[youtube=http://www.youtube.com/watch?v=vGbuitwkZiM&w=560&h=315]
Below is an unedited transcript:
JESSI HEMPEL: Hi, everybody, good morning. Just take a second to readjust yourselves and come on over here. We are on the auxiliary stage.
I’m here this morning with CEO and founder, co-founder, of Uber, Travis Kalanick. And I know that most of you guys are expecting some major news from this company. So I don’t want to beat around the bush. We’ve had reporters ambush you. We know how you got here. Do you want to give it to us straight?
TRAVIS KALANICK: Well, the big news, and some of you may have found this already, is that —
JESSI HEMPEL: No tweeting, guys.
TRAVIS KALANICK: They can tweet. It’s all right.
JESSI HEMPEL: Okay. Cool.
TRAVIS KALANICK: Uber just launched in Aspen. (Laughter.)
JESSI HEMPEL: You heard it here first.
TRAVIS KALANICK: So we put cars up this morning at 7:00 a.m., and you now don’t have to wait for a shuttle anymore. (Laughter.)
JESSI HEMPEL: So, of course, the logical question is: How did you get here?
TRAVIS KALANICK: How did I get here? I got here via an Uber, of course.
JESSI HEMPEL: Okay. So, Travis, you and Garrett Camp, you launched this company three very short years ago. And lay of the land, I mean, you’re on the ground in 37 cities.
TRAVIS KALANICK: Yes. 37. Aspen is here for three days.
JESSI HEMPEL: All right.
TRAVIS KALANICK: So that counts as one of our cities today.
JESSI HEMPEL: For the next three days it’s 37. You’ve launched internationally. You’ve said that the early markets are profitable.
TRAVIS KALANICK: Yes.
JESSI HEMPEL: Let’s really break to what is the thing everybody’s talking about. So you have confirmed Uber is raising money.
TRAVIS KALANICK: Correct.
JESSI HEMPEL: I’ve heard that the current raise is almost complete, and that the value of the company is likely to be higher than Airbnb’s two and a half billion dollars. Is this something you can confirm for us?
TRAVIS KALANICK: You have to ask that question.
JESSI HEMPEL: Of course I have to ask that question.
TRAVIS KALANICK: So the party line is that we are not commenting on fundraising discussions we may or may not be having. And that was interesting information. I don’t know what else to say.
You know, there are probably one or two folks we’re talking to who we’ve signed NDAs with who are particularly loose with information, but that information is not correct.
JESSI HEMPEL: Okay. So let’s move on, then. Let’s say that a company like yours were to have a valuation north of $2.5 billion. Do you believe that Uber is a business that could command that?
TRAVIS KALANICK: Oh, the hypothetical. Here’s what I would say: Our numbers are really, really good. And the multiples that you see in the public market are around companies that are growing like 50 percent or 40 percent. You could take their price-to-sales ratios and we could come in — well, shoot, I’m getting stuck. (Laughter.) Shit.
We’re doing great. (Laughter.)
JESSI HEMPEL: Okay. Let’s go to the business. So I am an Uber user, as are, I would say, many people in the room. Raise your hand if you’ve been in an Uber vehicle. (Applause.)
TRAVIS KALANICK: All right.
JESSI HEMPEL: We have a couple of people who know how the service works.
TRAVIS KALANICK: Thank you, guys.
JESSI HEMPEL: And for those who know how the service works, many of us have noticed in the last year or so that things that look suspiciously not like rides keep sneaking into the mix. By that, I mean, you had a promotion over Valentine’s Day where you delivered roses.
TRAVIS KALANICK: Yes, on-demand roses.
JESSI HEMPEL: On-demand roses.
TRAVIS KALANICK: Bouquet of roses inside of five minutes in dozens of cities around the world. On Valentine’s Day. We saved marriages. (Laughter.)
JESSI HEMPEL: Thankfully, you reminded a lot of us that the day existed.
Also, July 3rd, the helicopter in New York. And you just had this ice cream thing. And it got me to thinking, is Uber more than cars? Can it be?
TRAVIS KALANICK: I mean, the way we look at what Uber is is it’s the cross between lifestyle, which is give me what I want and give it to me right now, which we’ve seen online, right? We all — remember, it was like instant gratification. It was like the wave of the future in the early 2000s, right? Give me what I want, give it to me right now, and the logistics to get it to you, right?
But we’ve done things like last Friday we did Uber ice cream. 33 cities around the world. It was essentially on-demand ice cream trucks, right? So you push a button in 33 cities and an ice cream truck would come. And people were reliving their childhood memories and they got pretty pumped.
JESSI HEMPEL: And some of us, I might point out, were just pushing that button over and over again —
TRAVIS KALANICK: Until they got it.
TRAVIS KALANICK: Well, so, yeah, there were some people who didn’t get it. It’s because if we were to — the only way to satiate all demand, let’s just say for one city like San Francisco, we would have needed over 1,000 ice cream trucks. And there are not 1,000 ice cream trucks in, like, the entire west coast of the United States.
JESSI HEMPEL: But isn’t that what a market is about? Getting supply and demand right?
TRAVIS KALANICK: Yeah. Because it’s a one-day thing, we didn’t think it was a good idea to go purchase —
JESSI HEMPEL: No, I’m just giving you a hard time.
TRAVIS KALANICK: — 900 ice cream trucks.
JESSI HEMPEL: But what does it tell you about what’s possible for Uber in the future? I mean, is this a meaningful experiment or is this marketing?
TRAVIS KALANICK: So it’s a very simple platform, right? So I called my general manager at Denver yesterday when I got into Aspen. And I asked him two questions. I said, one, is Hickenlooper still trying to put us out of business in Colorado? And two, when are we getting Aspen up? And he’s, like, you want Aspen up? I’m, like, yeah, like, I want Aspen up. And so he was able to get it up by this morning.
TRAVIS KALANICK: So the answer is, yes, we’re thinking about it. What we’re doing right now is we’re in the experimentation phase where you sort of find some interesting ways to do promotions like Uber ice cream.
TRAVIS KALANICK: But I think could it be that next summer we just do an entire summer of ice cream? Sure. It’s very simple. It’s very straightforward for us to basically give them a phone with an app on it and say, look, when the thing is blinking, hit the screen and go to where the map tells you to go. And you don’t have to pick them up and take them anywhere, just give them ice cream.
TRAVIS KALANICK: Complicated. I don’t have much of a relationship with Hickenlooper.
JESSI HEMPEL: Okay.
TRAVIS KALANICK: I spoke to him for the first time last night.
TRAVIS KALANICK: Dinner was good. Basically, what I got from Hickenlooper was that — I think he gets it. He gets it. He knows that tech progress matters and that being — that making Colorado a place for tech entrepreneurs and for technology, et cetera, is a good thing. And it’s not just good policy, it’s also good for the people of the state.
So he made it very clear that he was not the one that was trying to put us out of business, but actually it was his appointees at the PUC that were trying to put us out of business.
JESSI HEMPEL: So what we’re talking about really sort of feeds into something larger, Travis, which is Uber gets into it a lot with regulators. It seems to be, actually, the chief reason that we in the media like to write about you, other than that funding thing.
JESSI HEMPEL: So how much of your day is actually spent dealing with those issues?
And so, you know, the regulatory problem is not one that we look for. We go into cities where we’re legal. We operate where we’re legal. And what we find is in a lot of these cities, there are very strong relationships between the taxi industry and, say, like, the public utilities commission of Colorado. They’re good friends and they propose laws that would put us out of business.
JESSI HEMPEL: When was this proposed and what’s the likelihood that anything will come of it?
TRAVIS KALANICK: It was proposed earlier this year, if I’m not mistaken. And I’m not sure when it will — this is the thing about local governments, right? I don’t know if and when it becomes real. I just have to make sure that our customers who love us in the city that we’re in make sure that they let the world know, or certainly let their government officials know, that they’d be very disappointed if they lost the ability to get around their city.
JESSI HEMPEL: So let’s talk about those customers who love you for a second. You have passionate customers. You have folks who love you. You also have folks that you make very angry. And I know because they write to me. What will happen is I’ll write a piece about Uber and then I’ll get a slew of messages saying, “Yeah, but the surge pricing thing, he charged me so much money.”
JESSI HEMPEL: So can you talk a little bit, in particular, about the surge pricing in the context of when there is a crisis or a natural disaster, like the recent Toronto floods or like Hurricane Sandy?
TRAVIS KALANICK: Sure. So, first, surge pricing is, for those who may not know, surge pricing is basically a mechanism whereby when demand outstrips supply, the price goes up. When the price goes up, because we don’t own the cars, nor do we employ drivers. When the price goes up, our partners, who are the limo companies, essentially, they put more cars on the road. And more drivers want to drive when the price goes up. And so we’re able to get a larger percentage of our total sort of installed base on the driver’s side on the system when the price goes up. Therefore, more trips happen.
So that’s the premise. And we’ve sort of —
TRAVIS KALANICK: We run it — for instance, it’s happened every Friday and Saturday night in most of the cities that we’re in as an example.
TRAVIS KALANICK: Hotels do it, airlines do it. Tons of different businesses do this. And it’s just good economics.
JESSI HEMPEL: Right.
TRAVIS KALANICK: So to give you an example, in New York, Hurricane Sandy happened.
JESSI HEMPEL: Sure.
JESSI HEMPEL: Right.
TRAVIS KALANICK: For the rest of the sort of period, what we did is —
JESSI HEMPEL: When you did that, Travis, did you tell the world you were doing that?
JESSI HEMPEL: Okay.
JESSI HEMPEL: So you offset, the first day, the prices for those of us who are affected by the storm. But, of course, the period during which we were affected was very long in that particular case.
JESSI HEMPEL: Fair.
TRAVIS KALANICK: And so if we want to get them out there, it has to be worth their time. So what happened —
JESSI HEMPEL: What I’m hearing, though, is that it’s the driver’s decision, not Uber’s decision or responsibility on the pricing?
JESSI HEMPEL: Right. Right.
TRAVIS KALANICK: And so at some point, it’s really — in some ways, it’s up to both demand and supply, right? So if supply comes on in droves, then you have excess supply and then the price comes back down.
JESSI HEMPEL: Right. So talk about the competition a little bit. I mean, lots of folks want to be near business. You know, the 2013 pitch that I receive most often is “we are the Uber of blank.”
JESSI HEMPEL: So aren’t you the “Uber of blank?”
If it’s in our wheelhouse, right, we’ll ultimately do it. And I sort of outlined the sort of lifestyle and logistics cross. But there are a lot of things that don’t work for it.
JESSI HEMPEL: Yes.
TRAVIS KALANICK: There are things that are not designed for Uber, and there are things that are.
I think somebody came to me with Uber plumber. Right? I’m like, well, you know, people use plumbers like once every five years. So there’s just not enough liquidity there to make that interesting. You can actually just pick up the phone and he’ll come to you in a couple of hours and it’s okay.
TRAVIS KALANICK: Sure.
JESSI HEMPEL: — who are experimenting in this space.
TRAVIS KALANICK: Yes.
TRAVIS KALANICK: Well, I think they were a pretty interesting — took a pretty interesting approach to things. Basically, the way to think about it, Lift basically goes into the markets that Uber is in and then gets folks who don’t have commercial licenses and don’t have commercial insurance and says bring your own car and provide Uber-like service.
JESSI HEMPEL: Right.
And watched it happen for a year. But what they were able to do because no commercial insurance and because of their easy access to supply, the cost was really, really low. And so you could see a situation where they’d eat you up from the bottom up.
JESSI HEMPEL: Right.
TRAVIS KALANICK: And so stay on the sidelines, the regulators are going to do something about this. They ended up doing nothing about it, and then ultimately after a year saying, you know what? This is okay. This is all right. And we ultimately signed an agreement with the State of California saying that. And so then we basically found a way to get what they call non-TCP license transportation providers on board in a way that with background checks and insurance and things like this. But, ultimately, as they follow us in other cities, we now have a playbook. Which is if it’s totally just the regulatory risk is just off the charts, we’re going to stand back, watch it for 30 days, let the regulators know, look, either enforce the laws that you have in place right now, or embrace it. That’s fine. But if you have a policy of non-enforcement that goes 30 days, we call this regulatory ambiguity, then we’re coming in too because we want to participate in this kind of innovation.
TRAVIS KALANICK: Yes.
JESSI HEMPEL: What are the challenges to growing a business like this, which is very local, internationally?
TRAVIS KALANICK: Well, look, we don’t look at things in a country-by-country basis. We look at it city by city. And when you are as distributed as us, right? So a city manager basically runs day-to-day regulatory, biz dev, local marketing, customer support, social media, supply chain, and a whole bunch of other things. They’re really running a business.
And so once your culture is that way where you empower cities to do things, and once your culture is the way where you want to feel local in that city, then things just start to be natural. So we have an Uber playbook, but then there are things you can’t do, but anything other than what you can’t do, go for it, have fun.
TRAVIS KALANICK: Well, look, I think, you know, replicating — making a Groupon clone is very different than making an Uber clone. And the Sanwar brothers just recently came out with their Uber clone. But the thing is, in some ways, we are three years into getting very good at replicating. So I have a very strong team out there launching cities all the time. And our playbook is really, really good.
JESSI HEMPEL: So he’s pumped.
TRAVIS KALANICK: Yeah.
JESSI HEMPEL: So let’s turn to the audience here. We’ve got a lot of folks. Anybody got a question? Okay, we’ve got a bunch back here. We’re going to tart with you, and then go to you. Please, give us your name when your ask.
TRAVIS KALANICK: I feel we’re pretty solid in terms of rolling out in cities quickly. Actually, I think the bottleneck at this point is really people, right? So I think maybe what you mean by rolling out too quickly is rolling out in places where you don’t have good people running it, right?
So really, then, the pressure goes from sort of the structure like let’s set up an entity in Mexico City, which we soft launched a few weeks ago. Took us three months to get that set up, right? To, well, we have all the corporate structuring and all this stuff set up, we know how to operate internationally, we know how to clear in different currencies, but then it’s like, well, HR. Where’s HR in terms of getting the right, really good people in these cities?
So we’re always trying to push the boundary there. And there’s an expertise in doing that. And for sort of a hyper-growth type company, that ultimately becomes the make it or break it in terms of did you expand too fast or not? It’s did you get quality people on the ground in all the places that you’re in? And do you have a quality playbook in place for them to follow?
PHIL LIBIN: Hi, I’m Phil Libin with EverNote. Travis, what you’ve said about surge pricing. I’ve paid it a couple of times, and I’ve never had a bad experience with it. I always thought, yeah, this makes sense, it’s up front, I’m happy to trade off some money for time here. Where I think it might become problematic is if it could be used by the local operators to really game the system to have artificial scarcity. So I think as long as you optimize it for we want the price that results in the most rides, that’s great. You’re kind of on the right moral side here.
TRAVIS KALANICK: Well, look, this is a marketplace for transportation, right? So this is — the question you basically put is, like, can somebody corner the market? Right? Does somebody have like half of the puts on corn commodity or something like this, right?
There are probably a bunch of other mechanisms we could put in place to make sure that that doesn’t happen, but it goes against the DNA of our company for that kind of thing to happen. So if for whatever reason somebody was gaming it, we control that marketplace. We’re in the middle, we are the marketplace. We would make sure — marketplaces don’t work when people are cheating. And so we’d make sure that that wasn’t happening.
JESSI HEMPEL: Any other questions in the audience? Right there.
GLEN KACHER: Yes, Glen Kacher from Light Street Capital. I used your service a couple weeks ago in Chicago and found it to be great. I’m wondering if that product has helped your relationship with the taxi commissions.
And so we see the sort of completion rates, what we call request to completion ratio, in taxi, the taxi product, is far inferior to the sort of fully dedicated Uber product or Uber X product.
And getting to your point, the taxi industry, we’re putting more money in the taxi industry when we work with taxis, like in Chicago, but they don’t like that we become their distribution channel.
JESSI HEMPEL: A couple more questions back here. Sorry to cut you off, but let’s go over to the middle and back one. Is that Deep?
TRAVIS KALANICK: So anybody who’s done business in India knows that it’s pretty tough to get started if you’re a foreign company. And I think we’re just going through the process right now of getting things set up in India.
JESSI HEMPEL: Got it. And right in front of you in the green shirt.
TRAVIS KALANICK: Well, I think, typically, Uber is running into local battles wherever we — you know, not wherever, but in a lot of the places that we go. And it’s because the taxi industry is used to keeping competition out through regulation. They do anti-competitive things by working with local governments to do so.
It is illegal to be anti-competitive on your own. But if you do it through a local government in the United States, then it’s legal.
I think the really interesting part about can regulation keep up is it’s a tough one because regulators often are sort of catching up — that’s just the nature of things.
JESSI HEMPEL: A couple more questions in here? Right up front. To the left of JP.
LARRY GELLMAN: My name is Larry Gellman, and I work for Robert W. Baird, and have a son that works for Uber overseas.
JESSI HEMPEL: What’s his name?
JESSI HEMPEL: Okay, here we go.
TRAVIS KALANICK: Very good. (Laughter.)
TRAVIS KALANICK: Look, when we do a test, it’s the former. It’s doing something that captures people’s imaginations. But, honestly, when we first started Uber, that’s what it was about too. When Garrett and I got Uber up and running, it wasn’t about taking over the world or having a big company, it was about us and 100 friends pushing a button and a Mercedes rolling up in just a couple of minutes. And it was that “wow” factor.
And we like to say we wanted to be baller in S.F., right? So where these things end up, we don’t know. But I think what it shows is the experimental and sort of creative culture that we have at our company.
JESSI HEMPEL: Any other questions out there? Way in the back.
TRAVIS KALANICK: Yeah.
JESSI HEMPEL: Spoken like a question from someone from Starcom.
TRAVIS KALANICK: Yeah, so this is a question that comes up every once in a while. Sort of just straight-up advertising is something you’re probably not going to see on Uber. You know, if the average ride is, you know, let’s just say it’s 25 bucks and we’re getting 20 percent of that, like, what kind of CPM are you talking about? A $5,000 CPM if you’re talking in advertising terms? It doesn’t really make sense. And, honestly, it’s not good for the customer.
JESSI HEMPEL: That sounds pretty cool. What else have we got here? JP?
TRAVIS KALANICK: Oh, man. Okay, so I think, again, it goes back to lifestyle and logistics, right? If we can help somebody get a product or something that they want right now, give it to me right now and we are in the business of delivering it, great. Right? So if somebody goes, Travis, you’ve got this great lifestyle brand. Uber is, you know, so awesome and high end and all this. When are you going to do concierge services? Or when are you going to do hotels? And I’m like, we’re not going to do hotels because we’re not delivering a hotel building to you, right? So we know what we are. But maybe we do like Uber camper or something, like we’ll bring a camper to you — no, I’m just kidding.
TRAVIS KALANICK: So it just falls in line with that, JP.
JESSI HEMPEL: Couple more questions, back here.
CHARLOTTE: Hi, my name is Charlotte, I’m from Change.org. I know Uber has used our platform to start many petitions in different cities to rally your fan base. I’m wondering if you can speak more to your broad strategy of engaging Uber users to actually help you in your fight against unfair regulations.
Not as good on the inside game, and the whole, like, we don’t go in and ask for permission and things like this. But that’s how we look at it. And I think Change.org has been actually quite awesome in helping us do that.
JESSI HEMPEL: Okay, we’ve got time for one more quick question. Nobody liked the word “quick.” Great. So, Travis, I want to thank you for coming out. I want to thank you for the ice cream and the barbecue and all of the really cool things, and in particular the cars.
TRAVIS KALANICK: Yes.
TRAVIS KALANICK: Fair enough. All right, thank you.
TRAVIS KALANICK: All right, awesome. (Applause.)
