Originally published at: https://boingboing.net/2018/02/16/balance-sheet-shenanigans.html
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“Disruptive” Internet Company Mostly Exists To Fleece Investors, Water Wet, Germans Slightly Humorless, This & More At 11.
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Somebody smarter than me once said. “The only numbers from management that I believe are the ones on the dividend checks.” And that was just general advice, not about a “growth” company that can only seem to grow their debts.
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It’s to put normal cab companies out of business. That’s it. That’s all it is, and all its ever been. Run in the red until your competition goes out of business, then raise prices.
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Spot on.
Of course - we may have the cabs & Uber both go out of business. Now - that’s what I call disruption!
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O hell, I can do better than that. Somebody give me $4.5 billion, I’ll show you!
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Ride Austin demonstrates the most likely outcome – both Uber and traditional cab companies collapse (and good riddance to both) and are replaced by non-profit co-ops of drivers using software to produce a service similar to Uber.
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No kidding, you mean the company that a fast-talking narcissist founded by borrowing your car isn’t going to work out for you?
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I like it, but you’re forgetting the “Wal-Mart Model”, where the bigger company just runs competitors out of business by taking a loss until they win.
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Would it be so bad if Uber went out of business? If they are being out-competed by Lyft or even regular taxicab companies then that’s how business should work. I would be annoyed and angry if they were going out of business because traditional cab companies were getting government protection or something, but this just seems to be plain old poor management.
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They are the classic short-term business. They found a market that was easy to co-opt, made serious bank while the regulators scratched their heads about what to do, and now they are continuing to cash their checks while the train heads toward the cliff. When the crash happens, these same people (or their ilk) will point to their amazing past performance and jump to the next train that hasn’t gone over the cliff yet.
Figuring out exactly when the train is going over the cliff is impossible, unless you are an insider. Best to just stay off the train entirely OR let your money be managed by insiders. It’s a huge racket - all of it - the entire system. That’s why there’s so much money, and why there are “criminals” in charge of it. Quotes because while what they do is criminal, it’s not against the law.
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But Wallmart has big physical stores, and a distribution network, and is big enough to have pricing power in negotiations with it’s suppliers. Those “barriers to entry” make it difficult for a start up to compete with them. Uber has none of these. Once they have put the heavily regulated taxis out of business, there are few barriers to market entry. There’s nothing preventing local co-ops from spring up wherever Uber attempts to raise prices. There SHOULD be a price at which Uber could operate and pay their drives and get a small profit, but they seem to have too much debt (why?) to ever achieve that.
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The short version is that Uber is running a constant loss-leader promotion, mostly on the backs of their drivers, in the hope that a fleet of Uber self-driving passenger cars will hit the streets before the financial jig is up. I doubt that they’re going to make it.
The fact that the company was founded by an Ayn Rand fanboi doesn’t help matters, of course.
Not that they did, but the single good thing I can say about Uber is that it devastated the medallion monopoly racket in cities like NYC. True, they did so by skirting all kinds of safety regulations and labour laws, but the medallion owners were exploitative scumbags in their own way.
Like Cory and others here, I hope the outcome in the medium term will be local/regional co-ops based on open-source software combined with strong regulation of drivers when they’re operating in taxi mode. In the long term, I wouldn’t want to depend on driving any kind of vehicle for my liveliehood.
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Okay, so here’s something I’d like to understand a little better.
The basic idea of Uber is a cork board. You put up a piece of paper saying you are willing to drive people places and they go, hey, I want that. That’s the non-digital technology that is being emulated.
So they take that idea of having people offer rides and people ask for rides and they make it digital. They don’t pay for the insurance or the maintenance of the vehicles. They don’t pay for gas. They just take 20%.
How the fuck do they lose money.
That’s a serious question. All around the world there are people offering to give other people rides, people taking up those rides, and money changing hands, and you get 20% of the money. And you lose money.
What are they even doing with their money?
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They’re spending a lot on lawyers to fight local governments all across the world. That can’t be cheap.
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By piling the rents they collect into executive salaries and brand-building and lobbyists and lawyers to get around compliance with municipal regulations and R&D into autonomous vehicles that won’t bear fruit in time (and perhaps the occasional dividend payout to keep investors interested in the stock).
Their hope is that if they keep that all going until they can eliminate the workers who inhabit the area “below the API”; after that they expect to be able to collect a lot more than 20% and, as a powerful incumbent brand, raise prices from the loss-leader competition destroyer levels they’re at now. Spoiler: they won’t make it in time.
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Well, I think one of the things that this series has shown (I read the first five when they came out) was that even if they make autonomous vehicles they still might not be profitable. It looks like they’d save a lot since drivers are getting 80%. But that 80% includes insurance, fuel, and depreciation of cars.
Maybe their hope is to establish a monopoly and then act like a monopoly to make money. I do wonder if it was a Ponzi scheme to begin with. Like, probably not, but if not it must have spawned some Ponzi schemes since. Looking at this financial analysis it looks like there are some rubes out there with billions to invest.
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Short-term speculators, too.
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Yeah, and it’s wildly successful there. Or at least in bankrupting cab drivers.
And public transportation (which has already been replaced by Uber in some locales).
The problem is that they’re taking everyone else down with them.
I hope so. I really, really hope so.
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Serious question: Did Uber ever make money? I thought they have always had leaking financial arteries.
