‘Indian customer is demanding… historically very difficult to operate here,’ says Uber CEO Dara Khosrowshahi

In an interview with the Economic Times, the executive shared insights into the company’s investment strategy in India, its focus on mobility, profitability, the electric vehicles (EV) business, and differences in his management style compared to Uber’s founder Travis Kalanick.

Reflecting on the founder vs. CEO debate in the tech world, especially in the context of Uber founder Travis Kalanick, Khosrowshahi acknowledged the unique strengths of founders but highlighted the need for focus and the importance of being the right leader for a specific phase in a company’s journey. He expressed respect for Kalanick’s accomplishments and noted that their collaboration has been beneficial for Uber.

Competing in India for Global Success

Acknowledging the importance of succeeding in India, Khosrowshahi said the “Indian customer is a demanding one, both in terms of service and price”, adding that “it has been historically very difficult for companies which operate in higher revenue and cost scenarios to compete in low-cost and lower unit revenue markets. For us, India is not only a market with enormous potential, but it is a state of mind.”

The CEO also noted the country’s unique digital public infrastructure such as Aadhaar and ONDC and stressed the country’s role in fostering innovation at scale over the next five to ten years.

“I learnt about digital public infrastructure in India — Aadhaar, payments systems to ONDC, and a bunch of the surrounding technical infrastructure that is being built. It’s unique. There’s nothing like that anywhere in the world. It’s setting the stage for five to ten years of what will be incredible innovation at scale, putting India in an enviable position, and one that we want to play a part in by innovating as well,” he said on the first 48 hours of his visit in the country.

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Entrepreneurial Approach to Thrive in India

To succeed in India, Khosrowshahi underscored the need to be entrepreneurial, and offer low-cost services that meet customer expectations. He added that with over 900,000 earners on their platform, Uber has strengthened its position in two-wheelers and three-wheelers, facing increasing competition in the evolving Indian market.

“The Indian market is getting more competitive. It was a two-player market previously, now there are three to four players, and there are many young upstarts. We have to make sure we’re on our toes. One of the strengths of Uber is that we have big markets like the US, and Europe that are highly profitable, which allows us to lean into places like India that aren’t just high potential but are also large. Our market share has been higher than what it was when I joined, and it has been higher than probably ever. While (rival) Ola focuses on other areas…we love the ride-sharing business. We also continue to expand into new categories and are dedicated to sustainability. Some of our competitors are distracted by shiny, new efforts and IPOs, that’s great. I’m undistracted and completely focused on the mobility business here as there’s an enormous amount of upside for us and our positioning has never been better,” he said on Uber’s strategy.

Reflecting on market changes, Khosrowshahi said the company wants to concentrate on divesting from certain businesses and investing in mobility, where Uber sees significant upside.

“We can be profitable in India tomorrow if that was the direction I gave to the teams, but based on what I see in terms of the potential, it would be a wrong move … Short-term profits aren’t the answer, but I’m quite confident that in the long term, the Indian market can be profitable. So, we will invest for as long as we can afford to keep investing … We have a capital allocation framework, a great, new CFO (Prashanth Mahendra-Rajah) who looks at profitability and growth potential by geography and product,” he added.

“What we are determined with Uber in India is that to win in mobility, we had to let go of delivery which we didn’t have a right to win as it is highly competitive. We decided to take a stake in Zomato, which has been the winner here, and that turned out to be the right decision and allowed us to lean into mobility,” he said.

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Regrets and Future Possibilities

On the decision to sell UberEats, the executive said he regrets it, but affirmed it was the right move, adding that the current focus remains on mobility, with an eye on competitors and potential opportunities in delivery.

“I always have an all-hands meeting with local teams and every single time they (India team) ask me if we are going to get back into delivery. I don’t think it’s the right thing to do right now. ONDC presents opportunities structurally for innovation within the marketplace. That’s one of the reasons why we signed an MoU to explore ways in which we can work with ONDC. We watch our competitors carefully. Ola is dabbling in food delivery and we’re not afraid to watch and learn as a company. If there’s an opportunity for us to go into delivery, believe me, it tugs in my heart…but right now, the brain is telling me this is not the right time,” he said.

On the topic of profitability in India, Khosrowshahi acknowledged the potential for short-term profits but stressed the importance of long-term investment in the market. He outlined Uber’s capital allocation framework and highlighted the company’s focus on being lean and focused, shedding non-core businesses, and making strategic investments, such as the decision to take a stake in Zomato.

Drivers, Partners and Technological Innovation

Uber sees India as a rapidly growing market, with the number of drivers likely to surpass a million. Khosrowshahi said the company continues to invest in technological innovations, with India playing a significant role in developing products such as taxi demand aggregation, Uber Bus, and high-capacity vehicles.

“It’s about lowering the cost of transportation. Most of the products that we are building in India, these are products that we take out globally,” he said.

Further, on Uber’s partnership with Tata for sustainable vehicles, he said the company is in ongoing discussions to extend and expand this collaboration. Adding: “Right now, the focus of the partnership with Tata is to get sustainable vehicles onto the fleet. Tata is an unbelievably important player here so we continue to have a dialogue with them about how we can extend and expand our partnership with them.”

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Navigating Regulatory Challenges

Acknowledging the complexity of regulations in India, Khosrowshahi said the company recognises the need for local adaptations due to varying regulations across states and cities. “It’s a big country, sometimes there are different local needs. One of the areas of particular focus for us is charging infrastructure, which requires a public-private partnership. We operate in 70 different countries and every single one of these countries, we have different regulations by states and cities, even sometimes for airports. We do understand that this is a local business…The good news is that while sometimes these things move slowly, they get to the right place because common sense takes over,” he said.

But despite challenges, he believes common sense prevails, ultimately aligning regulations with the evolving needs of the market.

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Published: 26 Feb 2024, 10:40 AM IST