WHEN: Interview Airing Today, Thursday, May 31, 2018
WHERE: CNBC's "Squawk on the Street" – From Recode's Code Conference in Rancho Palos Verdes, CA
The following is the unofficial transcript of an EXCLUSIVE CNBC interview with Uber CEO Dara Khosrowshahi and CNBC's Carl Quintanilla airing on CNBC's "Squawk on the Street" (M-F 9AM – 11AM) today, Thursday, May 31, 2018. Dara sat down with Carl at Recode's Code Conference in Rancho Palos Verdes, CA. Following is a link to video of the full interview on CNBC.com: https://www.cnbc.com/video/2018/05/30/uber-ceo-khosrowshahi-says-they-on-track-for-an-ipo-in-2019.html.
All references must be sourced to CNBC.
CARL QUINTANILLA: We are in fact at the Code Confidence at Rancho Pallas Verdes, where you know technology innovation and mobility especially are huge topics of conversation. Dara Khosrowshahi of course is the CEO of Uber and he joins me here. Bernie was just saying you're one of the reasons he was able to sell that car and get-- you know, no-- no longer pay for parking. Welcome, it's good to see you.
DARA KHOSROWSHAHI: Bernie's our favorite kind of customer--
CARL QUINTANILLA: Yes.
DARA KHOSROWSHAHI: --so thank you.
CARL QUINTANILLA: So you're in the news. I mean let's start there.
DARA KHOSROWSHAHI: Yes. Yes--
CARL QUINTANILLA: You're in the news today because there's a report that earlier in the year. Warren Buffett approached you about an investment. They-- Bloomberg says $3 billion. And then Warren did comment later on to us, to our Becky Quick, saying, "I'm a great admirer of Dara." Some of the reported details are not correct, but it's true Berkshire had discussions with Uber. What were those discussions?
DARA KHOSROWSHAHI: I don't wanna get into the particulars necessary of those discussions, but like-- Warren said-- we did have discussions, and I don't think the reporting was entirely accurate. Listen, Warren Buffett is an investor who has the ability to have his choice of investment in the universe. Right? It's-- it's-- his brand, his smarts are unparalleled. And what I'll tell you is that I'm a giant fan. I'm, like, a Warren Buffett fanboy. For many, many years. And one of my business goals in life has been to get Warren Buffett to invest in something that I'm involved in, and so far I've failed. So maybe-- maybe one day I can convince him that, you know, times will be right. He would be willing to-- honor us with an investment. It hasn't happened. And, you know, he's-- I think Warren can invest anywhere, anytime.
CARL QUINTANILLA: But no additional color on what he was looking for, what you might have been looking for, or even whether or not it's possible talks resume or continue?
DARA KHOSROWSHAHI: I-- I think, listen, it's always possible that-- that talks will resume. And-- and I think there-- there has to be a match. We are a company that has, as you know, an enormous growth trajectory, but at the same time it comes with considerable risk. So I don't think that we necessarily fit in with the typical-- Warren Buffett-- investment. Maybe we can be-- a different kind of an investment, a portfolio diversification play for him. But, you know, you-- you never know what can happen, and I certainly would welcome any kind of a dialogue with him. It would be an honor. We didn't get there. Could we get there at some point? Maybe. Maybe not.
CARL QUINTANILLA: The reports frame it as-- Uber's cash position is good--
DARA KHOSROWSHAHI: Yes.
CARL QUINTANILLA: You have new term loans coming online. You've got the investment from the Softbank consortium. But you don't really need-- you're not hungry for liquidity at the moment.
DARA KHOSROWSHAHI: Not at this point. I-- I mean we are in a good position in terms of the company's profile in terms of profitability. Margins continue to get better. We have a very strong balance sheet, and I do think that we are on track in 2019 for an IPO. Lots of things can happen in the world, but we have a reasonable buffer as well. So I think we're in a pretty good spot. That said, we would welcome strategic investment. It's just not something-- it's not first priority for me right now. First priority is to continue to build a management team, continue to invest in the brand-- and get us in a position where-- we can build a big business and along the way go public.
CARL QUINTANILLA: What do the conditions need to be for an IPO to happen next year? Is there certain--
DARA KHOSROWSHAHI: Well--
CARL QUINTANILLA: --boxes that need to be checked?
DARA KHOSROWSHAHI: I think-- the management team has to be filled out. I am-- looking for a CFO and that's a pretty important person-- as part of an IPO. We are very much now rebuilding the brand and what Uber represents, and I think we're making terrific progress there. As far as people understanding that this is-- we are a company that is going to be defining urban mobility going forward, and really what we're working on now is to build out the safest mobility platform on Earth. And you've seen some of the moves that we've made on the safety front in terms of driver screening and making sure that anyone who drives on the platform— they're checked out, they're safe, et cetera. But also making sure that when you're on the trip, you can share your trip with friends and loved ones. We introduced the 911 button, if anything, God forbid, goes wrong. So really now we're working on the product, improving the product. As we improve the product, I think the financials will improve as well. And I do see us on track for a 2019 IPO at this point. And it's really about execution.
CARL QUINTANILLA: Interesting. If-- it-- so if market conditions were to continue as they are right now, you'd feel comfortable saying '19?
DARA KHOSROWSHAHI: I-- at this point, yes.
CARL QUINTANILLA: Interesting.
DARA KHOSROWSHAHI: I-- I think we're-- we're nicely on track.
CARL QUINTANILLA: Are you focused mostly on the core business for-- these days, or is it more about Eats or autonomy or areas that are, I don't know, growing per-- faster but not as big?
DARA KHOSROWSHAHI: I think that with a company of our scale-- you can never take your eye off the core. And so we have to drive that core business, the ride sharing business, and now the markets that we're in, the core markets, the U.S., Europe, Latin America, India, Middle East, Africa, et cetera. So you really have to keep your eye on the core. But when you're involved in-- the whole-- the transportation marketplace, this is a $6 trillion market, it is such an enormous market to go after that you have to keep your eye on the core, but you also have to be making investments, forward investments. Eats for us is a big forward investment. It's growing incredibly quickly, gaining very significant share in the food delivery space. We got into Jump, which is eBikes. We are now investing in what we call Uber as a platform, which is we're not necessarily just about taking a car from point A to B. We want to be there-- anytime you're going from point A to B, we wanna be there for you. Whether it's taking a car, whether it's taking a pooled car, whether it's taking a bike, whether you should walk, or even now-- we wanna build out the capability for you to take a bus or a subway. We want to be the A to B platform-- for transportation-- and the biggest one on Earth.
CARL QUINTANILLA: Where's the-- where's the limit to that line of thinking? I mean would le-- corporate logistics and, like, commercial delivery be out of bounds?
DARA KHOSROWSHAHI: No, certainly not. Well, we're-- we're in the freight business. And the-- the freight industry, it's almost a billion dollar freight brokerage business in the U.S. alone. And this is a business that has classically been incredibly offline. If you wanted to ship goods from point A to B, you will call a freight broker. The broker will call a bunch of trucks out there. Automation hasn't come to the freight brokerage business, and what we do at Uber is we match supply and demand in an incredibly automated, efficient way-- and we think, for example, the freight brokerage business and-- Uberizing the freight brokerage business is incredibly-- interesting. We'll do it for lower margins, and the dollars will go into the pockets of the shippers and/or the truckers, and we will-- make some money as well. And if you take that forward into the age of automation, where trucks are driven autonomously, at least on a highway, you get to a pretty interesting business-- in the B2B space as well. So again, that's another bet that we're making, but the early results are actually pretty encouraging for us.
CARL QUINTANILLA: Do you think that-- that kind of innovation is going to show itself first in the U.S., or is China more ripe for at least the autonomous part of all of that?
DARA KHOSROWSHAHI: Well, I think that the U.S. and China are going to play a part, and I think it's gonna be a race.
CARL QUINTANILLA: You do?
DARA KHOSROWSHAHI: You know, everything that you're seeing in the technology space right now, I think the innovation that you see in China's extraordinary. And the innovation that you see in the U.S. continues to be incredibly rich, entrepreneurial, et cetera. And I do think it's going to be a race. Par-- it partially is gonna have to do with the amount of innovation and the core pure tech out there. But it also has to do with governments and governments allowing this kind of innovation and experimentation to happen. So I think it's too early to call right now, but it's gonna be fun to watch. And we're certainly gonna play our part in the autonomous space as well.
CARL QUINTANILLA: Well, you're leading right to the big conversation here at the conference, which is the balance between regulation and innovation. And whether or not governments that lean he-- more heavily on-- on one end give up something in exchange for the other. I mean we've seen examples. You--
DARA KHOSROWSHAHI: Yes.
CARL QUINTANILLA: --we-- we've dealt with this, right? The U.K.-- eyes remain on the U.K. So--
DARA KHOSROWSHAHI: Yes, yes.
CARL QUINTANILLA: --how much of that do you think governments recognize? And are they, in some cases, self-defeating or destructive?
DARA KHOSROWSHAHI: Well-- well, listen, there's-- there's no such thing as a free lunch. And I think that government regulation is going to increasingly have to pay a part in the technology space.
CARL QUINTANILLA: Because?
DARA KHOSROWSHAHI: Because-- because we're becoming a bigger and bigger part of people's lives. Because we're becoming a part of everyday life. And, for example, where we play in the transportation space is this is fundamental to how people are going to move. And I think it's important for the cities and the governments that they op-- that we operate in to have a voice in that. And we are changing how we work with governments. We wanna be a partner with them. And, for example, we have a program where we are sharing data with the cities in which we operate in as it relates to traffic flows, because the-- the demographics are unmistakable. 50% of the world's population lives in large urban centers now. That's gonna move to 2/3 30 years from now. More people are moving to urban centers. Infrastructure is not going to be able to keep up. So first thing you have to do is you have to be smarter about movement around the cities, traffic around the cities, et cetera. Second is you have to get single people outta cars, and this is where car sharing becomes-- ride sharing becomes very important. But it also becomes where pooling, getting multiple people into-- a vehicle becomes incredibly important. And we're investing hundreds of millions of dollars in essentially-- cutting prices in order for more and more consumers to share rides. Because it's not something that, you know, socially yet is acceptable. And now we're innovating into new ways of getting around, which are eBikes, for example, with the Jump deal, and we hope to bring eBikes all over the world, so that if you're gonna be a single traveler, at least take a bike. And these eBikes, they make you feel like Superman. I mean it's amazing how fast you go, how easy it is. And further on, we-- we do wanna help these cities-- in terms of their bus service or bringing demand to their bus service and bringing demand to their metro. So it's a whole host of efforts that we're making, and that the real kinda forward push for us is actually taking it to the air, which is if you have cities going three-dimensional, high rises for residential, high rises for business, you're going to add another-- you're gonna have to add another dimension to transportation. Elon Musk wants to go underground. We're gonna-- hopefully make overground work. And we'll see which one works.
CARL QUINTANILLA: We-- you know, we've seen some of the-- the videos and the prototypes, and--
DARA KHOSROWSHAHI: Yes.
CARL QUINTANILLA: -- people look at it now and it seems fantastical. Do you forgive them for that? Do you forgive them for saying, "This? In a couple of years?"
DARA KHOSROWSHAHI: You-- you-- the amazing thing about technology is that what seems to be fantastical becomes normal, and then becomes rudimentary. I mean listen, the idea that you would, like, push a button and have a car show up in four minute-- four minutes, seven years ago you'd say, "That's amazing." Now, if the car doesn't show up in four minutes and it shows up in five minutes, you're like, "That was a minute late. I can't believe that." Right? So it's-- it's amazing how the fantastical becomes normal. But these are big bets that you have to make. They're experimental. I'm not saying that any of this is gonna be easy. It's gonna be very difficult. We have to approach it through partnership. We're not trying to do it ourselves as it relates to Uber Elevate. We're bringing a number of partners that are investing in this technology, but we think a combination of battery technology, combination of compute, et cetera, make this possible, and we wanna play a part in really solving this issue of urban mobility. Not just next year, but three, five, ten years from now.
CARL QUINTANILLA: Dara, thanks for the time.
DARA KHOSROWSHAHI: Happy to do it.
CARL QUINTANILLA: We look forward to seeing--
DARA KHOSROWSHAHI: Thank you for having me.
CARL QUINTANILLA: --your-- your-- presentation tonight on stage.
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