Uber’s CEO moonlighted as a driver, and it pushed him to change how he runs the company
When CEOs join their employees in the trenches it can translate to considerable gains in productivity for their companies. But Uber CEO Dara Khosrowshahi took the idea to a whole new level when he literally took the wheel and became one of his company’s drivers for several months. It began as an effort to understand the experiences of drivers during the pandemic, but the experiment eventually forced Khosrowshahi to “reexamine every single assumption that we’ve made.”
“I think that the industry as a whole, to some extent, has taken drivers for granted,” Khosrowshahi said in an interview with the Wall Street Journal published Friday. Since Uber was founded in 2009, its goal was to offer passengers a seamless riding experience, according to Khosrowshahi, who succeeded Uber cofounder Travis Kalanick as CEO in 2017, even if sometimes that goal came at the expense of drivers.
“Historically, we’ve always put a premium on the rider experience,” he said.
In 2021, Khosrowshahi posted on Twitter his experiences riding around San Francisco on a bicycle making Uber Eats food deliveries, telling the New York Times that he was initially “nervous” and “nearly got killed” in traffic near the city’s baseball stadium while the Giants were playing.
Khosrowshahi went into more detail about his experience in his interview with the WSJ, where he described using a secondhand Tesla last year to masquerade as an Uber driver chauffeuring people around the city, with a curated Spotify playlist and all. The experiment was known internally as “Project Boomerang,” and was originally designed to learn how the company could attract more drivers after a pandemic-induced shortage. Through the effort Khosrowshahi experienced many common Uber driver complaints, including harassment from riders, anxiety over maintaining a high rating, and a frustrating sign-up process.
“The whole experience was pretty clunky,” he said.
After ridership plunged during the pandemic, business for Uber and Lyft is starting to rebound. In February, Khosrowshahi attributed his company’s stellar earnings last quarter to consumer demand returning to pre-pandemic levels. Remote work starting to wind down has also helped boost Uber’s stock this year.
But challenges still lie ahead for Uber, especially when it comes to attracting drivers. When energy and fuel prices soared last year, take-home pay for drivers shrunk drastically, forcing some to work for less than minimum wage. Uber has been on bad terms with drivers over increased pay to help offset inflation, especially since last year when the company successfully sued to block holiday raises in New York City. A New York judge did order Uber to give raises to drivers last month, but tensions continue to run high, as drivers elsewhere in the country continue to criticize the share of trip fees Uber keeps and accuse it of discriminatory account suspensions or deactivations.
Disagreements also persist about the employment status of Uber drivers. Last month, a California appeals court upheld a 2020 classification of Uber drivers as independent contractors rather than employees, which means the company does not need to provide drivers with unemployment insurance and health insurance, or cover business expenses.
The company must also deal with competition from Lyft, which last month installed a new CEO. Uber still dominates 71% of the U.S. rideshare market to Lyft’s 29%, but Lyft’s new CEO, David Risher, says he welcomes the competition. “I think the world wants and sort of needs a strong number two,” Risher said in a recent interview with Fortune.
Khosrowshahi implied in his interview with the WSJ that retaining drivers and making Uber work for them is key to maintaining its current rebound. He said that being a non-founder CEO allows him more room to make innovative and potentially disruptive changes, which might include more efforts to win the “hearts and minds” of drivers.
