Uber COO says scale creates 'innovator's dilemma' for new businesses

Uber's size makes it hard to start new things. That is the message from Andrew Macdonald, the company's chief operating officer and president, who said in a podcast interview published Monday that the ride-hailing giant's core business swallows up resources that could go to new products.

In an interview on Harry Stebbings' 20VC podcast, Macdonald described what he called the "classic innovator's dilemma." The problem, he said, is that the existing business is so large it consumes organizational capacity. Even when Uber stands up other businesses, they struggle to get attention, distribution, marketing dollars or engineering resources.

"It just gets swallowed up by the hole," Macdonald said.

Uber is close to $250 billion in gross bookings on an annualized basis, Macdonald said. At that scale, a new product needs a plausible path to becoming a multibillion-dollar business before it is compelling enough for the company.

"It just actually constrains your thinking a little bit," he said.

The numbers back up the scale problem. Uber reported $58 billion in gross bookings in its most recent quarter and $14.2 billion in revenue. The platform averaged 208 million monthly active consumers.

Autonomous vehicles are now Uber's largest single area of investment, Macdonald said. The company has partnered with robotaxi platforms including Alphabet's Waymo and launched Uber Autonomous Solutions earlier this year, a suite of services to help AV companies commercialize their technology. The Financial Times estimated in an April report that Uber has committed more than $10 billion to AV investments and robotaxi fleet spending.

On Monday, Uber also unveiled a partnership with drone-delivery startup Zipline. Uber Eats customers will receive drone deliveries starting later this year. The companies said they were targeting one million daily drone deliveries by the end of 2029. The partnership includes a "strategic investment" in Zipline by Uber.

Macdonald said on the podcast that Uber tries to incubate fledgling ideas through a program called "Growth Bets." The company dedicates employees to new projects rather than having people manage existing businesses simultaneously. Even then, Macdonald said big companies throwing a lot of money at new projects often move more slowly than startups because people get "fat on the resources."

The upside, he said, is that if a new idea works, Uber can put it in front of more than 200 million people.

Uber's challenge is not unique. Large tech companies often struggle to launch new businesses alongside their core platforms. Macdonald's comments offer a rare inside look at how one of the biggest consumer platforms in the world thinks about innovation when its main business already dominates.

The company's bet on autonomous vehicles and drone delivery represents its attempt to find the next multibillion-dollar business. Whether those bets pay off will determine if Uber can solve the dilemma its COO described.