Bringing a culture back from the brink, w/Uber's Dara Khosrowshahi

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Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Hi listeners, it's Reed. Today we're sharing an episode with Uber CEO Dara Koshrashahi.

Today's show will tackle some of the most fascinating and complex topics you can encounter when you lead a company. From startup. To scale. But at its core. This episode is based on a simple

Timeless story. So simple. You could tell it to your kids. At bedtime. And that's

How we'll start the show. Okay. Jack. Amelia. Do you want to hear a story?

Yes. Okay, what story should we read? A pirate story. Okay, you got it. The adventures of Captain Jess

Speckle Crow. Just Speckle Crow here. Well. Band of pirate rogues. Chapter thirteen.

The pirates agree to change their ways. Captain Jess Specklecrow and her band of cutthroat pirates were counting the treasure from their latest raid. aboard their fearsome ship, the Masters of Sail. One double, two W. Three double Excuse me, Dad.

What's up? Yeah. the Bloon it's money. It's like they're counting their dollars. Oh One money, two money, three money. One money, two money, three money!

Jess looked across the deck at the faces of her pirate crew. What a sorry sight. Despite all the treasure that they had stolen. Something didn't feel quite right to Jess. It was a feeling that had been bothering her for a while now. Listen up, crew. Jess yelled.

But the pirates were too busy divvying up their spoils to pay attention. Over by the fossil. A pair of gnarly sea dogs were fighting over a shiny polished ruby. Ruby? Ooh, I love Ruby's. Looks like you wanna go for a swim. Come here, you salty dog! Yeah, God.

Uh a scratch. While over by the mainsail. A gagle of pirates had cracked open a case of rum. Right. Rum is a grown up drink. Oh.

Just side. Drew her flintlock pistol, took aim at the barrel of rum. Pull back the hammer. and fired.

Sup! Bye. I have a question. I Like

And so And I Had fun at the zoo and we saw some peacocks. Yeah.

I said listen up. We're known for being the most ruthless band of pirates in the Silicon Isles. Arrrrr her motley crew cheered. We've smashed our year on year booty growth projections yet again. Arrrrr, the pirate shoute again in excitement.

And our plank walking optimization algorithm has sent more of our prisoners to Davy Jones locker than any other. Arrrrrr They all cry, then here's the R. Jackie. Say uh

No say it loud, say it loud. Oh Yeah. Mm. But our fiendish reputation has got the best of us.

It's time we put our pirating ways. Behind us. It's time we shaped up and became A Navy. The pirates.

Gasped. A well-behaved Navy with shiny uniforms and disciplined officers and those things that stop you doing bad stuff. Yeah. What do you call those things again? Morals. They're called morals.

Morals! If we shape up Leave behind our lowdown ways and do the right thing. We can get even more treasure. Just for us? But for everyone!

A silence fell upon the pirates. They looked at one another. Then One of them. began to chant.

Yeah. Yeah. B. and other voices joined. Hey Stevie! Stevie!

Until the chorus of pirate voices Echoed about the rigging. Yeah.

Yeah. P. Maybe. And the legend of Jess Speckle Crow and her honorable Navy. Lived on forevermore.

The end. Please hear another story. No. Right, I was in the video. The end. Thanks to our producer, Chris McLeod, and his children Amelia and Jack, for letting us listen in on Storytime.

Thanks, Chris, Amelia and Jack. Like many stories of redemption, There's a moral to be taken from the tale of Captain Jeff Specklecrow and our pirate gang. It's an obvious one. That even an easily distracted four year old

Can grasp. But that said It's a lesson. Many founders forget. There's a romantic notion that startups should behave like a band of pirates as they fight their way hook and cutlass towards scale.

And there's nothing wrong with that. It's a view I wholeheartedly agree with. А з лом із кіам газ. On your ethical compass. And realize that your days as a swashbuckler must give way.

As your company matures. I believe that every startup must transition from a band of roguish pirates Into a disciplined navy. Get the timing wrong. and you'll quickly be lost at sea.

You gotta have incredible talent at every position. Huge push. There are fires burning when you're going out. Can you believe it? And then you go back to this is totally gonna be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Like, well that's just how you do it. We haven't made it. Just how you do it. This is masters of scale.

I'm Reed Hoffman. Founder of LinkedIn. Partner Greylock. And your host. And I believe that every startup.

Must transition from a band of roguish pirates Into a disciplined navy. Get the timing wrong. And you'll quickly. Be lost at sea.

For decades now, startups have had an affinity for pirates. And it began. Like so many things in tech. With Steve Jobs. When Steve was building the first Macintosh, he coined the phrase

It's better to be a pirate. than to join the Navy. The Mack Team got on board. creating a homemade pirate flag with a rainbow colored Apple logo as an eye patch. In Silicon Valley, the pirate image.

Stuck. It's easy to be seduced by this image of the entrepreneur as a pirate. Who doesn't want to leap across the rigging, cutlass in hand, like Johnny Depp? And look, early stage startups.

Are a lot like pirate ships. Pirates don't convene a committee meeting to decide what to do. They strike quickly. Break rules and take risks. And you need

This buccaneering spirit to survive. When the cannonballs are flying. And the odds are against you. But some startups Cross the line from squash buckling hero.

To dirty rotten scoundrel. Especially as they grow. You can tip. From a culture that joyfully flaunts orthodoxy. to a culture that truly believes that winning is all that matters.

And ethics be damned. And there's a second problem with piracy. It doesn't scale. If you succeed as a pirate, your stockpiles of treasure will grow.

The territories you control will widen. But you can't protect and patrol that much territory with only a ragtag fleet of pirate ships. This is why every startup needs to shed its pirate nature at some point and evolve into something more akin to a navy. No less heroic. But more disciplined.

With rules of engagement. Lines of communication and long term strategy. I wanted to talk to Dara Kostro Shahi about this. Because in accepting the role as Uber CO He's taken on the most extreme.

Pirate to Navy transition. I've ever seen. Uber blitz scaled to become the most valuable startup in the world. It also became notorious.

Rife with discrimination and questionable business practices. Uber has already secured its place in business history. Ведена за сус. Or a cautionary tale. Or both.

Rest on Dar's ability. To transform the company from a pirate ship. To a disciplined Navy fleet. Throughout his career. DAR has built a reputation for running very large.

Very successful organizations. With no drama. In other words, he's a classic naval leader. He was primed from a young age to act like an admiral. Not a brigand.

During his childhood years in Iran, his father would often bring him to work at the factories of the family business. When we went to these factories. He was Beloved. The employees just loved him, and the way that he spoke with our employees was was just amazing. It was

It was very human. It made a huge impression on the young Dara. My father is the most modest person alive, and he never confused his position of authority as a manager

with his position as a human. In nineteen seventy eight, a Dar's family was targeted by the radical opponents of Iran's then leader. The Shaw. Dar's family escaped the US.

After the revolution in Iran, their business was nationalized. And lost to them. My whole family was in this business and and work together. So to see That connection lost.

Uh was very Tough. I didn't understand it until later in my life. The family slowly started over, and in America. What it taught me was that

When you think you've lost everything, you really haven't. The opportunity to rebuild Show me that. You can take risk that failure isn't final. That you can get back up.

Dust yourself up. And get going again. This resilience. In the face of adversity, the belief that things can and will work out. is essential for any leader.

And especially when leading through a turnaround. That skill will come in handy. Later in the story. But Dara's first job out of college was was with the media investment bank

Allen and Company in New York. It's here he met the iconic media executive. Barry Diller. Who is a client. In truth.

The two never should have met. I was the grunt who was doing the grunt work. Which then should have translated into a beautiful presentation, which a wonderfully polished vice president would deliver to Barry Diller. Barry didn't want that. He wanted to know the person who was running the numbers because he wanted to make sure that those numbers are right.

Barry relied on Dara. For the facts. Barry Diller hovering over my computer. saying when are you going to print out the new spreadsheet so we can take a look at it.

I'm under pressure. I'm sweating in my suit at the time. And Barry's waiting for the printout to happen, impatient for these slow laser printers. And then we would go through the print out. Wanted to understand himself and he wanted to go to the source. By hovering over Dara's desk. Barry was bypassing the hierarchy that can make a Navy slow to react.

Or keep the truth. From those in command. Barry Grudo rely on Dara for this kind of unfiltered truth. And he soon enlisted Dara as a commodore in his new naval command. Dar ran a lot of things for Barry.

He started at USA Networks and later became Barry's CFO at Interactive Corp. Or in short. IAC. In two thousand five he became the CEO of the travel website Expedia. Owned by AAC.

Expedia was experiencing intense competition. And some hotel chains had withdrawn from the site. It was up to Dara to turn the company around before its problems. Got too serious. I was working harder than I ever had.

I was in every single meeting. I was working day and night. I was making decision after decision after decision. I thought I was doing a great job. I had no idea. Dara had been an expedia. For just one month.

But already he had set a tone of openness and honesty. It meant that employees felt free to speak their minds with him. I had an eye opening moment. When a young Product manager. Jen Pierce, I still remember her, came to me just to shoot the breeze at my office.

She came and said, You know, dar you keep telling us what to do. Instead of telling us where to go. And We like you so if you Tell us where to go.

We'll figure out our way there. But if all you do is tell us what to do, then whenever you're not in a meeting Nothing happens. So can you just tell us where to go and then let us Get there?

In this one conversation. Jen transformed Dara's trajectory. As a manager. For me it was like Boom.

Eye popping. I had to really work very, very hard because I was a bit of a control freak. to let go of What people are doing. and really start talking about where we're going and trust my team.

To get us there. Dar had just learned an early lesson in running a navy. From the outside, it might appear to you that you command a fleet of ships by telling each one exactly what to do. but that's not how the chain of command works. The Admiral doesn't tell each submarine commander the precise depth to dive to.

The Admiral gives broad direction. And trust. that their officers know what to do. This combination of strong local leadership and a strong centralized chain of command. Is what defines the most successful navies and distinguishes them.

from the pirates. Dara successfully grew Expedia into a twenty three billion dollar giant that won praise as one of the best managed companies in its industry. During his tenure as CEO, Expedant quadrupled its gross bookings. Demonstrating Dara's ability to command a major enterprise Through a period.

Of significant growth. And then Everything changed. You get a phone call. The phone call says, Hm, we'd like you to consider Uber.

Why did you take the phone call? At first I didn't I said Why would I do that? I'm I'm in such a great spot. I was comfortable.

And I was blinded that, you know, the goal of life shouldn't be comfort. Dar remained comfortable at Expedia. But then A second call came in.

I had a drink with actually Daniel Eck at Spotify. And Daniel asked me, Have they called you about this thing?'Cause I recommended you for the job. I say Yeah, but I said no way, like why would I do that? I I'm in a great spot. You know, I'm happy. And Daniel looks at me and says Dara.

Since when is life about happiness? It's about doing something great. This is important. You have to do this. Daniel Andara. We're both right. The role at Uber.

was important. And it would certainly be. not be comfortable. Let's recap. Uber situation.

At the time. Uber's mission. As easy to access as running water. The company grew incredibly quickly as it pursued this mission, fueled by over twenty two billion dollars in VC funding.

But as the company scaled rapidly, so did its toxic culture and bad business tactics. These led to a constant stream of nasty and very public challenges. They included political infighting. Allegations of corporate espionage and criminal investigations. Then

There were the many run ins with regulators, taxi firms and And even Uber's own drivers. Uber saw a backlash in its key markets. And withdrew from some, such as China. Back home.

Uber's controversial approach to charging higher fares at peak times With a hashtag Delete Uber. Campaign

This was all against the background of Uber's aggressive Bro culture and its cavalier attitude to spending. In february twenty seventeen, Six months before Dara became CEO, a blog post by former Uber engineer Susan Fowler blew the lid off the misogyny and harassment that was rife at the company.

Ariana Huffington became deeply involved in trying to fix the company's culture. She was the only woman on Uber's board of directors at that time. It was very important. Fatherboard. to make it very clear that we were

taking the accusation seriously, that there was going to be a full investigation And that we're going to hold management accountable. And one of the things I said Was Something that goes beyond what's happening Aruba.

Which is you know, the whole culture of you know, worshiping at the altar of hypergrowth. And therefore if you are a top performer, anything is allowed. I said I promise that Going forward no brilliant jerks will be allowed at Uber. Arian and the board set out to rid Uber of the

Of brilliant jerks. But a lot of work. remain for Dara. Looking at what Uber had been through and was going through, Dar knew he would need to build trust quickly.

To do this, he needed unfiltered truth. And like an admiral. Stepping aboard a flagship. Full control. Dar made this clear during a presentation he gave to the Uberboard during his interview for the CO position.

One of the slides in that presentation said Don't call me. I'll call you. Were you nervous about putting that slide in? I was nervous about putting that slide in, but

I thought that it was very important for My relationship with the board to be one of truth. And to be a frank relationship. That would set us both up for success. If I'm coming in as a CO, I've got to have authority.

I needed room. to affect change and to move the company in a different direction. And it was my way of telling the board and some of the founders that give me the authority

And then judge me based on my actions. Dara set the tone of his relationship with the board before he was even offered the job of CO. It was a gamble to speak to the board this way, but Dar knew that the only way he could take on the challenge of Uber was on his own terms. And one of those terms was was unfiltered honesty.

I think sometimes communications that are just dead honest. Or tough? But you have to force yourself to have those discussions because you get to the core Of expectations and relationships, and ultimately they draw very healthy relationships between individuals or companies or boards and their CEOs.

Well, honesty, especially difficult honesty, is how you build trust. Absolutely. Right,'cause they're like, okay, look, I'm I'm being straight with you. This is how we need to operate. If you disagree with me Talk me about it. Yes. Yes. The board chose Dara. After the break, we'll hear what he found when he arrived at Uber. And what he did.

to start the company's long overdue transformation. From pirate ship. to naval vessel. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious.

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Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Humans will never be more intelligent than AI. There's gonna be two types of companies.

Those are great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Calyubi. On my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives.

Find pioneers of AI wherever you tune in. Before the break. Dara had just taken on the role of Uber CEO. He had walked into a situation surrounded by some very public controversy. What was that like?

I asked them. So then You start. And you already know that There's a lot of things broken. Broken relationships with governments.

Bro culture. you know, blog posts and all the rest happening outside. There is critiques about being overly aggressive and not very ethical in terms of of business practice. Um

What does the first week look like walking in the bat? I'm listening to you, I'm sweating because I'm remembering that that first week. You know, I think one of the wonderful surprises for me coming in. was that The public perception of the company.

Was so different. from the people that I found at the company when I joined. These are unbelievably smart people who can Get another job at the drop of a hat. But

The team that was there They wanted to fight. Because they believed in the company. And

That was one of the most delightful things when I got him, which was There's a group of warriors Who were fighting for the company? Dar knew that most people at Uber were not pirates. But the culture there had promoted piracy for many years.

And I think it's important here to draw a distinction. While all startups have pirate like qualities. Scrappiness, inventiveness, rule breaking. There's a difference between ethical pirates And criminal pirates.

Ethical pirates may ignore conventional rules. But they're driven by their own strong moral code. Think. Johnny Depp In Pirates of the Caribbean.

Criminal pirates. have no such moral compass. How can you tell if your company has crossed the line? The broad question you should ask yourself is Am I a creator who is trying to improve the state of the world for everyone?

Or am I a thief? Who's just trying to grab things for myself. In creating a company, you're creating something for yourself. But you also need to be making a wide variety of consumers. and businesses.

Better off. Dar knew that in transitioning from pirate to navy fleet. He need to firmly end. The era of criminal pirates at Uber. While encouraging

The many ethical warriors he found amongst the drinks. Dar took an approach he'd built since the days in his father's factory. His time with Barry Diller. And then heading up the Navy at Expedia. He wanted a culture that would arise naturally out of the good people still at Uber.

The people who recognize the difficult things about the company, but still believed in it. I remember there was a Jeff Bezos letter a couple of years ago where he said that You know, the culture of the company defines itself. In an ideal world I could work at a company for two, three years understand what the culture is and not have culture be top down I want the culture of the company to be X because I said so help the culture define itself, but we didn't have time for that.

Instead, Dar gathered his team of captains and they looked through the cultural suggestions from the entire crew. Before Dara Uber's cultural guidelines. Range from the sober likes of Be yourself.

to the full on brocastic maxims like super pumped. And Always be hustling. It was time. For a sweeping change.

So we crowdsource actually from our employees. What do you think should represent the culture of Uber going forward? There were some themes that came to the surface. As a team, then we got together. And we pick the themes that we thought were the most relevant themes.

And we created what we call our new cultural norms, the Uber Tutato cultural norms. Some of these were continuations of the old norms. Some were totally new, and some were squarely aimed at overcoming the earlier toxic culture. We celebrate differences. We want to be a different company, but we also celebrate differences in background and where you come from and religion and sexuality, et cetera. And we believe that

No matter what you bring to the table, you should be able to contribute to what we call Uber. And there was one cultural value in particular that harked back to what Dara had learned in his first month at Expedia. Trust. That your crew will know what to do.

The simplest that I hear repeated over and over is We do the right thing, period. And we don't want to define to employee what the right thing is. You know what the right thing is. Let's do that and period, that's what we do.

You know what the right thing is. This is something that you need to remind yourself and your team of No matter what stage of scale. you're at. Because while startups and their founders

Benefit. From behaving like ethical pirates. They should never behave like sociopaths or Thieves or criminals. The key is to assess

Whether or not You're being an ethical. Pirate. Ethical pirates. have ethics that most of their crew members share.

The executives and employees following a leader should ask themselves Are we on a mission to improve the world? Or we just in it for the gold? Do we truly care about? The importance of diversity inclusion for our team.

Are we creating mutually beneficial relationships with managers and employees? If you're working for an ethical pirate. You should feel proud. Of your shared values. Dara had a clear mandate.

Fuberts board. And customers as well as the public. To transform the culture at Uber. It was time to give up the pirates hope. Jolly Roger.

For the flag. Of a disciplined navy. The radical Scale.

success of Uber that was unprecedented at the time. I think led to A culture that was Highly confident. A culture that was confrontational.

a culture that to some extent Celebrated breaking the rules. All of which made possible what Uber built. But which created a blind spot. As to

individuals. Respect for diversity of different viewpoints, et cetera. That led to Susan Fowler's blog. Which by the way wasn't the only difficult curves happening at the company.

I want to be clear here. The type of awful behavior that was rampant at Uber is in no way necessary to build a winning scale company. And you should not tolerate such behavior as an acceptable cost of reaching scale. In fact. You want to make sure that such behavior never takes root and is never tolerated.

In your band. Of ethical. Pirates. But the problems with piracy Go beyond ethics.

Pirate waves just don't scale. As a startup succeeds, it needs new organized systems and new organized people to run a large operation. And the transition from pirate to navy is tough. Logistically. And culturally.

Even for ethical pirates. My favorite analogy for entrepreneurship is it's like jumping off a cliff. and building an airplane on the way down. Pirates don't convene a committee meeting to decide what to do when the ground is approaching. Alright, and the hoy.

Park to part! But we haven't built the rudder yet! Ah! Then set up a conference call and tell the crew to dial in! Instead, they act quickly and decisively and are willing to take risks because they know if they don't, it's death. Many founders of companies that have reached massive scale will light up. When you talk to them.

about their early pirate days. and each will have their own swashbuckling tale of how they made the transition. Here's MailChip Founder. Ben Chester My God. And when you're a startup founder it's all

Pirates. Who joins a startup? Crazy people. Because startups are so risky. They've got a chip on their shoulder, they've got something to prove, they don't want rules, they wanna do everything, you know, they wanna build the whole house. This is why there are so many serial founders.

Once that house is built, They move on to the next project. Those that stick around. usually enlist help. And then what they do is they build something great.

And then they hire other people to maintain it. And those people Are different. Those people hire another cohort, a third generation of employees who hire a fourth generation. And these people want leadership, they want strategy.

They're joining a winning company at this point, if you're lucky. They don't remember what it was like in the startup years when it was you were all pirates and crazy people and you were on the brink of death every single day. And the boogeyman was lurking around the corner. These are people who are they they want to scale this thing up. Ben is one of those founders who decided to stick around.

It's a whole different demeanor. And I think this is where a lot of founders Probably choose to walk away. Um and it's very difficult to Stay.

But we stayed. Yeah. Dara would have to lead Uber through a cultural transformation from pirates to navy. But for Uber to thrive as a global business, he'd need three key elements in place. The first is a set of country managers who are responsible for their individual markets.

The second is an understanding of how those markets differ. The third is a unified executive team, which creates a centralized command center. Under Travis, Uber actually had the first two. There were strong regional managers and a decentralized command structure that allows the individual captains in the fleet to operate with entrepreneurial vigor. However, it was the third crucial element that Uber was lacking.

This element is a unified executive team to coordinate global operations. Including the activity of individual country managers. Travis had failed over and over to unify his executive team. Executive meetings were canceled at the last minute. Backbiting and infighting were the rule.

Not the exception. When you have strong individual captains and an admiral who can't or won't build a staff to help manage the fleet. You end up with a disorganized group of unscrupulous pirates. This creates the potential for organizational collapse through a runaway.

Cultural degeneration. What Uber needed was a centralized command that enforced and rewarded ethical terms of engagement. Before Dar joined the company, every encounter was treated as a confrontation. Instead of hailing other ships to offer a negotiation,

Uber would steam right in. Broad sides of cannons blazing with a take no prisoners attitude. It was gunship diplomacy. Without the diplomacy. At least one thing that I see from the outside

Is You know, with Travis and previously Uber would have what I would call a pugnacious culture. Right. You know, you challenge me, I hit you harder.

Right. Whether it's governments, whether it's you know, videos of arguments with with Uber drivers. You know, all these sorts of things. That seems to have changed. It was a An important shift.

And I think to some extent the pugnacious nature of the company got it into trouble, but also to some extent is responsible for the fact that it's a terrific company that I've got the pleasure of being able to run. This is an important point to remember. When you become an honorable navy, it doesn't mean you are toothless.

Diplomatic Corps. You still need to be an effective fighting force. But one that is a lot more strategic. In projecting its power. But it was clear to me that we needed to change strategies. It was clear to me that what got us here was not the right way forward.

And You know, I firmly believe that when you work in a industry like ours in the technology industry in the transportation industry which is a five trillion dollar marketplace The world is not a zero sum world. So

Just because someone wants something It doesn't mean that You have to give it up. There's actually room for dialogue and compromise. One area.

Uber was known for being particularly combative was its relationships with its drivers. This was highlighted in the video of its founder, Travis Kalanick, yelling at an Uber driver. Dara. Takes a markedly different approach. Not unlike his father on the factory floor.

In Iran. The vision with the drivers is that we call them driver partners and let's treat them like driver partners. So actually when I got here A group of employees and these are you know the the Uber champions, so they had actually gotten together to create a program called 180 Days of Change. To fundamentally listen to our drivers and change the product based on the dialogue with our driver partners.

Things like tipping. Things like paid wait times. so that we're really building something. For them, not just for us. And I think it's fundamentally a different way of working.

course there's still many issues between Uber and its drivers. And as the company evolves, There will be more to come. But I am sure we will never see Dara screaming at an Uber driver. This is what he told me when we spoke in December.

After a little more than half a year at Uber. I think one of the traps that I see with technology companies or executives in general is you lose touch with the outside world. You know, San Francisco it it's a bubble here. And

For me, one of the first things that I did and now I do it as a rule whenever I go from C to C is I mean with drivers. And they're pretty damn honest. With the stuff that they like. There's a lot of stuff that they like. And there's plenty of stuff that they don't like.

And That Connection. I think was something that was missing. Maybe because the company was just too busy, or growing too fast.

Dara is seeking a direct connection with Uber drivers. It's the same impulse for unfiltered truth that brought Barry Diller to Dara's desk. All those years ago. This doesn't mean that Dara literally has to have a one on one with every driver. He just needs to make sure that his officers are of such a caliber that they will have no problem with

Bringing that unfiltered truth. To him. Now we have a fundamental connection there. that is reflected in the organization. We have a driver product team And we now fundamentally build our product.

With the driver. We talk to them, we have a dialogue with them, and we build with them. that kinda connectivity with our driver partners. I think creates a win win and it creates mutual respect. It wasn't just drivers who were frequently clashed with.

company has famously fallen out with regulators across the world. Again. Dara's approach here is one of dialogue. Rather than dissonance. So I think from a government standpoint, and I'll put government regulators in one box.

What wasn't happening, which now is happening, is Honest. Plain spoken dialogue. One example is TFL. The authority that oversees transport operations in London.

Uber came close to losing its license to operate in the city. When I sat down with T FL. in London. What I discovered about the history there is that

T F O was asking Perfectly Just questions. There was nothing weird or unusual about their requests. But the conversation and the dialogue was happening through lawyers. Versus

Two people Sitting across the desk. Talking. maybe not agreeing on all things, but trying to come up with some compromise. It's just the realization that there are needs that governments and regulators have, there are needs that private companies have, and there's an overlap someplace where both can coexist peacefully.

Of course, it won't be possible to come to agreements everywhere. We pulled out of Barcelona just because We fundamentally disagree with something that the city government did it was designed To protect

Taxi cabs versus Consumers. And when that happens, we won't do business there. But An honest dialogue with a given take.

I believe is going to move us into a position of Partnership. With governments and regulators. Dar is also envisioning a way that being more open and inclusive will propel the next stage of Uber's business.

I won't pretend that it's easy. But One the strategic pivots that we have taken is to think about Uber, not as a service. But as a transportation platform.

Think of it as an Amazon of transportation. You can take a bus, you'll be able to take a car, you'll be able to take a train You will be able to take a taxi. Using Uber. It's a win for the consumer because the more choices I've got, the more pricing I've got, the better the product is.

Another way I think of putting it is Same. Because we're a platform. We're giving you a chance. to include you in the future.

That's right. And and I think technology companies have been accused of not being inclusive. And I think by the way that criticism to some extent has been fair. And we want to pivot our strategy so that it is a

bigger, inclusive Strategy. Uber began its journey as a band of pirates, hellbent on radical disruption. and disruption is often portrayed as destructive.

But part of economic progress is disruption. Ironically, the disruption beloved by pirates has been essential to Uber's belated transformation into a navy. But it is the disruption of its culture. Not of its business model that has been key. and Dara recognizes that it is an ongoing struggle.

Was there a moment in the internal cultural transformation where you suddenly felt like Okay, we've dug ourselves out. we're now on the right path, like a conversation, a realization, uh an event that happened that you went, Ah Yes.

This is exactly where we're we're on path. I'm still waiting for that moment. You know, I'm I'm uh I think the cultural transformation it's It is hard. It continues. It takes a long time. Just because you say something But it's not necessarily actioned at all levels of the company every single day. You know, I I don't live up to all of our norms

Yeah, every hour of every day. This stuff takes a long time. I think we are in a much, much better spot than we have been. But I'm not comfortable at this point. Truth telling.

remains a crucial element. The singular rule of CO life. Is that The higher up you move in a company, The less you really know what's going on.

And The only way that I found to figure out what's going on. is by telling the truth. And so

When I communicate to my employees I talk about the good stuff. But I talk about the bad stuff. I don't sugarcoat it. Because Then when you tell the truth.

Your Employees are like oh wow. Like This is okay to talk about the bad stuff. So the next time you see them And you ask them, How's it going?

You may not get the answer, Great, everything's fine, and they're hiding actually, they're panicking in the background. Like Listen, we've got a problem. And this is the defining upside of being a truth telling admiral. Rather than a fearmongering. Pirate Lord.

Usually you hear about the problems when it can't be solved or it's too late. They come to you before it's too late. You have the privilege of seeing the truth. because your team knows that you say the truth. It's simple but really hard.

And the key thing is obviously you can't work on the problem together unless we're talking about it. Absolutely. I agree with Dara. It is simple. And really hard. We're releasing this episode just after Uber has gone public.

as the company enters its next stage as a global Navy fleet with Dara's Admiral. And if you hope From Startup Pirate Ship. to a formidable mission focused navy.

Here's my advice to you. Make sure during your pirate days You fly the flag of spirited Ethical behavior and never let it slip from your mast. To be replaced.

By the skull and crossbones. I'm Reed Hoffman. Thank you for listening. Masters of Scale is a Wait One original. The show is recorded on site in California and produced at the studio inside SY Partners in New York.

Our executive producers are June Cohen and Darren Triff. Our producers are Chris McLeod, Adam Skuse, Jenny Cataldo, Dan Kedmi, Jordan McCloud, and Ben Manila. Our supervising producer is Jay Punjabi. Original music by Allison Leighton Brown.

Sound Design Mixing and Mastering by Brian Pugh. Special thanks to Chris Sha, Bob Safian, Alicia Schreiber, David Sanford, Saida Sepieva, Christina Gonzalez, Sarah Sandman, and Lauren Paselle. Visit masters of scale dot com to find a transcript for this episode, and be sure to subscribe to our email newsletter.

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