent on low wages for their drivers," while Vermont Sen Bernie Sanders belittled Khosrowshahi's $ 45 million pay package while "Uber drivers (struggle) to put food on the table." The techlash will certainly heat up along with the election.


However, Uber has won some victories. The company's license was in London extended for two months. And labor lawyers in the Trump administration have expressed the opinion that drivers who drive are correctly classified as contractors, which could weaken California's efforts to re-establish them as employees.

"We recognize that, with our society now, things are changing," Khosrowshahi tells me. It is expected that even part-time workers deserve certain protection, such as proper healthcare and the right to negotiate collectively with their employer. But Khosrowshahi thinks some legislators have gone too far.

"I am concerned that the politicians are currently playing on a reactive basis, which is ultimately not a better solution for society – certainly not for drivers and not for our drivers," he said.

The underlining of these political battles is an increasing traffic congestion in cities. Between 2010 and 2016, traffic congestion in San Francisco increased by around 60 percent – and Uber and Lyft accounted for more than half of that increase, according to a study published this year. Khosrowshahi acknowledges that traffic is a problem, but Uber should not be a scapegoat.

"More delivery vehicles and delivery from Amazon and groceries and we, you know, everything was responsible for congestion," he says. "Congestion is a mission for the growth of every city there is, and it will continue. We think we should treat everyone equally here."


I ask Khosrowshahi whether Uber will be here for the long term or whether it will eventually go bankrupt, as some have predicted.

"Well, I am confident that we will continue to do it in the future," he says. "We went after our first public offer quite aggressively, because we wanted to get the financing needed to continue investing in many of these innovations, some of which bear fruit in the long run."

Uber's transformation from & # 39; app that you can use to get a car & # 39; to & # 39; app that you can use to get a Pad Thai car, bike, scooter, train, bus or order & # 39; is one of these long-term payment offs. Uber, for example, will not earn money by adding buses and trains to its app. Public transport is not a profitable company and therefore government subsidies are needed to operate. But Uber is not trying to make money from the metro; it just wants to make sure you open the app regularly.

"We have seen experimentally that (public transport data) increase engagement with the app," says Khosrowshahi. “If more people open our app more often, things are on the way. We can generate income in one way or another. So in the short term, it's probably not the best kind of business bet. In the long term we think it is definitely a great bet. "

There is this great product called Google Maps that already does most of what Uber is trying to do now. It has transit information, detailed route determination, real-time traffic updates and estimates for Uber and Lyft rates. There are many other similar apps that perform similar tasks, including Transit, Citymapper and Moovit. Even the long-troubled Apple Maps is getting better.


Perhaps what Uber does is not so groundbreaking?

"So I guess as far as" Is it a better experience? "And so on, we think it's a similar experience. But in the end it's better because you have all your choices here, & # 39; says Khosrowshahi." And the way I would describe it is to search for Amazon products. versus, say, Google product search. Because we are so focused on urban transport, that is where the majority of our company is located, and because we are so focused on the complete experience, it is not just information. Ultimately, we want to integrate information with which you can take action and purchase this transit option. "

In other words, those other apps only give you information, while Uber allows you to take action. This also includes a data game.

"We will use your data," he says. “We will not sell it, but we will use your information to ensure that the offers we give you are the right offers. So we don't have to offer you 10 things, but we can probably offer you the two or three best choices there are. "

If you use & # 39; Uber & # 39; and & # 39; your information & # 39; in the same sentence, this will certainly trigger the alarm bells of some people. After all, this is the same company that set up the infamous "Greyball" program to hide its cars from law enforcement officials in a movement that some consider an obstruction of justice. There was also & # 39; God View & # 39 ;, with which the employees of the company could follow the riders in real time. Uber agreed to submit third-party audits for 20 years in a settlement with federal researchers about the espionage software.

But data that helps cities make better-informed decisions about transit improvements can help Uber rise above the competition while resolving nagging thoughts about the reliability of the business. Naturally, cities and transit agencies also want that data. Uber is notoriously stingy with his data and often refuses requests from cities for privacy reasons and the desire to maintain his competitive advantage. That has changed a bit in recent years with the launch of Uber movement, an online tool for cities to map travel times, made possible by the company's huge amount of travel data.

But transit experts are skeptical that Uber will eventually cough up enough data, or that one of these will make a difference. In 2017, 31 of the 35 major metropolitan areas in the US lost passengers using public transport, and driving is blamed, according to a study from the University of Kentucky. Researchers discovered that for every year after companies that take a ride enter an urban market, rail driving decreases by 1.3 percent and bus driving decreases by 1.7 percent.

Khosrowshahi rejects the idea that Uber is responsible for the decline of the transit riderhip. "Transit has competition anyway," he says, without specifically mentioning which other competition he refers to. "We want to ensure that transit data is available to all users and we think we can be a constructive part of the growth of transit over a long period."

Bicycles and scooters will be another important part of Uber's efforts to dominate urban transport, but the company's financial problems make it harder to grow that side of the business. Uber recently pulled his electric Jump bikes from Atlanta and San Diego. It keeps its scooters in Atlanta, but Khosrowshahi admits that competition from providers of Lyft and scooters such as Bird and Lime makes it harder to operate in more markets.

"If the company doesn't work, it's not good for the city," he says. “It's not good for us, it's not good for consumers, and so on. And we have discovered that we need to focus on fewer bets, on fewer cities to make the model work. "


Climbing the stairs at Grand Central, I finally come to ask Khosrowshahi my most nagging question: has he read New York Times news reporter Mike Isaac & # 39; s epic new book, Super Pumping: The Battle For Uber, about the rise and fall of Uber under Travis Kalanick?

"I read it," he says, beating on his iPad. “But I knew it all. There are no surprises. "

Nevertheless, he acknowledges that Uber and his employees have gone through hell and back. "It brings everything together. It's a bit rough. I have more respect for the employees who have been through 2017. Everything that happened is very difficult, but if you worked at Uber and you remained a true believer then all this was going on, that's great. "

The idea that Uber & # 39; s worst days are behind us is controversial. Uber is at a crossroads. The company is bigger than ever before. It is also under a larger microscope than ever before. The challenges it faces are becoming increasingly formal. And as it grows with more modes of transport, such as buses and subways, and perhaps even autonomous vehicles and flying cars, the company will encounter even steeper obstacles to keep everything apart.

Travis Kalanick once said that cars were driverless constitute an existential threat to Uber. But it is becoming increasingly clear that Uber & # 39; s greatest existential threat is itself.