Uber Profitable

Uber is one of the best examples of how a risky startup becomes a mature business.

What’s driving the news: After 12 years of burning through cash, Uber reported last month it is on track for operating profitability.

How they did it: Pre-IPO the company was derailing: drowning in infights, legal battles, and regulatory troubles. Uber CEO Dara Khosrowshahi joined the ride-share giant in 2017 tasked with turning it around in the aftermath of ousted founder and former CEO Travis Kalanick.

What exactly CEO Khosrowshahi did to turn Uber around

Pablo Srugo, VC partner at Mistral, wrote a LinkedIn post on what exactly Dara Khosrowshahi did to get Uber to profitability (condensed):

1. Run as lean as you can and focus only on what matters most. Dara K. reacted quickly to the pandemic and reduced staff by nearly 20%. It was painful, but it worked. He sold off business units that weren’t strategic. He disposed of their self-driving unit, their $400M stake in Careem, and their $392M stake in Zomato.

2. Only play games you can win. He left markets where they weren’t positioned to be a #1 or #2 player. He left Israel. He abandoned food delivery in Italy. Maybe in the future they’ll come back. For now, it’s win or get out.

3. Focus on long-term growth, not short-term profit. Dara launched UberOne, their Prime-like membership, and grew it to 12M members (2x YoY). Because of all the offers UberOne members get, they have lower margins than regular members. But since UberOne members order more and have higher retention, they have higher Lifetime Value. In the long run, they’re more profitable.

4. You can be lean and be aggressive.Anyone can get to profitability by cutting. He got there by growing lean. He acquired Drizly for $1B, Cornershop for $1.4B, and Postmates for $2.6B. As a result, he got both growth AND profits. At a $36B runrate he’s still on track to double in ~3 years. Without losing money. Chasing profitability doesn’t mean playing it safe. You can keep taking bold bets.

When I read this, I immediately started researching more about Khosrowshahi and how he operates to see what I could learn from him. I found interviews he did with NYT and WSJ and watched all sorts of videos. Here’s what I found.

Daily habits and routines that keep Khosrowshahi optimized

“You need to up your eccentricity,” his wife said to him jokingly during his interview with New York Times. Even in live interviews, his “presence” is not that "interesting” — he’s calm, even-keeled, and semi-well-spoken.

He has that rare leadership quality you get if confidence and humility had a baby. Speaking of, he’s on his second marriage with four kids, lives in SF, and is 54-56 years old. His day to day looks like this:

• Sleep. Khosroshahi wakes up at 5:15 am and immediately makes coffee. “I usually skip breakfast,” he said.

• Working out. He never misses a workout every day. “If I don’t exercise, my wife tells me I become Evil Dara,” Khosrowshahi told WSJ two days ago. He runs and does Peloton classes. “If I’m thinking about my next gasp of breath, it makes me forget for a second about any worries that I have.”

• Work. Immediately in the day, he ingests a ton of information. He checks email first either in bed or while making coffee. “I’ll check out how Europe is doing. Usually there’s a report on how the business did over the weekend.” His news digest is like a fine steak—the Journal, the New York Times and the FT—”to get set on what’s going on around the world.”

• Hiring. “What I look for above all is followership,” said Khosrowshahi. “I want to know who they’ve hired, who they’ve developed, because ultimately, you get exponential benefit, not just based on the individual, but everyone they’ve hired and developed.” He said “Bet on people” was some of the best advice he’s ever received.

• Family. After work, he prioritizes and protects dinner with his family. “We put all the phones away, no distractions whatsoever. Having that time to talk about everyone’s day, laugh a little bit, make fun of each other—that time is really special to me. And cooking with my wife on the weekends. I’m an obsessive griller.” (Steak.)

• Diet. He drinks red wine and eats desserts. “I don’t think I’ve gone a day in four years without having a piece of chocolate,” he told the WSJ. #goals

• Hobbies. Khosrowshahi describes himself as “a gamer who doesn't have enough time to play much.” A little research shows he “loves Dungeons and Dragons” and that he and his wife met over World of Warcraft. He’s into travel and sci-fi geek, per his X profile. He sounds like someone you’d want to get steak with. One that he grills.

The big takeaway for entrepreneurs

Khosrowshahi is not an entrepreneur. He’s a professional manager. There’s a big difference. (I wrote an Inc. article in 2017 about how the two Uber leaders Travis Kalanick and Dara Khosrowshahi could not be more different from each other.)

• An entrepreneur takes big swings, moves fast, isn’t afraid to fail or break things, carries an audacious vision, hypes people up, challenges the status quo, and leads with intensity and passion. It works, and is arguably required, for disruptive startups, but doesn’t work as well at larger companies (cough X cough).

• A professional manager is an efficiency machine, takes calculated risks, moves slowly, relies on teams, calms people down, stays grounded, and leads with principles, not passion.

As a business owner, you need to know which hat to wear and when. There’s a point in every scaling company when it’s time to hang up the entrepreneur hat entirely and don the professional manager hat.

Keep in mind this doesn’t always have to be the case—Mark Zuckerberg is a good example of a founder who shed his entrepreneurial roots and morphed himself into more of a professional manager CEO.

So it can be done, but you’ll really have to know thyself to recognize it before it’s too late.

Thanks for reading. See you next Thursday.

Dave