BANGALORE, INDIA – Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi is vowing to make his company profitable while pursuing growth from emerging arenas such as India, addressing investors’ concerns about the ride-sharing company’s mounting losses and global regulatory challenges.
Uber, which lost about $5.2 billion in the second quarter alone, is having a tough time convincing the market of its growth potential — or that it can turn a profit anytime soon.
Its stock has plummeted 27 percent since a disappointing initial public offering in May. Khosrowshahi, who this month unveiled a final round of job cuts, said the core rides business would achieve profitability even as newer lines, such as Eats, gained traction.
Khosrowshahi was brought in to clean up the ride-sharing company in the summer of 2017, after a series of scandals brought down flamboyant co-founder Travis Kalanick. It had already become one of the world’s most valuable startups by aggressively pushing into new markets, bringing its model to places where few rules existed to deal with the emergent phenomenon of ride-hailing. Now, Uber is advancing at a more even clip after exiting markets such as China, expanding its existing business lines and exploring new markets. The company will soon roll out Uber Works, a listing service for temp workers of all stripes.
“If I rated myself based on accounting of the last quarter, I wouldn’t be doing so well. But I live in the real world,” Khosrowshahi said in an interview Wednesday, sitting in a conference room sporting a bright-red Uber-monogrammed Indian silk waistcoat.
“I ran Expedia for 12 years. It was a profitable company with significant cash flows,” Khosrowshahi said at Uber’s engineering center in Bangalore, which was decked out with oil lamps and sheer orange drapes for Diwali, the upcoming Indian festival of lights. Uber’s take rate, or commission earned, in rides was over 20 percent and “a great business can be built with a 20 percent take rate.”
Uber is one of the most prominent companies in the portfolio of SoftBank Group Corp., the Japanese investment powerhouse that also backed WeWork and former rivals such as Didi Chuxing. The U.S. company, once a star in the SoftBank constellation, is now labeled among its biggest underperformers.
India is a potential bright spot: a massive, untapped market where Uber can demonstrate rapid growth to calm investors back home. It’s also a laboratory for innovation in terms of new modes of transportation, the chief executive said. “Our fastest-growing segments are some of the new segments — two- and three-wheelers,” he said. The company has a presence in about 40 Indian cities.
Khosrowshahi says Uber will continue to invest there, and is confident his team can build products that are a fit not just for India but could also be exported to the growth regions of the next decade — from the Middle East to Africa. This week, he unveiled a feature to link Uber’s services to Delhi’s public transport system.
The most significant of the problems facing him could well be a shifting gig-worker landscape. Regulators are making it harder for companies such as Uber and Lyft to classify workers as independent contractors, which raises a question about the basis of their business models. California’s classification of drivers as employees would be a “mistake,” Khosrowshahi said, and would increase prices for riders while making the service available to fewer people.
“We and other gig economy companies are going to sponsor an initiative that actually brings this issue to the voters. Let the voters decide.”