Interview: Andrew Macdonald
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Andrew is Uber's Vice President of Operations in Latin America and Asia Pacific
IBR: You had a direct hand in building uberX’s Chicago and Toronto business. How different was your strategy when entering one market versus the other?
AM: I started out running our Canadian business in the spring of 2012. At that time, Uber was brand new to Toronto and was a young company overall. It was like creating a totally new company. We had to educate people on not just what Uber was and what the brand was, but the basics of the model. The other thing was that taxis in Toronto are very limited and very expensive, so people didn’t think of taxis and limousines as a day-to-day transportation option. That was a little bit of a unique challenge.
We had already been established for a year and a half in Chicago and more than two years in the U.S. We were one of the first cities in the world to launch rideshare, so uberX. In Chicago, it was really about educating consumers about this concept of peer-to-peer ridesharing and getting into a car that wasn’t a taxi. Breaking down the preconceived notions about peer-to-peer transportation was a big part. Creating a regulatory regime with local governments that actually regulated ridesharing was another major consideration. From a driver perspective, we’re educating people on using their own car to earn a few extra bucks on weekends or evenings.
IBR: When you’re comparing your experiences in North America versus Latin America and Asia Pacific, what were the biggest challenges and were they similar to those faced in the North American market?
AM: There are definitely sets of challenges that are common all over the world when bringing new technology and a new way for people to get around in cities. Often, that is disrupting or at least representing change from existing models. There are challenges when working with governments, stakeholders, and existing regulatory bodies about how cities and countries should embrace this new kind of transportation. Of course, there are the usual challenges of trying to start a new business in a new place. You need to establish your brand, build up your logistics network, and make the service reliable and high-quality. We also see local variants depending on the nature of the market. If you think about emerging markets, places like India, or Brazil, or the Philippines, the consumer set looks a little different. They use smartphones that are often old. They are more Android than iPhone. Cellular network connections are weaker. You have many more dead spots. Data is scarcer. People pay with cash instead of credit cards. Traffic is more extreme than what you see in North American markets and that is a unique case. Maybe the types of vehicles people use are different, like using motorcycles or really small cars, as opposed to larger models.
IBR: Uber uses a fairly decentralized structure with General Managers and VPs at the regional level. Would you say the regional level strategy is an extension of corporate level strategy?
AM: We’re pretty deliberate about cascading our company level business and team priorities down to the regional level. When you think about our organization, we try to set out high-level company priorities whether those are about safety, low-cost transportation, or having the best team. Then, we extend those to our managers worldwide. They may add or substitute where it matters locally.
IBR: What strategies or qualities give Uber an edge in international markets?
AM: We are the only global player in the ridesharing space and frankly the only player in the food-delivery space as well. That gives you a lot of advantages you can draw on, but also some challenges. What’s great is that we build technology that we want to deploy globally from day one, and we often invent things in local markets. For example, when Uber first launched, we were an all credit card transaction platform. One of the key value propositions that people loved about Uber in North America was that you could hop in and out without ever paying cash. Then we went to other markets and realized quickly that we needed to develop ways to use other payment methods on the platform. We experimented with cash in India. It worked well, and we expanded it to dozens of other countries around the world. We can innovate locally and deploy globally. That’s an advantage. We’re also building a global brand which I think is pretty powerful. Uber is a brand that is known in 80-plus countries around the world and that has value.
IBR: What is Uber’s strategy when competing against local players?
AM: We face local competitors who tailor their engineering and product to local needs. At times, that means we need to balance being nimble with building global solutions and not chasing every little market nuance. Ultimately the list of things we could build is endless and we need to be better at prioritization. That said, competition is really good for the industry. It grows the category. The more people that are ridesharing, the more people that are going to ditch car-ownership, which is our ultimate goal. It pushes everyone to be better. We innovate faster, we move quicker, and it’s good for consumers. Obviously, we want some competition. There’s competition all over the world, and that’s a really healthy thing.
IBR: Was Xchange Leasing used to introduce more drivers into the system? If so, how big of an impediment is the supply of drivers for domestic growth?
AM: One of the great things about the Uber platform is that we try to make it an economic opportunity that anyone can go after. We found that there were people who were signing up to be Uber partners but didn’t have a car. We actually saw a double-digit percentage of people fitting this segment and considered filling this need. It was about giving earning opportunities to people who wanted to drive on the platform but didn’t have vehicles. Matching supply and demand is a core part of what we do, and scaling our driver base fast enough to meet rider demand is a very important part of our operations and strategy. We’re constantly seeking to balance the marketplace and grow our driver base. In certain markets, scaling drivers is definitely a challenge. What matters is that we’re providing the best platform for drivers, and that means stability of earnings and flexibility. It also means that drivers feel safe and respected on the platform and feel valued by Uber. We’re working on those things, and if we do it right, I think we’ll be able to scale our driver base fast enough to meet demand.
IBR: How has Uber managed to ensure the loyalty of customers worldwide? How do loyalty programs translate in different geographies and markets?
AM: Loyalty is definitely something we’re working on as a part of our overall strategy. Loyalty is driven by a lot of different things. We find that some riders want unique experiences or special treatment. That’s where you’ll see programs like Uber VIP filling a need. We’ve done that in a few countries around the world and feedback is generally pretty good. In other places, people want discounts for loyalty. In the U.S., we’re experimenting with subscription products that let you sign up and pay an up-front fee to get a discounted ride over time. Other places, it’s about premium products. We just launched a product in India called Uber Premier where you get access to higher-quality cars, better-rated drivers, and certain other benefits. We also recently launched our Uber VISA card in partnership with Barclays in the U.S. which helps generate loyalty. What we don’t have is one central loyalty program like what you see from airlines or hotel chains. It’s definitely something we’re thinking about, but we’re not quite there yet.
IBR: Governments are major stakeholders in your operations. How do they fit in your strategy?
AM: Working with governments in a positive and proactive manner is definitely something we have improved on as we continue to evolve as a company. Our goal when we launch into new markets is to do so in a collaborative manner with both governments and local stakeholders. That sometimes means moving a little bit slower. That’s been an evolution for us but I think it’s a worthwhile one. Transportation is a highly regulated industry, and we are connecting customers with transportation all over the world. I think to do well in that space, you also need to be a collaborative player and that’s a big focus of ours going forward.
IBR: Uber has made many investments in self-driving cars and recently partnered with NASA to develop flying cars. How do these initiatives play into Uber’s strategy?
AM: Self-driving at its heart is about safety. When you look at any set of statistics about this topic, it’s clear that one of the leading causes of death, especially amongst young people, is car accidents. The vision for self-driving is that it will be far safer than human drivers who tend to make a lot of errors. It’s also going to make transportation much more efficient. Shared mobility is very likely going to become the norm. Individual car ownership and the hassles of parking and traffic should fade and costs will come down. As costs come down, more people are able to access the platform and the shared mobility options. That is ultimately the linkage to our mission of making transportation as reliable as running water, everywhere, for everyone.
With regards to our partnership with NASA, we’re a company that’s betting on the future and thinking ultra long-term. I think there’s enough there to recognize that these flying cars could be interesting down the road. If you could take your commute that was normally 65 minutes in traffic and make that 10 minutes through the air, I think that’s very attractive to consumers. We ultimately are a transportation platform. If you want to get somewhere, we want you opening the Uber app and realizing that there are a lot of different ways you can do that.
IBR: Is the vision to have self-driving cars make up the entire fleet of Uber cars, or to act as a supplement to existing drivers?
AM: I think the reality is that self-driving is going to come online gradually and serve certain parts of a city, or even certain parts of the world. What we may see for a very long time, once self-driving becomes a reality, is a mix of human drivers and self-driving cars. That is going to provide the best service to customers. I think you’re going to need this mix for years, if not decades, given the limitations self-driving will have off the bat.
IBR: How has Uber’s strategy changed over time as the company grew from a startup to an established brand?
AM: We’re a company that is somewhere around eight years old. In some ways, we’re still a very young organization. However, we’ve scaled very quickly. When I joined the company in spring 2012, there were about 60 people at the company. We’ve scaled to more than 16,000 in the 5½ years that I’ve been here. We’ve also gone from one country to 80-plus countries, hundreds of cities, millions of partners, and tens of millions of riders rapidly. While we’re the same age as a lot of startups, we have become a large global brand very quickly. I think that comes with a lot of expectations and responsibilities. We’re a global brand, but we’re still growing up as a company and it’s our responsibility to do that quickly.
IBR: Uber prides itself on being a global transportation technology company. What’s the most promising opportunity for Uber going forward, both in terms of geography and product offering?
AM: Ridesharing accounts for less than one per cent of the total trips taken today around the world. We actually feel like we have an opportunity in every market we’re in to continue pushing that penetration level higher, and to encourage people to leave their car at home and take shared mobility options. So, when you think about this industry and replacing car ownership, you realize how early it is and how big this pie is, and how Uber and other companies in this space are just getting started.
