We asked Uber Freight head Lior Ron everything about the tech giant's push into trucking - from profitability to matching algorithms to tackling the trucker shortage. Here's the full interview.
- Uber Freight is a freight-brokerage technology for truck drivers and shippers from Uber. The tech giant is investing more and more into Uber Freight.
- We sat down with Uber Freight head Lior Ron to learn more about the trucking brokerage app, launched in 2017.
- The head of Uber Freight walked us through the new Chicago HQ, what hiring for Uber Freight is like, profitability in the sector, its matching algorithm, and more.
- Ron cofounded Otto, which was acquired by Uber in October 2016 as its self-driving truck unit. Otto has morphed into Uber Freight and is no longer developing autonomous technology.
- Before cofounding Otto, Ron was a special advisor at Google, and also held key product lead jobs at Motorola, and Yahoo!.
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Rachel Premack: Just to start off, I'd love to learn a little bit more about the Chicago office.
Lior Ron: Cool. The Chicago update really stems from just the growth and the momentum at Uber Freight.
And how we shaped everything to be carrier-centric, how we build at scale and how we actually go out to the US, where we have now a half a million drivers on the platform. And really then in the last 12 months we shifted more of the focus, or doubled down on the focus on the shipper side.
Read more: Uber is opening massive new offices in Chicago and Dallas despite recent cost-cutting efforts
Now that we have that platform, that we have Uber Freight for shippers, we have the one stop shop. We've basically been bombarded with demand from the marketplace. Everything from the big guys. We have now hundreds of Fortune 500 customers that are doing significant business with us. And they're going deeper and deeper and deeper into the supply chain and asking us to come on board and help them with some of their solutioning to small businesses.
We've launched that platform a couple of months ago and just the foundations of small businesses onboarding themselves and using that platform.
Premack: The small businesses on the shipper side?
Ron: Yes, the mom-and-pop shops. The one truck a week, one truck a month, one truck a day, small businesses and really empowering them, leveling the playing field for them.
So, lots of demands going into 2020 and we wanted to basically double down on the investment to be ready for the next level of scale. We have today a fantastic office in Chicago where we were able to hire some of the best in class talent on the logistics side of the house. People who have been in the industry for a while, know how everything operates, but want to join for the journey of rethinking stuff and improving things for the better and really rethinking some of the industry.
Uber Freight is developing custom tools for Fortune 500 companies to manage their supply chains
Ron: Now, when you're deep into enterprise solutionings and you're serving the Pepsis, Coca-Colas, LGs, Home Depots, and Safeways of the world, then you want to actually start developing a lot of things for those shippers on top of the platform.
And we want to make sure the developers out there close to the talent, close to the logistics center, close to the shippers so they can iterate and innovate even faster on top of the base platform that we have developed out of San Francisco.
Premack: That's interesting that - along with the original Uber Freight tool - some of these huge customers are also getting specific tools or customized platforms then.
Ron: Yeah, I mean they all have, there's a lot of commonalities, but this is a very sophisticated enterprise business, and we want to meet them where they are and walk them together on a journey of really rethinking the supply chain. And that will include everything from them adopting the Uber Shipper platform as is, all the way to us integrating deep into their systems.
Uber Freight is hiring an additional 2,000 people in sales and tech roles
Premack: You mentioned hiring earlier. Where is it most challenging to hire for Uber Freight?
Ron: I think the challenge is just making sure that we have a great process to help the right people join us. There's tens of thousands of people who are applying and they want to be part of the future. It's really making sure that we have the right cultural process to interview the right people and to onboard the right people.
And then once they're onboard, we pay a lot of attention on everything from informing people on the context of the business to making sure that we have a great culture that collaborates with you in all the functions. Because it takes a village to do a shipment.
You need everything from sales to a car manager to the carrier sales to the technology people. So, making sure that the team can collaborate and making sure that everybody's super customer-obsessed.
It's more about just being selective on the people who are joining and the people who are basically joining us on the journey. And that's where we're spending a lot of our time.
Premack: So there's not really any shortage of qualified talent, you would say?
Ron: No, I wouldn't say there's a shortage. I mean if you think about the two main constituencies, one is industry folks. This is a good opportunity. They know the industry, they know the pinpoints and they know there's a better way. They want to come to a place that actually can change that. And then there's some places that are developing interesting stuff, but not at the scale and impact that we do. So, they want to join a place that can actually have an impacted scale and they come to us and join us for that.
If you think about technologists, they want to work on meaty problems that have an impact in the real world. And there are just so many of those businesses out there today that are doing just, you know, an incremental feature here or there or some shiny object for some consumers, but engineers and tech folks are smart and they're just attracted to an opportunity to drive the change. Yeah, so we see a lot, we see a very healthy inbound across both of those populations.
Why lifelong logistics employees are going to freight startups
Premack: That's actually what my second question was - how to attract people who are already in logistics or what kind of thing that they're looking for.
Ron: They're looking for an opportunity to change in the industry and to make an impact. And the other thing that Uber allows them to do is a path and a mobility to continue to grow their career, because there's two vectors of growth.
One is when you're in this hyper-scale period. Your skills are tested, they'll stretch, you learn new stuff, you're in the front lines, you can make mistakes, you can learn from them. There's just like constant opportunities because we're going so fast, so we have people who join us years ago and they're now managing you know, hundreds of people. We have people that have rotated between the sales side and the carrier sales.
But the other path that you can do, it's really integrated. What we started seeing is a path in which talent comes in the door, maybe on the logistics side of the house but then grow into tech and grow from there.
We have some folks who started early in Chicago, they're now basically leading our product expansion into Europe, like product managers. We have hundreds of folks who took, we have something called the Analyst Academy where we basically teach basic skills of SQL and a lot of the ops folks are actually taking that. It's the most popular class in the building. They're taking an extensive SQL training, after which they are actually becoming analysts.
Traditional trucking companies don't seem to care about Uber Freight
Premack: So we just finished earnings, and I noticed when listening to the sales calls or earnings calls at traditional brokerage incumbents that none of them really seem particularly worried about Uber Freight or anyone else.
So I'm just wondering, what's your reaction to that? Is this something where you think they don't really understand the threat?
Ron: It's a good question, I think, to ask them.
I think this is a very big ocean and one of the attractions of this market is it's ginormous - like 15% of the global GDP, $700 billion in the US. So, you can definitely have multibillion dollar companies in this industry. I think that's why it was a lot of runway for everyone involved.
Other than offering that potential explanation, I couldn't tell because we're just really focusing on what we're building, on how we are building that. We are now releasing basically almost twice a week stuff to the market on the basis of iteration, on us basically building.
Innovation takes time at a grand scale. Step one was really building the digital infrastructure. Now, we have essentially the biggest digital fleet in the US. But then on top of that, you can start doing stuff like facilitators I've mentioned, like changing how some of those enterprises are handling and managing the supply chain, like empowering those small businesses because we have a self-serve platform.
We're just focusing on that innovation and solving customer needs and just doing that as fast as humanly possible with the best talent that we have. And that's the focus.
Ron says there's no timeline for when Uber Freight will be profitable
Premack: There's no debate that Uber Freight's grown quite a bit and is now one of the market leaders and has tons of business and tons of new customers and these sorts of things. But I guess right now is Uber Freight's focus is more on expanding new tools and expanding its business? Or is it looking at improving margins as well and improving profitability?
Ron: Both, always. You want to innovate, but the key for innovation is having a sustainable long-term business model. So, the focus has always been from day one, both. And the beauty of a great product market fit and a great technology is if you can actually do things that are doing both at the same time.
We'll have more announcements in a few weeks, but you can think about ways in which we can start - now that we have the full digital network and we understand where those skills are going and what they're doing. We can basically start offering them (truck drivers) reloads and opportunities to not only go somewhere but come back.
You can think about that as a win-win, right? If you actually start integrating the network even more tightly where drivers and carriers are benefiting because you can optimize their deadhead and they can drive fewer miles but make more money.
Shippers are winning because we can offer them services that are very competitive and we are winning because you can actually converge the price in the market much more effectively. So I think we are always looking for things like that, that can push the envelope both on the innovation piece, but also on the business-model piece.
Premack: And do you know when Uber Freight will be a fully profitable segment of Uber?
Ron: We don't have a specific timeline of that as a goal. We're focusing on always scaling, making sure that we have all the services that our customers, the shippers, we can support. And as we do that, we keep improving and iterating on the end-to-end business model.
So again, we want to guide the growth with sustainability, but it's less about this day versus this day. Let's do the right thing for the customer first and then good things will happen on our side as well. It's less about being super prescriptive.
Here's what I've learned, just one of the takeaways just building products for the past 20, 25 years as a technologist: Scaling this business is everything. The key product you're building as a logistics company is actually your network.
And your scale is the most important thing because scale allows you to actually drive impact. Scale allows you to change things across the industry. Scale allows you to actually unite a very fragmented industry instead of driving efficiencies across the supply chain. You need scale.
We've been very focused on that because we know this would drive impact. And this is what we care about. So, that's part of this strategy.
Innovation just for the sake of innovation is great, but it's really about combining scale, first US, but now global scale, where we can start deploying those innovations across both sides of the ocean and also scale on the network side.
Uber Freight's matching algorithm has some similarities to its ride-hailing counterpart
Premack: On a different note, how does the matching algorithm of Uber Freight versus Uber itself compare?
Ron: Lots of similarities and lots of differences.
Actually, the first matching (Uber Freight) algorithm was written by the godfather of sales pricing at Uber, as a testament of some of the similarities. Because at the end of the day, you have a massive matching challenge here of supply and demand at scale.
We need to do thousands and millions of matchings every day. Being able to understand your supply, predict that, and understand what's happening in the city or across the nation, and then matching that with demand and understanding what's the demand, what's the best matching, how to think about that are very common.
But then let's all figure out the differences.
On the Uber side, it's real time. It's like you press a button and you need to fetch a car in two, three minutes, which means you need to do matching in seconds.
On the Uber Freight side, a lot of our shipments are now matched instantly because everything is automated. We are getting that from the shipper. We price it, we match it, we find a driver.
But you're not doing that for a shipment that will go out in a minute. You're doing it for the next day or two days or a week.
So, your ability to forecast well into the future is much more important. On the ride-sharing side, it's less important. You all know what your supplies are going to look like a week from today so the time horizon is different.
The other thing that's different is just the price of the transaction, right? You have a $3, $4, $5, $7, $10 transaction on one side versus a thousand dollar transaction on the other side. So, how do you price that transaction is very important.
Some of those are contractual commitments. We've already priced that before. Some of those are more ad hoc commitments that we're pricing live.
We are leveraging a lot of the joint infrastructures. Those teams of amazing, academic talent in Uber are world-class in forecasting marketplaces. And we leverage, we stand on the shoulders of giants there, but then we have an amazing marketplace team.
Bar Ifrach, who actually led marketplace for Airbnb, joined us a few months ago to lead this team. And we develop a lot of cutting-edge simulation, models, forecasting, pricing algorithms, and matching on the Freight side that is different from the other side of the business.
Shippers wait longer than carriers to get matched on Uber Freight - and cutting that buffer time is the next challenge for the team
Premack: If you're a shipper or a carrier who is using Uber Freight, who would be waiting longer for a job?
I'm trying to think of these comparatively. If I'm trying to get a car, if it's certain time of the day in New York, I'm going to be waiting a while. But sometimes it might be quicker.
How does that dynamic work out on the Uber Freight side?
Ron: The pricing power might be with the shippers, but the booking power is with the carrier, which goes a long way of saying that the shipper is probably going to wait more.
The carrier, when they're in the mindset of "I need to find my next opportunity" can go instantly to the marketplace and book the opportunity while the shipper basically needs to wait for that opportunity to be booked.
Because of that - and because we now have a basically US wide-scale network with critical density in every freight corridor - a lot of the next phase of innovation or development is how can we cut that buffer time shorter, and how do we condense the distance between a shipper request and a fulfillment on the driver's side.
And you do that by working with an enterprise of integrating deeper and deeper and deeper. We have those shippers so you actually understand when in advance what are going to be their needs.
Once you understand their needs, you can actually push that to the marketplace very fast. And you can do a host of other things to take the friction as much as possible out of the demand side of the business.
The truck driver shortage hasn't hurt Uber Freight
Premack: You mentioned that there were more carriers than shippers on Uber Freight right now. I'm wondering if that has any sort of relation to the driver shortage or if you notice how the truck driver shortage is at all affecting Uber Freight.
Ron: Yeah. Good question. What we have found is that it's actually, because the platform is so easy to use, you just download the app and you stay and you use it and we can recommend the right opportunities. It's in your pocket and it's very noninvasive. There's no high switching costs. And we found carriers actually extremely willing to adopt the technology.
And on top of that, I think you covered that before in terms of like the micro situation in the freight market, right? Rates have definitely gone down over the past few months.
Put yourself in the carrier shoes. That's exactly the kind of time where you want to adopt more technology and you're more open to solutions that can find the right shipments and drive efficiency in your operation and help you grow your business or sustainable business.
We're seeing immense appetite from carriers to adopt the technology. Although there might be some micro shortage, actually we see very high adoption of the platform. So then, it's really about ramping up the shippers and looking for that to have liquidity for those levels.