Episode 182 | Insights into The Rideshare Industry and The Growth of Uber

The Road to Autonomy

Harry Campbell aka The Rideshare Guy joined Grayson Brulte on The Road to Autonomy podcast to discuss the rideshare industry, the role that power drivers play in the ecosystem and his thoughts on Uber’s growing hybrid network.

The conversation begins with Grayson and Harry discussing Uber’s outperformance compared to the S&P 500. Over the last 12 months, Uber has outperformed the S&P 500 by 102%. While Uber is outperforming the market, their competitor Lyft is struggling to figure out the future of their business.

Drivers are the backbone of both Uber and Lyft. According to J.P. Morgan, the average Uber driver earns $33 an hour. The estimated average hourly earnings are only for Period 3, commonly referred to as active time. Period 1 is when a driver is on the Uber app waiting for a ride. Period 2 is when a driver has accepted a ride and are driving to pick up the passenger.

Period 3, that’s when you make the most amount of money as a driver. You want your wheels moving, you want to be going fast, you want to be going far. That’s kind of how you make the most amount of money. $33 an hour is basically saying drivers make $33 an hour when they are driving to a customer or they have a customer in the car, but we are not going to count any of the downtime. – Harry Campbell

While drivers are the backbone of the platforms, there are divergences in how Uber and Lyft attract and retain drivers. Both companies use incentives to retain drivers, Lyft is starting to increase the amount incentives to attract power drivers away from Uber. Power drivers are drivers who drive more than 40+ hours a week or roughly 6,000 miles per month. Accounting for 20% of the driver inventory at any moment.

As Uber continues to grow and shed non-core assets, the company is laying the foundation to transform Uber into a hybrid platform with both drivers and autonomous vehicles. Today, you can hail a Waymo in Phoenix on the Uber app and have Uber Eats delivered in a Motional autonomous vehicle in Santa Monica.

When it comes to Uber’s strategy with AV, I think it’s kind of a no-brainer. – Harry Campbell

This is the right strategy for Uber. Dara Khosrowshahi made the strategic decision to sell Uber ATG to Aurora and focus on becoming a platform again. Uber was able to shed the billions in development costs, while fully embracing the power of Uber — the platform. This decision has allowed Uber to focus on growing their free cash flow while becoming profitable.

The Uber 2.0 strategy will enable Uber to collect a fee very similar to the way Mastercard and Visa collect swipe fees every time a consumer makes a purchase with their credit card. The more consumers choose to ride in Waymo vehicles on the Uber platform, the more revenue Uber will generate.

Uber’s new autonomous vehicle strategy will pay dividends as Waymo scales up. If the price of a Waymo is on par with Uber X, consumers in our opinion will overwhelmingly choose Waymo because of the consistent experience. Either way, Uber benefits as the company will collect a platform usage fee.

Wrapping up the conversation, Harry shares his opinion on the future of Uber.

Episode Chapters

0:00 The Road to Autonomy Index Introduction

0:55 Uber vs S&P 500

2:05 Does Lyft Survive?

3:32 Rideshare Drivers: Driving for Uber and Lyft

17:41 Uber and Lyft Driver Incentives

21:40 Most Popular Rideshare Vehicles

25:33 Dara Khosrowshahi

29:36 Do Uber Drivers Buy UBER Stock?

35:20 Changes Drivers Would Like to See on the Uber and Lyft Platforms

41:50 Autonomous Vehicles as Rideshare Vehicles (Robotaxis)

44:50 Uber’s Autonomous Vehicle Strategy

49:10 Lyft’s Earnings Blunder

50:38 Uber’s Product Compared to Waymo

53:44 Expanding the Uber Platform

1:07:56 Uber Freight

1:10:20 The Future of Uber

Recorded on Thursday, February 22, 2024

Uber is a The Road to Autonomy Index component company

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About The Road to Autonomy

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