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Whether a business is booming thanks to well-timed expansion activities during a stable economy, or a company is contending with declining revenue due to major global events outside anyone’s control, the way the executive team responds dictates how the company will get to the next phase.

Uber CEO Dara Khosrowshahi calls these different moments “peace time” and “war time,” and adapts his leadership approach accordingly. When things are going well, he takes the opportunity to spend more time collaborating and hearing different perspectives throughout the organization. During challenging moments, he prioritizes speed and top-down decision-making.

“There’s this push and pull,” says Khosrowshahi. “During easier times, I’m much more consultative. During tough times, I’m much more hardcore.”

The inherent challenge, Khosrowshahi says, is recognizing which moment is upon an organization. Given the high degree of variation in the way businesses are impacted by economic or geopolitical events, it can be difficult to assess how a particular scenario will affect an organization. It’s up to the leader to set priorities and establish the mindset that will trickle down through the company, says Khosrowshahi.

“There’s a human bias to process good news very quickly and to process bad news very slowly,” he says. “In tough markets, to some extent, the leader has to be able to stare down a black hole and understand what’s happening, and process very quickly, and then be decisive.”

Khosrowshahi joined me for a discussion on navigating different market conditions, his perspective on the pace at which companies should adapt their tactics and cultural norms, and his outlook for the future of transportation and delivery.

This interview was recorded in late 2022 as part of Greylock’s Iconversations series. You can watch the video of the discussion on our YouTube channel or listen to the podcast at the links below. And if you aren’t already a subscriber to Greymatter, you can sign up wherever you get your podcasts.

Episode Transcript

Reid Hoffman:

Today, obviously, we’re in that kind of a troubled market and troubled times. When you have capital markets work like this, when you have potentially fundraising difficulties, you have disbelief in the market, reflecting in multiples, other kinds of things, what skills of leadership, what ways of thinking about this as leaders most come to mind for you? And what are you doing? And how would you talk to leaders here about how to think about how to navigate these difficult times?

Dara Khosrowshahi:

Well, we’re in the middle of it. And so. I don’t pretend to know everything about it, but there are a couple of things that come to mind. First of all, as a leader, there’s a human bias to process good news very quickly and to process bad news very slowly. The minute you see a signal on good news, it’s like, “Good news. What do we do here and there?”

You see a signal on bad news. It’s like, “Nyah, let’s see what happens tomorrow.” And then, if tomorrow’s the same. You’re like, “Well, maybe things will change next week. Got to be patient. Got to be patient.” So, I think one is just to recognize, in tough markets, to some extent, the leader has to be able to stare down a black hole and understand what’s happening, and process very quickly, and then be decisive.

So, there are different styles of leadership during, let’s call it wartime and peacetime. And for me, during peacetime, I’m much more team-oriented. I want to hear everyone’s opinion, et cetera. I think we’re definitely during war time. During war time, you just have to be much more decisive and action oriented. It was a little lesson for me, I remember. This is not the first tough time for Uber, right?

RH:

We’re going to get back to that.

DK:

Yeah. Tough times are just kind of what we do. It is like a Thursday. And a much tougher time, frankly, for us, more than where we are now, was post-pandemic. Our mobility business, which was our cash cow, lost 85% of its volume overnight – within the context of we were losing two and a half billion dollars anyway.

So, I had some friends who were profitable businesses that lost a bunch of their volume. We were deeply unprofitable and lost a bunch of volume. And I knew we had to make some tough calls. And I really wanted my team to be bought in. So, we would get together on Zoom over and over, talk about what we have to do here and there. And one of the exchanges that I had with my CFO, Nelson Chai (that still sticks with me), as we were talking in circles all over, was that Nelson’s was like, “Dara, just tell us what you want to do. We’ll do it. You don’t need to ask our opinion and all this. Tell us.”

During tough times, your team needs leadership. You’ve got to assume that mantle. Once Nelson told me that, I was like, “All right, let’s go.” And I took input, but I started leading.

And this is not something that you do all the time, because you want your team involved. You’ve got to be top-down and you’ve got to solve for speed, and you’ve got to solve for decisiveness, because even if you’re decisive and you make 20%, if you make a decision that’s 20% off, it’s better than being indecisive and not doing anything.

So, there’s this push and pull. During easier times, I’m much more consultative. During tough times, I’m much more hardcore. And my team kind of knows that now. They understand, once in a while, I’m just going to come in, and we’re just going to go, and we’re solving for speed.

The second part that I would say is – and this isn’t just during tough times – is it’s the job of the leader, to some extent, to go against the grain. And it’s very easy for a leader, during good times, for you to become the cheerleader. Everything’s fine. The good times are when you’ve got to be the asshole.

The good times are when everyone feels great about what they’re doing, they lose discipline, they think they’re terrific. That’s when you’ve got to come down really hard on your team. And it feels nonsensical. It doesn’t make sense. They’re doing great. They’re amazing. That is not the time for you to be a cheerleader at all. And on the other side, it’s during the tough times when you’ve got to start being a cheerleader. And you’ve got to make an assessment of your team, your situation, et cetera. So, if you have a team member who’s not a wartime person, move them out. That’s a separate decision. But once you assess that your team is the right team there around you, that’s when you really have to lift them up. And it’s really hard because, at the end of every day, You’re like, “Oh my god, this is so terrible.”

But then, when you wake up that morning, and you get together with your team, it feels weird a little bit, because you don’t want to come off as too optimistic and not recognizing there’s this duality of understanding the reality and be like, “We can do this. Come on. We can do this. Let’s go.”

And it’s tricky because your team has to understand that you’re staring at that black hole, but then you’re like, “We got this.” And then, really lift up that team because, believe me, if you feel like crap, they’re feeling like crap. They need you to lift them up.

RH:

And on the pandemic: Now, having gone through it, and picked up some of the kind of structured principles the way that you do as a leader, if you were given a magical phone that you call yourself the day the pandemic bomb dropped, what would you tell yourself to do differently?

DK:

Definitely go faster. And I mean that. This is something I tell myself all the time as it relates to people, in terms of decision making. We move quickly, but we could have moved a bit quicker. And then, it goes to the biases that I talked about.

If the right thing to do is to, let’s say, cut 25% of your staff – and we cut 25% of our staff. It was terrible – you’ll convince yourself that the right number’s 15. You’ll convince yourself that, “Well, I’ll do 10, see what happens, et cetera.” And you may not have the luxury to see what happens. And so, I would say move faster and don’t mollify the tough calls. Ultimately, when we made the cuts, we did go in deeply. It took me too long to get there. It took way too many restless nights, way too many sleepless nights. The end product, I think we handled it well. We just took too long.

RH:

So, let’s switch to when you were being more careful.

I had kind of presumed that the way that one would do a cultural rejuvenation was one would ride in and say, “There’s a new sheriff in town. Get on board with the new program and just do that.” And one of the things that I got added to my toolkit – which is now permanently emblazoned there – was this idea that no, you ride in and you say, “Actually, in fact, you are already great. I’m just helping you rediscover it in a variety of techniques. For example, let’s do a company-wide survey of what our values are. And then, we’ll get all those values and I’ll do some editorial to redo it, but I’m doing it as a reflection of what you guys are saying versus you guys have to now come join my camp as ways of doing that.”

So, say a little bit about that kind of reforming, what you did for folks here. And then, that, unlike the war time pandemic, which is, “Oh my god, we have to make all these hard decisions right now,” that was a more deliberately graceful process. Say a little bit about that.

DK:

Yeah, absolutely. So, when I came in, one of the significant reasons why I came in was because the company needed a cultural reset. And the world was looking for it. I think leadership was looking for it. The board was looking for it as well. And so, we had to move very, very quickly in terms of that reset. And I will tell you. The old culture of Uber was – I don’t consider it a bad culture, just some of the cultural values started getting weaponized.

So, I’ll give you one example. There’s a cultural value which is “be toe-stepping”. The idea behind that was to challenge (challenge others), and don’t be afraid to challenge others. That’s a great kind of culture to have, but it got weaponized into “it’s okay to be an asshole.” Right?

So, it was really important to me because there was incredible talent at Uber. Met a couple of them here, engineering talent, et cetera. And I wanted to respect that, partially because it was part of my job as being CEO and I wanted to keep that talent.

At the same time, I knew that we had to make a cultural reset very quickly. So, we went out there and we crowdsourced, from Uber employees, what they thought the best norms/cultural values should be. And we took some of the older values that we thought were great values, big bold bets. And then, we also combined them with some newer values that we wanted to carry the day. The one that we talk about a lot is we do the right thing period.

And so, for me, it was a symbol of, “Hey, we’re going to take the good of the old. And there’s a lot of greatness that made Uber what it was. And I’m here to pivot, not say that everything that you did was terrible.”

It’s actually interesting. We actually very recently reset those values as well. And we went through an exercise. First of all, I think a lot of companies or people view or say that values are forever, they never change. I personally think that’s BS. Companies should be constantly adapting. You shouldn’t be changing your mission. Mission is super slow, maybe once every 10 years or so. Values and norms, slow. Strategy, medium. Tactics, pretty fast.

And so, we actually revisited our cultural norms and values. And this time, I was more top-down. I work with my team, but I felt like I had a right to be top-down, because I’d gotten to know the company. And I wasn’t like some stranger saying, “Hey, I’m going to make a bunch of stuff up not knowing anything about the company.” And actually, this time, it really did work out because it was a reflection to some extent who we were, but really the new company that we are going forward.

RH:

And I presume “do the right thing, period” is still on the list?

DK:

That one was the one that stayed.

RH:

Yeah. No, exactly. And what did you find?

DK:

By the way, I’m going to interrupt you for a second.

RH:

Oh yeah, of course.

DK:

What’s the job of a board during tough times?

RH:

Well, it depends a little bit on the company, CEO, health, and position. But I think that, too often, boards get to adding to the tough times versus helping.

DK:

That’s what I’m saying. It’s a job of the CEO to go against sometimes.

RH:

Yes. Exactly.

DK:

And I think, from a board standpoint, the CEO knows he or she is a piece of crap when things are going badly. The board doesn’t need to remind you.

RH:

Yes. Or that times are difficult.

DK:

Yeah, yeah.

RH:

Right. And so, I think that it’s very similar to what you were saying about the CEO job, which is, look, when it’s obvious of we’re having difficulty navigating this particular facet of the business – might be a go to market strategy, might be a competitive thing, might be a capital raise, might be a delay in product – one of the most irritating things I find happening in a board meeting is like, Oh look, “We slipped this product by a quarter.” And then, everyone spends an hour going, “Well, slipping the release of a product by quarter is a really terrible thing.” It’s like, “Yeah. We know it’s a terrible thing. We don’t need an hour to talk about it.” Right?

And if you don’t know, it’s a terrible thing… If the CEO doesn’t know it’s a terrible thing, that’s a different problem.

DK:

Yeah. Yeah.

RH:

Right.

DK:

And by the way, the next time, they’ll commit to a much slower timeframe so that they don’t have to tell you that they’ve slipped.

RH:

Yes. Right. And so, I think that the key thing is making sure that you are making focus decisions? Are you making the hard calls? Are you not getting kind of ameliorated into kind of softer things? One of the general things is it isn’t just that people like to be liked, but there’s also a question of there’s a lot of competing ideas. I have this mode where I try to teach other board members a very simple thing of green light, yellow light, red light. Green light is they’re the CEO. They make the decisions. You’re just talking about them. That should be the state you’re in. Red light is, they might not know it yet, but they’re not the CEO. There is some transition that is coming.

DK:

They will know.

RH:

Yes.

DK:

Right?

RH:

The mistake that board members who are inexperienced make most often is they stay in yellow light too long. They go, “There’s a question…” and then they start micromanaging. And so, when I get to a yellow light circumstance, I pull the board members aside and I explain this theory to them. And I say, “Yellow light is a limited amount of time with a limited measurement. And it goes one of the two directions.”

DK:

That’s right. If you make the assessment that they are, then you’ve got to lift them up.

RH:

Yes. Yes. And figure that out.

So, back to one of the interesting things that I saw you and Eric talking about at the Masters of Scale summit, where Eric asserted that a new CEO in a turnaround circumstance had to trade 80% of their staff. And you said, “Well actually, it ended up being 50% for me. And I think that’s a good number.”

Say a little bit about what that changeover of staff looks like, how to manage it with grace and care for the organization. What are the kinds of principles when you’re doing this kind of change in direction, whether it’s a rejuvenation of the company, whether it’s a pandemic, how do you approach that?

DK:

Yeah. It’s too easy to be formulaic about things that aren’t formulaic. And a company’s an organism. It’s like a human body. Right? So, you can’t make grand pronouncements.

For me, it was pretty practical. I had a lot of respect for Uber as an operating entity. From an operating entity, from a technical standpoint, from a product standpoint, I thought that the company had real strengths, high bar for talent, high demand for throughput. Where Travis, who was a founder, didn’t invest, was in the framework around the company; CFO, general council, a bunch of the somewhat considered ESG kind of framing controls, et cetera, governance, the board. That part of the company was quite immature.

So, I had a hypothesis coming in. I’d spoken to a bunch of folks. I’d spoken to board members. I’d spoken to a bunch of folks who had worked with Travis, had great things to say about him, and a bunch of folks who didn’t, so I got a complete view. And so, when I came in I had a plan. I had a hypothesis. And my hypothesis was this was actually a company that was pretty nails in terms of operations, product, data science. And of course, we still can get better, but the framing of the company, the corporate staff, et cetera, had to be turned over.

So, I moved very quickly there in those areas, I brought in Nelson Chai, new CFO. I brought in a new chief legal officer, new chief people officer, et cetera. But a lot of the leadership in ops stayed with us. And on the technical side, I brought in a new team, I think up level them as well. And I think, to me, the lesson is to go in with a hypothesis on where you think strengths and weaknesses are and what you are trying to personally achieve.

And I’d say so far it’s so good. Two years in, it still felt a little bit like Dara’s new people and then the old guard. And we weren’t one team. It didn’t feel like one team. Pandemic brought us all together and it’s like one team now. Whether you were there before or after, et cetera, everyone’s sitting in their chairs comfortably. There’s a lot of trust. These kinds of really difficult circumstances can either bring a team together or tear it apart. For us, fortunately, it was the former. And the team feels really good now.

RH:

Well, with existential threat, if you survive…

DK:

Yeah.

RH:

So, last question before we open to the audience, Uber is one of those companies that has a unique lens into what’s happening in the economy, what’s happening in society, what’s happening. What are the surprising lessons, kind of now post pandemic, coming out of it? What’s growing? What’s shrinking? What economy is working or not working? Frequently, this is asked as a recession question.

DK:

This is going to seem a little boring. People always look (coming out of pandemics) they look for forever changes. It’s very rare when things get changed forever. Everything’s reverting back to the norm. There’s this hypothesis in the pandemic, “Oh. It’s going to change things forever.”

And we were talking about Shopify. Shopify’s growth has now come to a norm, which is a really good norm, but it’s reverting. We’re seeing our ride share volumes explode now versus really low,low levels. And so, we’ve been desperately looking for patterns, work patterns, workday commute versus weekend versus party nights, et cetera. Everything. It’s like people are people. They go out. All the patterns are back.

The one patterning that is not back is cities opening up. And the U.S. was really trailing the world. I would say six months ago the world was opening up much faster than the U.S. Now, the U.S. has caught up to the world, which is very interesting. But the U.S. is a tale of two coasts, which is the west coast is opening up unbelievably more slowly than basically everywhere else. The bottom three out of our hundred cities are Portland, Seattle, San Francisco. They are still like 60% of pre-pandemic highs in terms of trip volume. And New York, Miami, Atlanta, Houston, anything in Texas, all of those are back and happening. So, it’s pretty remarkable how the coasts have bounced back so differently in one country. And we don’t see that in other countries. Most countries are actually quite similar in terms of the UK coming back, France coming back, Germany coming back in an even way. But the U.S. is… It’s just the tale of two coasts. Hopefully that changes.

RH:

Indeed. So, I actually have a stack of questions, but part of what we try to do here is have an open conversation.

Audience Member:

Thanks Dara. So, you came in obviously under tricky circumstances, to say the least. And you probably finally got through the moment where you’re gelling some of the cultural norms. You’re moving on. And then the pandemic hits.

DK:

Yeah.

Audience Member:

And it’s got to be a little bit like, “Can I just catch a break here?” As the CEO, how do you steal yourself for that moment where you can’t wallow in that. You’ve just got to lead the team?

DK:

No. You can’t. And I’d say, on this one, I’m pretty lucky, if you want to call it that, which is my family, we’re immigrants. We lost everything when we came to the states. It crushed my dad. He built his whole career. And it’s a little twisted, I’m super competitive. I work really hard. I love all this. Right? But seeing someone losing everything, and then rebuilding it because we were lucky enough to come to the states, losing everything and always having my family around me, and then losing everything and seeing it crush my dad, has created this weird circumstance for me, which is like…Worrying, it doesn’t help. Getting stressed out, there’s nothing constructive about getting stressed out. Either you’re going to fail or not fail. You’re going to make good decision tomorrow or bad decision. Why the hell stress about it? So, my wife calls me a robot. So, I can’t give you constructive advice on that. I’m just able to like, “Hey, this is really sucks. Okay, what do we do?” And I’ll do my best. I’m always going to have my family. And that just lets me… I kind of don’t eat steel myself. I’m lucky that way, I guess.

RH:

The thing I would add is the CEO job is a very lonely job.

DK:

Yeah.

RH:

Right?

DK:

Yes, it is.

RH:

And so, part of the reason why we do events like this and other kinds of things is to find some people that you can talk to about it, because we’re stronger together. I mean, it’s another piece.

DK:

One piece of advice or one mechanism that really helps is I have always had a really close relationship with my chairman. So, when I ran Expedia, Barry Diller, he’s a real business mentor of mine. At Uber, it’s Ron Sugar. And I have a one-on-one with him every week. And it’s an hour every week. I do not miss that one on one. We will have it every single week. Sometimes, it takes 10 minutes, usually we fill an hour. That helps me. You lose that board dynamic. He starts helping me as a person. And then, when it gets to the board meeting, he knows so much.

RH:

Where’s the next question?

Audience Member:

If you have to think about Dara before Uber and after Uber, how has Uber transformed your leadership style?

DK:

Oh boy. I don’t know if it’s transformed my leadership style. I guess Uber’s a much more public leadership job. At Expedia, Expedia’s really cool, 13 years, got to be a part of building a great company. And my favorite part of Expedia was succeeding as a team. A bunch of people made a bet on me. It really worked out. We’re great friends. But publicly, no one gave a shit other than my investors. It wasn’t in the public ether, et cetera. One of the things that I love about Uber is the impact that we have. It’s unbelievable. It’s a really important product. And so, for me, getting comfortable in this seat, in the public seat, has been a real learning for me. I’m kind of looking forward to being out of it, just not yet. I still have some work to do. I’m not an extrovert. I go home. And I lock myself up in a closet and I cry. And that helps me get ready for tomorrow.

RH:

As long as you’re not worrying about it.

DK:

Yeah, exactly. Exactly. So, I’d say that’s been the bigger transformation. And the advice that I would give folks here is, if you’re going to be on a stage, it’s a performance, so perform. It’s not the same as sitting at a table and talking to folks. There’s Barry Diller, who was my mentor. One of the things he said is, “Dara, when you’re on stage, it’s not your job to inform, it’s your job to entertain. Just don’t be boring.”

And so, I think all of you, hopefully, you’re going to be on stage. You’re going to be on a stage in front of your employees, et cetera. And when you’re on stage, don’t treat it casually. And by the way, I know there’s some CEOs who are like, “I don’t like doing this part of my job.” There’s a lot of parts of your job that you know don’t like, right? There’s really cool stuff and not. But these are moments for you to communicate. Take them seriously. Even if it’s an all-hands, if it’s in front of 50 people, if it’s in front of something like this, don’t take these moments casually. So, I think that’s something that I’ve learned over a period of time.

RH:

Great.

Audience Member:

Hey Dara, thanks for taking the time tonight. I have a question. I’m curious, are there any other kinds of countercyclical or contrarian things, in retrospect, that would be useful to do in different market cycles?

DK:

Yeah, it’s a great question. And by the way, it’s a really easy answer in theory. It’s much harder in practice, because if everyone else is dancing and you’re not dancing, you’re going to feel lonely. I think one of the regrets, in terms of what I could have done better pre pandemic, was I could have been tougher on cost. I should have been tougher on cost, not could have. I should have. And so, when times are good, there’s this temptation to chase, chase, chase, higher, higher, higher. You see that positive signal. Absolutely, add five engineers to this team. “Oh my God. It’s growing 500%.” 10 more engineers, let’s go. And the chase hides poor work. The chase prevents you from really driving the team to build an excellent product. Because what they’ll do is they’ll build a good product and you’ll throw a bunch of money behind it. And they’ll never have to get to excellent.

So, I wish I’d done that, but I’ll tell you, it’s really hard because the chase, it just makes you want to go. And then, especially there’s the peer pressure of their friends’ teams that are doubling in size, tripling in size. Why aren’t I? Then, the only way that I’ve seen it work is there’s this – and I don’t mean to be too male – but there’s this warrior mentality. There’s this hardcore mentality that you introduce. And it becomes kind of a heroic affair for you to do, with five engineers, something that someone else is doing with 12, because the temptation is for a lot of teams to tend to equate team size with what you think of them. And that, I found, is the hardest thing to crack, which is the manager who’s the hero isn’t the one who takes her team from 10 to 50. It’s the one who says, “I’ve got 10. We’re a bunch of ninjas. And we’re going to stay at 10. Don’t give me another person.” It’s hard to do. It’s very easy for me to sit here and tell you all this, but it’s hard to do.

Audience Member:

Yeah. I was just wondering. Uber, even before your time, went into a lot of markets globally, and then also now pulled out of some of them. In hindsight, do you think now, if you were earlier in Uber, was that a great decision, or should there have been more of a focus on a few markets?

DK:

I think it was a brilliant decision. I think it’s one of the great gifts that Travis left me. It was harder, took a lot of guts, took a lot of money raising to do it. We are now going through what I call a painful process. When you go into those markets, you have to hack a bunch of the local behaviors. And then usually, you can replace the hacks with technology. And humans are the hackers, so to speak. You can replace it with tech. And tech is always, in the end, better. Almost always, in the end, better. And you do it for the big market.

So, there’s a bunch of debt that the company’s taken on, in terms of complexity, and in terms of rolling out pricing, routing. Al goes to every single market out there. So, I won’t pretend that it’s not… there isn’t a bunch of debt that we’re repaying. But if you’re repaying debt, it’s against a great asset that we built. So, I think, yeah, like Southeast Asia turned out to be too competitive. I’m really glad we got out of those markets, but we’ve gotten out of 10% and we’re still in 90%. So, it was a huge, I think, asset. It was the blitz scale that worked, one of the big ones.

Reid Hoffman:

Yeah.

DK:

Right?

Reid Hoffman:

Indeed.

Audience Member:

Just curious, I mean, speaking of Southeast Asia and some of the competitors there, I’m curious if you have any opinion on why super apps haven’t worked in the United States yet?

DK:

I’d asked you the same question too. I think that one of the elements that have made super apps work in Southeast Asia and China is just broadband and bandwidth. And so, it’s been a necessity of that market for these super apps to work.

I think the western markets…Western markets love pure plays. And if you are trying to do 10 things definitionally, you’re not going to do it as well as someone who’s trying to do one or two.I think we’re trying to figure it out. We’ve got our Rides app and our Eats app and single driver app. And so, we’ve had lots of debates as to how these apps come together. And it’s really difficult to work it out. There’s infra, single identity, single payments, et cetera, single CRM stack that we’re using to essentially build one experience with multiple apps. That’s our solution, but I don’t have a perfect answer for you. It’s really speculation.

RH:

Yeah, there’s a lot of other speculation on that too. Well, you can all see why after I saw Dara on the Masters of Scale summit, I texted the Masters of Scale team, and said, “We need to do a follow up interview with Dara. There’s too much good here.”

And so, with that, let’s thank Dara for spending the evening with us.

DK:

Thank you.