Ex-Uber Exec Emil Michael on Autonomous Driving, Saudi Arabia, and Company Culture
By: Alex Kantrowitz
Tags: Technology, Autonomous Vehicles, Uber, Big Technology, Business

OneZero is partnering with the Big Technology Podcast from Alex Kantrowitz to bring readers exclusive access to interview transcripts with notable figures in and around the tech industry.

This week, we’re joined by Emil Michael, Uber’s former chief business officer. This interview has been edited for length and clarity.

To subscribe to the podcast and hear the interview for yourself, you can check it out on Apple Podcasts, Spotify, and Overcast.

Uber is facing a difficult moment amid the coronavirus pandemic. The service, built on the belief that people would forsake car ownership in favor of its ride-hailing service, is watching many of its customers buy cars and stay home. The new trouble comes after the company worked to right itself after years of turbulence under ex-CEO Travis Kalanick’s leadership. Emil Michael, the former Uber chief business officer and confidant of Kalanick, joined the Big Technology Podcast to discuss Uber’s business prospects, its culture, its current leadership, and its controversies.

Alex Kantrowitz: You were the chief dealmaker for Uber, one of Travis Kalanick’s right-hand men. Would you say that that’s an accurate description?

Emil Michael: Right-hand man tends to be independent of title. It’s: Who does the leader spend the most time with? I probably spent the most time with Travis on various business problems in my scope and out of my scope. My day job was chief business officer, which included corporate development— that was raising money, which we raised a lot of at Uber, mergers and acquisitions, business development, so like the partnerships we did with credit card companies or car companies and so on. I ran our enterprise business, which was called Uber For Business. I ran our China business. I was the most senior exec at headquarters managing the China business, which is a big, big deal for us.

Like a lot of people, I bought a car during this pandemic. I used to take Uber all the time. I don’t take Uber anymore. Do you think the idea of the end of car ownership is still something that is actually possible? And how long will this pandemic set us back?

Let’s think about Uber in two main parts. They’re a food delivery business and a ride-hailing business. There’s no doubt that in the last six months the ride-hailing business has been decimated. Is that going to go on long term? I think there is some degree of accuracy there. If people got cars during the pandemic or moved out to the burbs, dense urban areas might lose population, and then there’ll be less Uber rides to take.

If you believe, though, that these urban areas maybe are temporarily getting depopulated, and then people are going to come back into San Francisco and New York and these places, then it’ll largely come back. But I do think the pandemic is going to have some long-term effects. One of them is going to be that some segment of people are going to be more comfortable driving alone in a car than they were with a rider. Frankly, there was a countereffect of people being less likely to ride in subways and buses — who might switch to Uber but can’t afford a car. So how that works out, I don’t know. It’s probably a slight net negative.

I hadn’t thought about the idea that people might ditch public transportation for an Uber.

If you could afford it and you don’t want to be in that kind of dense environment, your option is to bike, scooter, depending on the weather and distance, or Uber. And to the extent that you can afford that, I think you might substitute public transport for Uber.

Is that a better society for us, if we’re for moving more toward relying on a private company than, let’s say, the subway?

Most big cities are dealing with traffic problems, so I don’t think it helps in that respect. To an extent, individual cars add more to climate change than mass transit. That’s an issue. But then you still have that fundamental question of, can we prove to people that being in these environments is as safe as it was before?

We get a vaccine in 2021 that’s widely distributed and very effective, might people snap back to their old habits, which means you might sell your car? Is that what’s going to happen or not? If that happens, then everything bounces back, and it won’t be an issue. If not, then you might have more crowded cities from a car standpoint.

Uber was aiming for profitability this year, and they’ve cut losses a little bit, but they’re still losing a billion dollars a quarter. How does a company like Uber lose money?

There’s a couple of things. There’s a big, big research and development spend on autonomous vehicles, something in the order of $700–800 million per year. And so you do that, and the payback is not for five, seven, 10 years. But the question to the management team is, do you still do that knowing that you can get disrupted by Google’s Waymo? Or do you stop? So that’s one place that the money is spent.

The second place the money is spent is on employee stock comp. When you look at these numbers, you do have to take out what looks like cash coming off the balance sheet versus stocks. A lot of Silicon Valley companies pay their employees with stock compensation, which looks scary when you compare it to a traditional company that doesn’t quite do a lot of stock options.

And then third, last quarter showed a big loss because they had to write down their stakes in Didi and all the other investments that they made because ride-hailing was compromised all over the world. But that’s a paper loss, meaning they’re still holding the same stock. It’s valued less. Next quarter or the quarter after when it goes back up, they’ll have a big gain to shell.

Then the final factor is just Uber is bloated. They laid off a lot of people this summer. I don’t think Dara took a hard look at the company’s cost structure when he came in because he had other problems to deal with. When he finally got to, the company was overstaffed, and he took a big chunk out of it this past summer. Maybe there’s another round or two to go, but I do think this company can be profitable in 2021.

People I’ve spoken to say Uber needs to price realistically, which will drive down demand, and then cut staff, leaving Uber looking a lot like a taxi business. Does that seem like the right path to you?

Yeah, I don’t think that’s accurate. I think that the price will certainly have to go up if they get more regulations passed like they did in New York, where they have to guarantee a certain wage or they lose the employee contractor issue. That will impact demand, that’s for sure. But those things aren’t certain.

Winning Prop 22, which keeps Uber drivers classified as contractors, still leaves a central problem. These drivers perform a tremendous amount of labor for a technology company. And through all this work, they end up making a few people rich. Do you think that there’s a way that Uber can operate where it does have a more equitable share between the people making millions and the drivers?

Yeah, I think there’s absolutely a third way, and there should be a third way, not just for Uber drivers but for all independent contractors. Let me give you some examples. In the ballot initiative, Uber proposed to create benefit pools for drivers, so that they’re supplementing things they might not get as an independent contractor at all. Because the thing that people forget is, something like 70% of Uber drivers drive less than 10 hours a week. And then half of them drive not only for Uber but for Lyft or Instacart or DoorDash or whatever. So it’s hard to consider them an employee of any one of these companies or even one company if they work 10 hours a week because typically this is a filler for drivers.

It used to be that there were a lot of full-time drivers. That’s totally over. So the question is, how can you give them benefits that are split from a cost standpoint among the various activities that this driver does in their life? I think there’s a way there.

When we hired David Plouffe in 2014, this was his mission. It was always something that the company was thinking about doing, knowing that you have to be fair to employees. You want them to be happy. So there is a middle ground. I think no one’s reached it.

Do you believe it’s the industry that should drive this change, or do you think there’s a role for the government to play?

I think there’s a role for the government and industry, but the government for sure. Because one of the things that happened after World War II, when we started attaching health care to jobs, it skewed the whole way we think about benefits for humans. But I think we’re one of the only countries in the world that’s so closely attached to those things. If you’re leaving a job or moving a job, why are you switching your health insurance? So this third way that I think we have to think about it, which probably has to have government involvement is — can you create systems that are independent of employment that provide benefits for folks? I think that does require some cooperation, but it does require some change from the government as well.

In Vegas in 2015, there was this Uber concert with Beyoncé, and word is you got in front of the company and said, “Travis Kalanick is my best friend.” What’s your relationship like with him today.

We were working at Uber. We were doing 80-, 90-hour weeks because it was so intense, the growth pace we were on. He’s one of my best friends still. He was at my wedding. We’re close friends today, for sure.

Does he have a grand plan to come back and take over Uber again?

No, he is deeply involved in his next business. He’s happy. He’s building something he believes in. I think he sold all his stock. He’s off the board. He’s moved on from that experience. So I don’t think you’re going to see that happening.

You think he’ll ever create a competitor to Uber?

I think he believes that this other industry is bigger than Uber.

Tell us a little bit more about that…

At a very high level, he is creating what’s called CloudKitchens, which are built to optimize the preparation and delivery of food. If you believe that people are going to cook less and have food delivered more, then… it’s happening in China, something like 20% of all meals in China are delivered. In the U.S., it’s like 2–3%. So if you believe that we’re going to follow that trend, then he’s making the economic bet that these restaurants are going to want these very efficient, cheaper places to cook food that are optimized around a city, that can be done with fast delivery. So if anything, it’s a real estate play and chasing a trend on food delivery. I think that he thinks it’s a bigger idea. There’s certainly more revenue in food than there is in transportation.

Do you think Uber ends up making more money on Uber Eats than driving?

The ride-hailing business is bigger than the food delivery business because when people are relying on Uber—like you did before you got your car, you were taking it every single day, potentially multiple times a day. The food delivery business, people are not typically ordering food multiple times a day from Uber Eats. It’s just less of an everyday habit, less of a reliance, if you will.

People who are pro-Travis tend to not like Dara, the current CEO of Uber. Someone who pays close attention to the company told me, “He’s a suit. He’s a hired suit.” What’s your reaction to that?

They’re so different stylistically. I remember at some point Dara had said, “I couldn’t have started this business. You needed a Travis to start a business like this.” So he even acknowledged that the strengths that Travis had in disruption and innovation and so on were things that he didn’t have or weren’t his sweet spot. I think the vast majority of the people who were looking for that kind of mission-oriented experience that was generated around innovation and hyper-growth, they’re not at the company anymore.

Dara inspires more stability and more diplomacy. I think the company culture is orienting toward that. So I think it’s natural to have people say, well, I prefer this or that. I’m a startup innovator person, or I’m a diplomacy person. That feels natural and predictable.

Dara also basically put the former leaders of the company on blast while making apologies for the stuff that you guys were doing. What do you think about that?

That was disappointing. It may have been something that he had to do just because the environment around the company was so intense, and he had to give people confidence that it was going to take a different path. I think as it played out since then, a lot of the stuff has proven to be more smoke than fire. And so I think he went a little harder core than he needed to on that stuff.

As a result, he lost a lot of great employees who were in the company and knew it wasn’t a bad company. It had problems, but it was a good company fundamentally. Because they didn’t agree with that, and I think he didn’t allow the old management and the new management to cooperate as much as we might have, which meant the business lost some steam that it didn’t have to lose. So I wasn’t a fan of that.

Well, I don’t think anyone who lives in the Bay Area has gone too long without speaking with an Uber employee who complained a little bit about the environment.

Ninety percent of the people, nine zero, employees of Uber who were there within the early days loved the place. Whatever problems they said it had, they said it was the best experience of their life. They didn’t experience any of the problems that were in the press. That doesn’t mean… 10% is still a lot, or 5% is even still a lot. But I think the company got mischaracterized because it was early on in this cycle that we’re in now, and companies are having to account for all the things that happen inside the companies that swept all industries since 2017 for a good reason.

Uber was in the front end of that, and therefore, it took a lot more heat than it probably would have if the same things happen now. So there’s no doubt that there were things that could have been fixed, but this wasn’t a bad company. The vast majority of people inside the company would agree with me on that.

Just to get you on record: Do you think the problem was some bad elements of the culture or was the problem the coverage?

No, I wouldn’t disclaim full responsibility. The company was growing so fast, that unless you were also building the infrastructure of the company at the same pace — HR, legal, training for managers, the things that solidify a company — that misalignment is going to cause problems.

So you have young people with managerial responsibility who haven’t been trained as well as they should have. That’s a problem. So those were real issues. That being said, I do think the press magnified them to a degree, where if you compare an outsider’s view versus the people on the inside, it was like two different companies.

Is that what you’d say to people working in startups today? Put some guard rails on early so you don’t end up in a similar situation?

For companies that are in hyper-growth, it’s a super unique situation, and you cannot ignore the company-building parts of that or you’re going to have problems. So, absolutely, I would tell younger people who are in this situation about that mistake and how to correct it.

When we were hearing the Uber story back in 2016, the idea was that the company would eventually have the network and technology to have all its cars be autonomous. Is it just taking longer or do you think Uber is giving up on self-driving cars?

I think it’s just taking longer. I was on the cynical side of the timelines on self-driving. When we were investing in this in 2014–15, my view was like — it’s going to take till 2025 or longer to have a material number of cars on the road. I’m not a technologist, so I was just looking at it from a combination of regulatory, what I understood with the technology, and so on.

I still think that day may be too soon. Everyone made this mistake. GM Cruise made this mistake. Waymo made this mistake. I don’t know if you remember Waymo was saying that they’re going to have a self-driving car service launched by 2017. Cruise said that it was going to have it by ’18. So the whole industry, I think, was just wrong in how fast this was going to move.

Why were they so wrong?

People thought the components were going to advance faster than they did. It just didn’t turn out that way. Unlike a microchip which just gets faster, faster, faster, the thing with self-driving cars is you have to count for infinite situations; a kid crossing the street, a plastic bag twirling the air that looks like a rock, what happens when it rains, incline, and so on. And just a sheer enormity of the situation just make it a much harder problem to solve.

The public’s tolerance for mistakes is not high. When there’s a fatality, that shut the industry down for six, nine months. So it’s going to take a long time to get the tech right, to get people comfortable with the fact that there are going to be errors. And is that okay? And then the regulations to follow.

What did you personally feel like when you heard that someone was killed by a self-driving car?

I was gone from the company by then, but it was sad. I guess you expect these things to happen. But the way it happened was just tragic. You’re putting names to faces or names to these statistics. It’s sad. I wasn’t in the guts of it to know how it happened or why until way after. But the thing you have to think about is, driving cars with humans kills a million people a year worldwide. So at some level, you have to believe that we’re doing net better for the world by doing the self-driving thing even though it’s imperfect, but that’s still hard when you see an individual case.

Self-driving was a core part of Uber’s business back in the day, but I wonder how long that they’re going to hold onto it. You understand the strategy. Where’s it going to go from here?

There’s going to be four or five efforts on self-driving that all have a shot at winning some or all of the market. Waymo clearly is far ahead of anyone in the industry. You have the GM Cruise effort, which is material and is well-funded and has the benefit of being attached to an automaker. In theory, they could take the software and put it in the hardware more easily. You have Uber’s effort. Those are the three big efforts in the United States that all have a shot. And then you have something going on in China.

The rest of the efforts around the world are relatively minor. So it is not crazy for somebody to continue investing in these four efforts. It could be that the consortium develops and continues investing in Uber’s efforts. The consortium of automakers benefits from that. As you probably read, Toyota invested in that. I’m guessing they did that because they want access to the tech. So I do think you just have to get other people to help finance it because it’s a worthwhile effort, and they could easily be still one of the main players.

You don’t believe that it’s just going to be Uber going at it alone for much longer?

The cash cost of it is enormous. If you’re Uber and you’re running a network of cars, you want several automakers to have the software in their car. So you actually want people to have access to your technology. Unlike if you’re Waymo, you’re like, I’m going to run the whole closed system. I’m going to do it all myself. It’s a different business model. I think if Uber does it the right way, it’s a superior business model to having a lot of the auto companies dependent on their self-driving tech. But to do that, they need to have a contribution from a financial standpoint to make it through the seven or 10 years it’s going to take to get there.

There’s been news that Anthony Levandowski, who was at Google and got busted for bringing some trade secrets over to Uber, is now going to go to prison for a year and a half for his role in that.

You worked closely with the guy and were in the company at the time. What’s your take on all of this? Is he the one that should be going to prison for this? And are there other repercussions or should there be? Are there things we’re not seeing about it that we should be looking for?

My understanding of what he was convicted of was taking stuff from Google that he shouldn’t have. So there’s never been proof that came over to Uber. As far as I know, there was never intent at all for any of that to come over to Uber. So let’s separate that piece. What he did and what he admitted to doing at Google was the problem or the reason he’s going to spend [time in] jail.

Had we known that was going to happen, obviously, that wouldn’t have been something that would be okay with us because of the magnitude of that. So that’s a good example of the press muddling the issue and inflating Uber into it, when it was actually an individual’s action at his prior company.

What’s the point of taking the trade secrets from Google if you’re not going to go apply them to your next job? Logically, you think about motive. Was he just getting a kick on downloading stuff off the Google server maybe?

The only thing I could speculate on is that Google owed him a whole bunch of money from some acquisition that they did, and maybe he wasn’t sure he was going to get it. This was some way of making sure he had something to hold them accountable to that. But Uber didn’t need their stuff. Their stuff was irrelevant to us. Uber was building something totally different. We wanted Anthony’s brain, but we didn’t want his work product or Google’s work product.

And as far as I know, they never found anything anywhere. So it just sounds like he downloaded something and then he threw it away or never used it. This only came up years later, or a year later since the acquisition was done. So that’s my only guess as to motivation.

Let’s talk about Saudi Arabia. U.S. intelligence agencies say the country intended to kill a U.S. journalist, Jamal Khashoggi. We know that the FBI also accused people close to the Saudi royal family of trying to log into Twitter systems and get data from dissidents.

Saudi Arabia invested billions of dollars into Uber. Is there a certain point where Silicon Valley will throw up its hands and say, “You guys got a lot of money, but we don’t really want to do business with you anymore?”

Well, let’s first get the facts and timeline consistent, which is, we took the investment from Saudi in 2016. And so these events that you’re talking about happened after that.

Yes, they happened after.

That being said, the broader question is what Silicon Valley really does, or any company that’s seeking foreign investment does. It’s a really hard question. Because in some ways, one could make the argument that every government in the world, every big government, has its things that they do. Look at the Chinese and the Uighurs. Every country has its thing. It’s a gray zone for what one does unless you want the world’s economic clock to stop ticking.

That being said, is it better if Saudi makes an investment in American companies? That investment results in money, and that money goes back to the Saudi people to improve their lives. Right? Which was the theory. If you remember the Public Investment Fund of Saudi Arabia, the idea was to transition the company from oil wealth to other forms of wealth.

The way we thought about it when we took the Saudi money, is that we could be a change agent and help convince them that women should be allowed to drive. That was a major part of our discussions with them. We made it known that that’s what we were supporting, and we thought that Uber could be an advocate for that. We were. It happened soon after they invested in us.

Let’s say we were to flip the timeline, would you still do business with them?

I believe generally that if the company or country that you’re taking money from is actually going to use the potential gain in that to help their people, I think that’s a big deal to me. I was born in Egypt, and I grew up speaking Arabic as my first language. My parents immigrated because they wanted a better life, so I kind of know what life’s like in the Middle East. I have a lot of sympathy for what people are going through there and what they went through in the last couple of decades with a lot of dictators and so on. If I believe that the money was going to go back, it was going to help improve their lives, it would be something I would strongly consider and have to weigh against the things that happened in the last couple of years.

All right, so sort of inconclusive now.

It depends on the regime. Now if you said, would you take money from North Korea? Of course not. But there’s a line that you draw because you know the money is not going back to help anybody except the regime, right?

Let’s spend our last few minutes talking about the startups that are emerging from the Uber ecosystem. Just give us a quick 10,000-foot view of why there’s been such an impressive or enthusiastic group of founders that have come out of Uber?

If you put yourself back into the early days of Uber, it was one of, if not the, most exciting companies in the world in terms of its ambition and its speed of deployment. So it attracted a really energetic group of people. We were really relentless about hiring the best people we could find all the time. I think Travis and Ryan Graves interviewed people, everyone in the company until it got to 500 or 1,000 people, something like that to try to keep the level of talent really high. So it’s natural that you will have this diaspora of great talent.

What made Uber different than some of the other tech companies is that, because we deployed people in every city, we had more employees than the average tech company early on because they were doing things like handing out phones to drivers. They were doing things in the cities they live in. So you have this big employee base relative to other tech companies that was attracted to the place because of the speed and energy it had and because of its big mission, and then the hiring bar was high. So it’s natural that you’d have people who are ambitious and going out there doing interesting things.

I think people had a lot of criticism in 2017 about why we were promoting leaders of different stripes. I will tell people today, I still think there’ll be more female Fortune 500 CEOs coming out of Uber than any other tech company in the Valley. P&L’s they got, the responsibilities that got early in their career were incredible, unable to get into any other type of company. And so, I think you’ll see leaders who are building their own companies and leaders who are going to join other companies and become C-level folks there. This is going to happen all over the world.

Are they mostly doing transportation-related startups?

I don’t think that there’s going to be a lot of success in starting new transportation companies. There were some that were like, “Oh, we’d transport kids, or we do these straight-line shots down Fifth Avenue in these SUVs.” I’m not optimistic about those things. So I think the more innovative stuff you’ll see is outside the transportation sector from the Uber people. But what you will see is that they will be way more unafraid of doing operational work than the average software company will be.

If that means you have to go to a city and use hustle to start a business, because you have to talk to real people or you have to do things on the ground, they’re less afraid of that because they lived that. They’re very optimistic about their ability to drop into a city and create a new business as opposed to sitting at home and writing code. So I think some of the things that required logistics outside of transportation are going to be things that they gravitate toward.

Do you want to tell us about a few companies that you find interesting, and what they say about the market?

Like I said, the biggest diaspora has been to other food delivery companies. That’s one category that I think is still growing tremendously and had tremendous tailwinds from Covid. I think a lot of the software you’re going to see, software development startups coming out of Uber, or things like RedCircle, or things that are autonomous. How to automate certain things, not just cars, but maybe things on a smaller level.

I saw a robotic coffee company that was started up by people from Uber. So I think you’re going to see a lot of that. There were a couple of companies that have started working on maps and how to make maps more rich for the self-driving future. So you see, they’re all over the place, to be honest. It’s not like you got PayPal and a bunch of those people went into payments. I think this is going to be more widespread in their domain than the average startup that succeeds in the Valley.

I want to ask you one last question, which is going to bring it all full circle. I’d love to know a little bit about your personal habits right now in the middle of the pandemic. Are you taking Uber? Did you buy a car? What is your personal relationship to the technology that you help build?

Well, I got married in 2018, so I was 45. So I waited until late in life. I had my first kid, my daughter, on February 7 right before shit hit the fan. So since then, I’ve been an adoring dad and there for every milestone. Like everyone else, when I’m doing business calls advising companies or doing my board meetings; I’m on Zoom all the time. I’m trying now to move to half Zoom and half audio, just so I can pace a little bit and not have the… It gets super exhausting to look at someone’s face on Zoom all day, every day.

I live in Miami Beach, and I live on an island connected to the main part of Miami beach. I have a car, the car I got from California, which I never got rid of. I bought another one when we had the kid so we could have a baby seat and so on. So I’ve not been in Uber in the last few months, for sure. I haven’t needed to, because mostly, we’ve been quarantined. And then when we go out, we’re taking our daughter to a pediatrician or something. It’s much more convenient to have your own baby seat, to be honest.