The uber delusion

hubert horan is the shit! he expresses everything wrong with uber and the uber mentality from the opening–

"Since it began operations in 2010, Uber has grown to the point where it now collects over $45 billion in gross passenger revenue, and it has seized a major share of the urban car service market. But the widespread belief that it is a highly innovative and successful company has no basis in economic reality.

An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business."

and onward–

“In reality, Uber’s platform does not include any technological breakthroughs, and Uber has done nothing to “disrupt” the economics of providing urban car services. What Uber has disrupted is the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency. Its multibillion dollar subsidies completely distorted marketplace price and service signals, leading to a massive misallocation of resources. Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else.”

this article is lengthy but greatly rewards close reading. close repeated reading.

here’s the link–


rereading the article it seems even more devastating than it did the first time. another quote–

"Other Silicon Valley investors amassed staggering riches while inflicting enormous damage on the rest of society (e.g., creating an uncontrollable surveillance apparatus, poisoning public discourse, exploiting massive anticompetitive power), but in these cases one can at least point to some offsetting benefits (search engines, lower retail prices, useful social media tools). One can also argue that, in a different political environment, most of these gains could have been achieved while avoiding most of the costs.

Uber, meanwhile, is unique because it is entirely exploitive. It has not created any sustainable offsetting benefits. The private wealth it has created comes entirely at the expense of the rest of society. In this, it at least helps destroy the last illusions that twenty-first-century capitalism is being operated to serve the greater good. Uber always depended on pursuing artificial market power and destroying any constraints on the exercise of that power. It was always explicitly transferring wealth from labor to capital, and from democratically accountable public control to totally unaccountable private control."


There’s something about vicious takedowns in measured, almost scholarly language that really appeals to me.

What Uber has disrupted is the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency.


(Too bad that idea was pretty wobbly long before Uber came around)


that article is filled with vicious burns just like that.


Uber doesn’t disrupt any economic models of taxi service (or any of the other things they have their fingers in) but they do solve a fundamental consumer problem. I remember pre-Uber days trying to get a taxi in a neighborhood not near mine, asking people on the street what taxi company was dominant in that neighborhood because my usual service didn’t have any cars in the area. After several calls to multiple companies, I finally got a car but had to wait 15 minutes for it to arrive. So yeah, a service like Uber is incredibly helpful, and theoretically eliminates redundant dispatch systems maintained by different cab companies. Same thing with Uber Eats; from a consumer standpoint maybe there’s no difference, but now restaurants don’t have to maintain their own delivery service.

Don’t get me wrong; I hate Uber and the way the way the company behaves. But they have provided an innovative service that has changed the taxi industry for the better, at least from a consumer standpoint. Of course, according to Uber, consumers aren’t their customers…

unfortunately, the only way they can fund that “innovative service” is by enormous subsidies from investors, transferring vehicle and insurance expenses onto the drivers, and reducing wages to near minimum wage levels. and, despite all of the subsidies uber has either been given or extracted, it loses money on virtually every ride. there’s an old joke that seems fitting here about two shirtmakers which ends with the punchline–“sure, i’m losing 25 cents on every shirt but i’ll make it up in volume.” here’s a relevant passage from the article–

“Today’s Uber is clearly more popular than traditional taxi service, but this observation is economically meaningless. The only valid comparisons are with a hypothetical, subsidy-free Uber that could produce today’s prices and service levels along with sustainable profits. If Uber could somehow convert the $14-plus billion that it lost in the last four years to sustainable, growing profits, it would be one the biggest corporate turnarounds in history. Conversely, if Uber fails to find the billions of dollars in operating efficiencies that it couldn’t find over the past nine years, it will have a devastating impact on the urban car service industry, and the hundreds of cities that depend on taxis. As it struggles to reduce losses, it will be free to cut service and gouge the customers and drivers who are no longer protected by either regulations or meaningful competition.”

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I don’t disagree that Uber’s own business model is built on a foundation of lies, false projections, externalized costs and usurious fees. The folks at Uber got greedy; instead of just trying to be a dispatch replacement service, they sold a vision of autonomous vehicles and “disrupting” every possible related industry to investors, and put themselves in a position of having to spend far more than they made on their legitimate business to fund that vision. It’s unsustainable. But the fundamental service solves a legitimate problem, and if Uber and Lyft collapse, I hope that we’ll at least keep some semblance of their app-based dispatch service because it’s a helluvalot better than street-hailing a cab or calling a dozen dispatch companies.


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