Uber Technologies, Inc. (NYSE:UBER) Evercore ISI 2nd Annual Technology, Media & Telcom Conference Call September 8, 2022 3:00 PM ET
Company Participants
Andrew Macdonald – SVP, Mobility & Business Operations
Conference Call Participants
Mark Mahaney – Evercore ISI
Spencer Tan – Evercore ISI
Mark Mahaney
Good afternoon. I’m Mark Mahaney, Head of Internet Research here at Evercore ISI. Spencer Tan and I co-cover Uber. And we’re thrilled to have Andrew Macdonald, SVP, Mobility and Business Operations, also a 10-year vet of Uber. There are not too many 10-year vets of Uber. So this guy knows the stories, the ups and downs. Hey, what start-ups don’t have ups and downs? We were talking about the Super Pumped book, which I thought was great. I didn’t watch the series. I read the book. But I just — this is a fascinating company.
By the way, it’s one of our top picks in mega cap. We talked about a ship between easy money and hard money longs. Hard money, those that need free cash flow support. Well, guess what company has had a free cash flow tipping point? And it’s — and that’s Uber. Nobody would have thought that a few years ago when they went public with record losses, but things can change, things can scale.
So anyway, that’s where we are. I’m going to go through 30 minutes of questions. If the clock — oh, I guess, I’m early. So I’ll go through 30 minutes of questions. I’ll leave 5 minutes, maybe more because we have a lot of people here, to ask questions.
So Andrew, thanks a ton for joining us today.
Question-and-Answer Session
Q – Mark Mahaney
First question I want to ask you is — and I guess I’ll keep the questions mostly to mobility is, are there signs of industry rationalization? Or do you see — just in the mobility and the ridesharing industry, do you see more signs that competitors are cutting back on subsidies, incentives, because of these tough financial market conditions that public companies and privately funded companies must be experiencing?
Andrew Macdonald
Yes. So short answer is, yes, we definitely are seeing some of that. I think the move to more rational economics has been a multiyear journey for like ride hail, right? And I think you saw a lot of it start to happen with us and Lyft went public within a few months of each other. And the investor demands changed then, and the mood music has changed even more in the last 3 to 6 months, right?
And so for us, the big global competitors we have, the 2 big ones are DiDi and Bolt. I think DiDi’s had its own set of challenges as it’s gone global, both internationally and domestically. And I think those are fairly well publicized, so I probably don’t need to go into those. And we’ve seen, I’d say, a stabilization of the dynamics with DiDi. It’s not to say that they aren’t still investing in international. If you look at their financials — their last published financials, you can see a trailing 12-month loss in their international business of close to $1 billion. So they have spent, but I think we’re not seeing any degradation. We have seen them leave a few markets. And they are under some pressure in some of their markets as well from governments. So that certainly helps our market dynamics.
And then Bolt has been the most aggressive global competitor the past sort of 12 to 18 months. They raised money, I think, at the right time. But again, they published their financials, their burn rates are quite substantial. And in the last few months, I think probably as they’ve come to the conclusion, it’s going to be harder to raise that next round and try to get an up round on their $7 billion or $8 billion valuation. We’ve seen some moderation. We’ve seen them dial down, particularly in some of our strongest markets, and we’ve seen them sort of retrench to their core markets. So there’s some positive dynamics there.
Mark Mahaney
What would you say are — on ridesharing, what are Uber’s strongest markets?
Andrew Macdonald
So I think that the big markets for us globally, obviously, the U.S. We tend to talk about our star markets, which are our largest 10 markets that are north of 80% of our bookings. You can probably guess them, but U.S., Canada, Mexico, Brazil, France, U.K., Germany, Spain, India, Australia are where we focus a ton of our resourcing and effort. Now we’re in another 60 markets globally, and some of those markets represent our highest growth or highest-margin markets. But in terms of raw scale and focus, those are the big ones.
Mark Mahaney
Okay. Let me stick with that for a little bit. I remember a couple of years ago, there was this — I forget, it was the 6 of the 7 markets that you were entering. I know Germany was one of those. Spain was another. They had a lot of — they were large markets. I think South Korea was one of them. That large markets but had — regulatorily challenged. I think Germany required the drivers to go back to their home twice or something before they could pick up their next passenger. I’m exaggerating.
Andrew Macdonald
Yes, return to garage. No, you’re not. It’s not back to home, it’s back to the garage, which makes a ton of sense.
Mark Mahaney
Yes, yes. So in those markets, since you just mentioned it, do you feel like you finally have broken through in a market like Germany?
Andrew Macdonald
Yes. So the — you’re right. We’ve talked about — internally, we call them our clavis markets because we — clavis for key — are trying to unlock the markets. The — these markets, so you’ve got them, Germany, Spain, Italy, Korea, Japan are the ones. And we’ve looked at these as — those 5 markets, I think, top 10, top 12 globally in terms of GDP, all of them, where ride hail basically didn’t exist 3, 4 years ago. And not just ride hail, but even basic e-hail like the ability to hail a taxi, tiny single-digit through an app. And to — we’ve made some great progress in some. We’re sort of early days in others and some we just haven’t. And so I — you really kind of need to get specific.
I’d say the biggest success stories of those are Germany and Spain for us. Spain is going to be $1 billion GB business for us by 2024. Germany is going to be $1 billion GB business for us by 2025. We have operating models that work there. The models are different than our core markets. So you’re working with fleets. In Spain, you’re working with fleets that mostly employ drivers. In Germany, it’s similar. There are IOs in both markets, but it’s mostly fleets that actually employ drivers.
Mark Mahaney
IOs? What are…
Andrew Macdonald
Independent operator, sorry. Our typical model, IC, independent contractor. But those markets are different, and so we had to build the capabilities to work with fleets. They require different tools in tech. You have to have scheduling, fleet management tools. You need to build tools for the people who are running fleets to see where their drivers are on the map, to pay them hourly, to optimize — dispatch gets optimized in a different way because it’s not individual driver deciding where they want to go, it actually may be their fleet manager telling them to position in certain places. So they run the business a bit differently, but I think we’ve proven that we can do it. And so those are big businesses for us. Both of them have doubled since 2019, and that’s with the pandemic hitting in the middle and are on a really good track.
Japan and Korea are earlier, but we’re investing. In Korea, we’ve done a joint venture, which we control with SK Telecom. And what enabled us to do that JV was some flexibility in terms of the rules of the road as it relates to e-hailing. They’re moving to dynamic pricing, which is a key unlock for us because it allows you to flex up and down, which is what makes the marketplace more reliable than traditional taxis, which usually fixed price, fixed supply. But Korea’s tough, and so we’re on a multiyear journey there. I still think it’s going to end up being a Spain or Germany success story. But we had — we’ve had to tilt the model a lot, and we still need some regulatory unlock. Japan’s the same story.
And then Italy, we’ve had some big announcements in Italy, right? We’ve got a partnership with the largest taxi company in the country that we’re going to add 80 cities, 12,000 vehicles across the country. We’re live with that partnership in Rome and Milan right now. It’s very early days. These are taxis. And there’s — we don’t have flexible pricing yet, but the business is all incremental because we’re tiny in Italy today. So just different degrees of progress.
Mark Mahaney
Okay. Let me ask you about recession signals. And I don’t know if this is going to be hard to see perhaps because you’ve got these 2 trends. People are finally becoming — they have been for a while, but becoming more mobile. So ridesharing has been in this multiperiod recovery that may swamp the recession signals. But are you seeing recession signals just on the ride-sharing business? Are you seeing signs that consumers are pulling back or, I don’t know what, walking to work or taking public transportation, even though there may be greater safety risk associated with that? Any recession signals on the ride-sharing side?
Andrew Macdonald
Short answer’s no, not yet. And a couple of things I’d say. One is we are still — we always have been and we continue to be, coming out of the pandemic, a supply-limited business, right? And so the greatest driver of our growth historically has been how fast can we put cars on the road. And so consumer demand tends to be there when the service is reliable and certainly, if we can get prices down. And so we’re not seeing anything on the consumer side that concerns us. In fact, our low-income consumers in the U.S. increased in August as a share of our business versus July. Some of that’s probably students coming back. But we’re not seeing anything.
We’re not seeing it in Europe yet. Our social demands or time of day, social demand patterns in Europe in August were up 30% over July. Some of that is holidays unwinding towards the back half, but there’s just nothing there on the consumer side. And on the flip side, to the extent the labor market loosens or people have less savings in their bank account, that helps our supply side of our business, which ultimately is what’s going to drive growth. So we haven’t seen it yet.
Mark Mahaney
Okay. Then let me — you mentioned supply, that’s the one I want to go to next. So in the June quarter results, when you disclosed them, it certainly sounded — I forgot what the data point was, but it certainly sounded like you’re starting to get — you are getting nice growth in driver supply. I think there’s a bit of a hedge in your business, a recession hedge because people need that side hustle. And it’s not necessarily getting new drivers, but maybe reactivating old drivers. And the — and I think the general economics like you can make a pretty good buck right now driving for Uber for a couple of hours a week. And then I think you’ve also made some — the ability to kind of sign up. What do you call it? Modular or something or other…
Andrew Macdonald
Yes, modular onboarding. Yes.
Mark Mahaney
Modular onboarding. I think you made it easier, too, for people to sign up. So I’m hoping all that means that you’re seeing continued strong growth in driver supply. Is that true?
Andrew Macdonald
Yes. So short answer it’s true. Unpacking a couple of things you said there. One is resurrection, as a percentage of our driver growth, is quite substantial. So when I say resurrections, I mean, taking people who’ve used the platform in the past and bringing them back, either pre-COVID or even years before that.
Mark Mahaney
They were — 1/3 or half of your new drivers would be resurrections?
Andrew Macdonald
Today, that’s increasing as a percentage and it varies a bit by the market, but it’s quite significant. In some markets, it would be close to half. The stat that I like to put out is if we resurrected 4% of our churn driver base historically, it would double our active drivers on the road globally. So it just gives you a sense.
And look, you can look at churn as a problem for our platform. But I think the ability of people to move in and out of gig work or flexible work is a feature, not a bug. When we survey drivers who churned, the vast majority of them are — who do so are doing so for reasons that aren’t concerning to us. They moved cities. They got another job. Their spouse went back to work. There’s 50 different reasons people move in and out of gig work. And I think it’s a feature of the platform, not a bug.
Growth — driver growth continues to be strong. It’s not yet where we want it to be, right? The consumer experience is much better than it was a year ago, but it’s not a pre-’19, pre-COVID levels, 2019 levels. And the best way to fix that is to grow drivers faster. We’re doing a ton on the supplies — or on the tech side. Modular onboarding is a good example of that.
Modular onboarding is — essentially, we’ve changed how you flow through our funnels as a new driver sign up, where we activate you on — to be a courier first because the requirements to be a courier are much lower. In many places, it’s basically just a driver’s license. And whereas our business — my business is more regulated. But if we do that, we can really increase funnel velocity. So I can activate you to be a courier in like 18 hours and 5 hours in some places. I can’t necessarily activate you to be a driver for maybe 3 days, 7 days, 2 weeks in New York much longer. And that’s a huge advantage for our platform because we bring people in on one service and then progress them on to others.
So that’s been a big unlock. There’s a bunch of other stuff I could talk about there. But yes, it’s both tech and then just the frigging operational focus to bring back drivers.
Mark Mahaney
How long does it take, you think, to kind of get the supply/demand balance, balanced?
Andrew Macdonald
It’s a market-specific question. There’s a number of — because our business — I talk globally, our business happens at the city level. It actually happens in the neighborhood level, but it happens at the city level. So in a number of markets, we are approaching pre-COVID reliability levels. I think Toronto is a good example of that where we’re pretty close to pre-COVID.
And when I say pre-COVID reliability levels, what I’m generally talking about is what is average pricing, what percentage of trips are surged, what’s the average surge multiplier, what percentage of requests are completed, what percentage of consumer sessions turn into a completed trip and then other sort of driver quality-type metrics like cancellations and things like that. Those numbers are getting pretty close in a place like Toronto to what they were in 2019.
But we’ve talked about it with some of the folks in the room, new York City is not there yet. It’s close on reliability in terms of conversion. ETAs are still higher than they were pre-COVID. And pricing is still higher than it was pre-COVID.
So I’m skirting the answer a little bit because there’s not a global answer. But I think we’ll get there. I think some markets, it will be — it’s already there. Some markets, it will be 3 months. And in some markets, particularly where the structural headwinds like really low blue collar unemployment, immigration restrictions, COVID lockdowns, government support, in those places it will take longer.
Mark Mahaney
There have been a series of product innovations. And I guess the one I’m most focused on is this upfront pricing. And I do my research on Uber, but I’ve never actually driven for Uber. I know I should.
Andrew Macdonald
You got to.
Mark Mahaney
Yes, I know.
Andrew Macdonald
It will change how you think about the service. I drive on the platform a couple of times a month.
Mark Mahaney
You got a good score?
Andrew Macdonald
5.0.
Mark Mahaney
That’s pretty good. Anyway…
Andrew Macdonald
It’s good, right?
Mark Mahaney
Yes, I hear — I think that’s good. But — so I said that I would think that upfront pricing is a great thing. Like as a driver, why wouldn’t I want to know the route and how much I get paid. Now I think it’s been — it’s a little more nuanced than that because sometimes I think what you see is, well, that’s — I was sort of expecting to get more for that JFK to Tribeca run as a local example. But anyway, talk about what impact upfront pricing has had. Has that increased? How do you measure the success of it in terms of driver satisfaction, driver retention?
Andrew Macdonald
Yes, so upfront pricing is probably the most significant change we’ve made to how our marketplace operates, both the technology but also sort of the core business model. And on the driver side, it’s a major change, right? So basically since the dawn of the for-hire industry, drivers have been compensated on some formula of time and distance. How far did you go? How long did it take? You bake in maybe some fixed base fare component to that. And that’s how the taxi industry, for our industry has worked forever.
So moving to this notion of I’m no longer going to tell you, hey, here’s a ride and I’m going to pay you this per minute, this per mile, instead I’m just going to tell you more details about the trip and offer you a price and you can decide whether you take it or not. That’s a huge shift.
For drivers, what they love about it is the increased transparency. We now give them all of the information they need about the trip upfront, where the pickup is, where the drop-off is and what they’re going to get paid and what we think the time is going to be to complete the trip. The trade is that we’ve removed this concept of time and distance to programmatically price. And that gives us much more flexibility. And what it gives us flexibility to do is price the trip for what it’s worth.
So with time and distance, whether you’re going 5 minutes or 50 minutes or 5 hours, the basis for calculating that fare is not the same. But the attractiveness of a 5-minute trip or a 50-minute trip or a 5-hour trip might be very different. That’s going to depend on a lot of things. What’s the time of day? What’s the traffic? Where are you going? Where are you starting? What’s the overall supply/demand balance in the market? All sorts of different factors go into actually pricing what that trip is worth.
And what happens with time and distance is drivers optimize for themselves what they think the trip is worth, and we call that cherry picking where they say, “I’m not taking that. It’s too low to go to that neighborhood at this time of day. I’ll never get a trip back,” or “I’m going to get stuck in traffic,” or “You know what, I want to end my day over here instead of there.”
If you can actually price on what the trip is worth, you create a ton of efficiency in the network. And the way that we sort of effectualize that is driver and rider pricing are entirely decoupled. So what a rider pays is no longer directly linked to what a driver gets paid. And we can flex our take rate in the middle, depending on what we think that trip is worth. And so for a very high-value trip, $150, it’s going to take you half an hour and you end up in a spot where you’re definitely going to get a trip back, we might say, okay, on that trip, we actually don’t have to — the rider might pay $150 because that’s what we need — that’s what our pricing is balancing rider side demand and the available cars, we may price that up. But on the driver’s side, we may — well, we actually only have to pay $80 because the clearing price of that trip in the market is $80. And so our take on that trip might be very high.
The next trip that gets dispatched from a rider might be very unattractive. It might take you 1.5 hours outside the city, and you know as a driver, you’re going to have to deadhead back. You’re going to have to come back empty. So we price that into the price we offer you, and maybe we take very low commission on that trip because we know to get you to take that trip, we’re going to have to pay you a higher percentage of the fare. We’re going to charge the rider up. We’ll also give you more of the dollar. Today, what happens with that trip, is the driver gets it. Maybe they accept. They see, oh, I’m going to cancel that. I’m going to call the rider and ask them where they’re going. And it’s a horrible customer experience it is, and you’re also just completing fewer trips.
So the net effect, how we measure success is, are we seeing higher throughput? So for the same amount of requests, are we completing more of them, if we’re pricing more efficiently, we should be. Are we seeing higher driver satisfaction? And the answer in the places we’ve deployed it is yes. Because overall, they like the additional transparency and control. Are we seeing better consumer metrics? And the answer is yes. Because a higher percentage of their trips are going to get completed, whether they’re going to somewhere that’s desirable for the driver or not, we’re going to price that correctly to get you where you’re going. And for Uber, the net effect is we have more flexibility on take rate because we’re moving up and down depending on the trip level.
Now we’re trying to orient drivers to the average. If you look at the end of a week, on average, we haven’t moved take rate up as a result of this technology, but we have the flexibility to do that. And so that’s how we think about the success of it. And it’s working quite well so far.
Mark Mahaney
And how long did it take you to develop this? This sounds like…
Andrew Macdonald
This is years in the making because there’s actually a bunch of — it sounds like one program, but there’s actually a bunch of sort of subcomponents of how the algos ultimately price what the rider pays, what the driver pays and how we adjust for all the other things that need a factor into that. So this is years in the making.
Mark Mahaney
Anybody else doing this?
Andrew Macdonald
Nobody is doing the full stack of what I’m describing here in terms of network pricing, fully decoupled rider, fully decoupled driver. You do see different approaches to this problem. This company called inDriver which does a bid-ask model between the consumer and the rider. So the driver essentially gets an — the rider says I’m going to go from here to here and I’m willing to pay $20, and the driver sees $20 to go from here to here. That’s actually being programmed by the rider, not the algorithm, so we think that’s a much less efficient model. It’s interesting, though, because I do think this — especially in developing markets. It doesn’t work well in big cities, but it does work well in sparser marketplaces, but nobody is doing it the way we’re doing it.
Mark Mahaney
And The Rideshare Guy likes this?
Andrew Macdonald
The Rideshare Guy likes it. You can go and look at Harry’s interviews on this. And the main thing is because there’s a big — drivers have wanted more transparency since the beginning of Uber. They understand that it — removing time and distance is a sensitive topic because of how the industry has been priced forever. But overall, the transparency makes it worth it.
Mark Mahaney
And then I’m sorry, how far out is this rolled out? Like is it in most markets? Some markets? And do you have to have it in all markets? You can just put it in some and not others. Maybe there’s some markets where it’s naturally a better fit. Maybe in the distant suburbs of New York, it’s probably not a good fit. Maybe in the city is — I don’t know. I just dubbed it as an example. Like is — so it’s…
Andrew Macdonald
It’s rolled out 40% — in 40% of gross bookings in the U.S. Our goal is to roll it out to 100%. Typically, this should work better in dense and sparser markets. In fact, I think it’s actually arguably more important in sparser markets or in times of sparser supply to properly price what it’s going to take to be reliable. So we’ll roll that out through the rest of the U.S., and then we’ll go global with it. I think this becomes the default anywhere we can do it. In some places, we are limited by business model, regulatory, et cetera, but in the vast majority of places, this will be the norm.
Mark Mahaney
Okay. That’s great. Is that — I don’t want to — is that the biggest — is that the most important product innovation that we as investors should think about?
Andrew Macdonald
There are so many good ones.
Mark Mahaney
Well, then let me ask, what about…
Andrew Macdonald
I think this is a super impactful, massive change to our marketplace that for Uber, because of our size and scale advantage, I think we’re uniquely positioned to do. And so I think this is the most important marketplace innovation we’re working on right now, for sure.
Mark Mahaney
What about reserve? And I — is that a — how long has that been in the market? I increasingly use reserve. I just find that — like why didn’t I use reserve before? But it’s also not that obvious. Like I still — I think you could do more to highlight it, but maybe you don’t want to.
Andrew Macdonald
No, we do want to. So reserve is a major paradigm shift as well for the consumer side. It is on the driver side as well. The — but Uber forever has been on demand. I mean if you look at our website from 2010, it’s your on-demand private driver. The whole concept has been push a button, get a ride when you need it. That’s the magic of Uber, right? So actually moving to preplan has been sort of a controversial notion internally.
But I think the challenge is like — again, if you think about use cases where you need a greater degree of reliability, if you think about consumer segments who value a greater degree of reliability, I put a — I was telling this story earlier, but I put a note into my sort of extended team Slack chat this morning saying, “I got updated stat on the percentage of first-time Uber users, who are choosing reserve as their first ever Uber trip, and I was astounded at how high that number was.” It’s not something we’ve disclosed, so okay, but…
Mark Mahaney
Yes, we think it’d be very low.
Andrew Macdonald
I was — it’s still low as a percentage of the stack, but relative to the size of the reserve business, I was very surprised at the absolute number of people. And then somebody chimed in and said, “Yes, my 80-year-old mother just took her first Uber trip because reserve is something she’s actually comfortable doing. She can schedule a ride to go to a doctor’s appointment or a social event or whatever.” And so I think we sometimes think every consumer looks alike, but they don’t.
But I’m the same. I’ve moved like 80% of my personal uses to reserve. Very — planning my week, my schedule is booked morning through midnight, and so I like to have all my trips ready to go. When I go to go to the airport this afternoon from here, my reserve ride will be ready at 3:35, you know what I mean.
Mark Mahaney
I’m 6:15.
Andrew Macdonald
Okay. Perfect. It’s a massive unlock for us. And if we could shift consumers to preplan on Uber, it does a couple of things. One is, I think they’ll consolidate more of their ride hail business on Uber because you already got a reservation, you’re not going to go then shop for another trip. Two, I think it unlocks more high-value use cases like early morning airports. Three, it’s a huge unlock in sparser markets, right? So if you’re out in the suburbs, our CFO, Nelson, always complained about when it came to Uber, he can’t get it — he can’t trust it at 4 a.m. We’ll get reserved to a point where you can trust it at 4 a.m. in the suburbs, for it. Three, it creates lock-in on the supply side because I put reserve — I’ve reserved trips 3, 4 weeks in advance. People do that. Driver signs up for that. Boom. That driver’s now locked in to drive on Uber 3 weeks from now.
And then as we go to other verticals within mobility, so we’ve launched a product called Comfort Electric, which essentially gives you Teslas. It’s very hard to offer that reliably in 5 minutes in every city in the U.S. because your percentage of supply that will be Teslas will be like 5% to 10% even in a great city. But if you’re creating this prereserved vector, all of a sudden, your network is less sparse because you can get a Tesla driver to say, okay, I’m going to sign up for that trip next Tuesday. So it’s very interesting.
Mark Mahaney
Okay. I’m going to ask 3 more questions, then I’ll open it up. Talk about the outlook for core mobility versus some of the more, I don’t know, ancillary mobility offerings like this taxi thing. I’ve always been a little bit on the skeptical side that there really would be a market for that, but I’m open to it, the shared rides in the 2- and 3-wheel ride. So I don’t know. I’m so used to the core mobility. Are any of these others big enough to actually move the needle?
Andrew Macdonald
Yes, so we talk about hailables as a category. That includes taxis and then 2- and 3-wheel vehicles that can be street hailed. Any vehicle going to be street hailed creates a bunch of unique complexities for trying to move that business online. It’s a significant business for us. So hailables is north of $1 billion run rate.
On taxi, I think you’re right to be skeptical because there’s a whole bunch of structural challenges with the taxi market that have made it historically not well suited to being hailed through an app. And the main structural challenge is a street hail is going to be more attractive to the driver because a of bird in the hand is more valuable, and you’re not paying a service fee on that commission when the driver — when the customer gets in and pays you cash.
But what is happening, and I think people don’t fully understand, is that taxi rules and regulations over the last decade have modernized a lot from what Uber originally launched and disrupted. And the biggest unlock has been flexible pricing. And we don’t have that everywhere. But when you have flexible pricing on taxi, now as a driver, you’re incentivized to take demand at peak periods when normally you take a street hail. Because if Uber’s surging 1.5x, you say, you know what, okay, I’m going to take 1.5x with the normal metered rates are. And so it becomes more attractive.
The other thing to evaluate our taxi through is in markets where we have a large, strong, reliable UberX product, it is going to be harder to add — to grow a significant taxi business because UberX as a product generally works quite well and people like it. But the vast majority of our largest taxi markets are places where UberX is just not allowed. And so if you look at where our biggest taxi markets are, somewhere like Austria, which is not going to be the #1 market most of the people in this room go look at to see how we’re doing, but taxi is a huge product there. If you look at how we’re doing in Turkey with taxi, if you look at how we’re going to unlock some of those clavis markets I mentioned earlier, it’s going to be because of taxi. And so that’s why it’s significant.
Mark Mahaney
Okay. That’s good.
Andrew Macdonald
And 2- and 3-wheelers just lower the price. And the reason they lower the price, and it’s not going to — I don’t think you’re going to see us have a huge motorcycle business in New York City or the U.S. anytime soon. But if you look at how fast motors are growing for us in India and Brazil, it’s because the cost of the vehicle is actually a huge inhibiting factor to getting many drivers on the road in these places. And so you bring that to like a motorcycle costs like 1/7 or 1/8 of what a car cost in these places. You lower the barriers to supply and you lower the input cost of supply, so consumer prices can be lower.
And then if you’re talking about traffic snarl in developing market cities, somewhere like Sao Paulo, the value of a motorcycle to the airport is going to take half the time of a car or 1/3 of the time of the car because you just plow through traffic.
Mark Mahaney
Okay. Let’s see, Uber One, you’ve got like 10 million subscribers. I’ve always thought about this as this is primable, and that it’s — the activity — it’s kind of something you would use a couple of times a week for delivery, for mobility. Yes, I bet you, the average Uber One subscriber probably uses Uber a couple of times a week, so it’s on the front screen of their phone. So I would think there’s enormous opportunity there.
There’s probably a lot of stuff that you can do more. Like I forget, I think I say 5% or something on drives, and I don’t have any delivery fees. But there’s — those are — but I don’t have any bells and whistles. Like I’d like to — I like loyalty programs because every once in a while I get upgraded. But I don’t know, I don’t think I can recall being upgraded to a Black Car from an X, even though I’m an Uber One member.
Andrew Macdonald
Yes. You get preferred drivers, but yes.
Mark Mahaney
Okay. So just talk about the — where do you think that can go? I mean — if this — if you do this right, I don’t think there are 10 million Uber One customers, I think there are 50 million. Like I just think it’s — I guess, it’s almost a utility. So how do you grow the Uber One subscriber base?
Andrew Macdonald
Yes. So I think we — you’re right, 10 million was our last disclosure there, a meaningful percentage of GB coverage, especially on delivery. I think the way that we grow Uber One is, a, we are so far from optimized for Uber One on mobility, and you’re covering that, right? Like the core hero benefit today tends to be a 5% discount on mobility, which is compelling. If you’re a power user of Uber, the economics to pay back your $9.99 or whatever it costs in your market, you get there pretty quick. And so it is compelling economically, but there are no bells and whistles. And we haven’t built experiential benefits, which I think are the key to the next phase of evolution. And when I say experiential benefits, it could be things like free upgrades. It could be things like priority dispatch in the moments that matter. So if you’re at the airport, we’ll always put your dispatch at the top of the queue. So these things that sort of tilt the marketplace in your favor, I think, as a consumer are really, really interesting.
I think there’s a big opportunity for us to drive trial with Uber One of new products, right? So a major priority for me and the mobility vision we’ve laid out is getting people not just to use UberX through Uber but to use Comfort, to use Reserve, to use Shared Rides when they’re more price sensitive, but also to get their bikes and scooters through our Lime partnership, to — we want people to consolidate more of their mobility usage on to Uber. And we’re seeing that happen. And Uber One becomes a vehicle to do that, right?
UberX is hard to discount for us as part of a membership program because there’s no excess inventory like a hotel giving away unused rooms or an airline giving away unsold seats, right? You’ve got to pay the driver for that trip, so we generally have to fund those discounts. When you get into some of our other product types, you can actually do really interesting things with membership, right?
So if we’re doing a shared ride, for example, the marginal cost of an additional seat in an UberX Share is not the same as the marginal cost of an additional seat in an UberX, where it’s 100%, right? And so there’s like very interesting things we can do to create capacity in our network and give that value away in the membership program. And I think that’s where you’ll see us go.
Mark Mahaney
Okay. I’m sorry, let’s go to questions. Anybody like to ask a question?
Unidentified Analyst
A bigger picture one, Andrew. What’s your personal view on autonomy in the medium-term 5-, 7-year time frame and how that integrates with the core business? How are you guys ?
Mark Mahaney
Impact, opportunity or a threat autonomy to Uber.
Andrew Macdonald
Yes. So it’s a very important question because I think you’re right. Like if we don’t execute a strategy and the chips don’t fall the way that we want them to, it could be existential for Uber, right? If somebody — and I think the existential scenario — maybe I shouldn’t start there, but the existential scenario is one player gets there ahead of everybody else, way ahead of everybody else and decides they want to build the network end-to-end, right? So not only they have the software, they’ve got the hardware and they want to run the consumer networks. They want to build an Uber. And there are some players that seem to be trying to go down that path.
And so the good scenario for Uber is there’s a healthy network of players that get there. And there are 25-plus different companies putting real dollars towards this problem. So the upside scenario for our business is multiple players get there. Consumers don’t want to have 25 different ride-hailing apps for 25 different autonomous vehicle companies, some of them software companies, some of them hardware, some of them both. Instead, Uber is what it is today, which is the largest network for on-demand mobility in the world, increasingly scheduled mobility.
And as a producer of one of these vehicles, both the software and the hardware, you just want to run your asset at the highest utilization possible. And the best way to do that is put it on the Uber network, right? And we built the right technology to make that work today. And really, the analogy is it’s not that different from a fleet owner in Spain who owns cars, employs drivers and is just trying to run that asset on Uber in Spain as much as possible. And so that’s the strategy.
As we are the largest network, you can plug a vehicle into Uber today as an autonomous provider who today can only serve like 2% of trips in a city, right? I mean Cruise is a really impressive company, for example, but they’re serving sort of limited times in geos in San Francisco, limited weather conditions, certain origins and destinations. They can’t obey certain traffic rules. It’s a very hard problem to solve.
But if you plug your car into Uber today, we can only serve your vehicle the trips that it can handle, and we’ll just serve the rest with the rest of our network. And I think that’s a really interesting position for us to be in. And so we think autonomous is a huge unlock for our business, if things play out the way I just described because it will materially bring down the cost of transportation.
And in a world where like fewer people actually just own cars, then ride-hailing as a TAM is 10x, 50x, 100x, I’m not sure what it is, but it’s much, much bigger because that cost comes down. And if we’re the network serving those vehicles, then we win in that space. And so that’s the opportunity.
But what we are paranoid as hell about that strategy playing out the right way because if it doesn’t, then we have to go down a different path, right? We have to figure out how to take a more direct role in the ecosystem because our business depends on it.
Mark Mahaney
Spencer?
Spencer Tan
Yes. I just wanted to touch on market share, specifically in the U.S. On an aggregated basis, it seems like it’s been a fairly split 70-30 between you and Lyft. In New York City, in particular, it’s been about the same. I would think that we would see that market share increase over time. But what are some of the puts and takes that is moderating that and keeping it kind of oscillating plus or minus 3% rather than kind of you having a more dominant share than where your position was like, let’s say, 3 or 4 years ago?
Andrew Macdonald
Yes. So it’s a great question. Obviously, something we’re like very focused on. I would say we’re becoming less focused on obsessing about Uber versus Lyft market share because we view the category as much larger than like head-to-head, UberX versus Lyft economy. I think the pressure has been upward for the last couple of years. I think when we see — when we track investment levels in the market, et cetera, like the natural drift seems to be upward for our CP. That’s a pretty big reversal from where it was going from like — well, really starting in 2017 through 2020, where the natural drift had been downward and there was reputation, brand, all sorts of things that went into that.
But look, I think, we think, as the — first of all, we think multiple players can make money in this category. And Lyft does many good things as a competitor. But we think that the network advantage we have will continue to put upward pressure. We’re not obsessing about Lyft because my version is not — or my vision is not to build a better version of Lyft, it’s to be a much different company. But we do think we’re well positioned right now.
Mark Mahaney
Anybody want to ask one last question? Going once. Going twice. If not, Andrew Macdonald of Uber, thank you very much, Andrew.
Andrew Macdonald
Thank you.
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