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Comment by KKKKkkkk1 | Hacker News Reader

It's interesting how often Silicon Valley companies blitzscale an unsustainable business model and then leave public investors holding the bag. In the Uber and Lyft case, the time bomb was the regulatory issue. Which investors should have known about, given that these companies have been breaking the law since day 1. Tesla with their full self driving is also an example of this dump the risks on the bag holders pattern.

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> then leave public investors holding the bag.

Their labor issues are hardly new. If you did not know about them when you invested in Uber, you didn't even read the news articles, yet alone the filings. You were supposed to price that in to your investment if you purchased.

To be fair, the founder didn't want to do IPO and according to rumors that was the reason why he was kicked out. All the toxic workplace stuff was just a narrative tool to make it happen more easily.

Also, it's a public market. No one is "holding the bag". This may be true if Uber crashed before the IPO because private investors can't easily sell, but once on the public and liquid market, it is the public investor's own choice to invest or divest in these companies.

> All the toxic workplace stuff was just a narrative tool

That's a pretty bold claim. What of all the reports of a toxic workplace? I've heard first-hand accounts.

I think he was arguing that the execs at Uber didn't really care about the toxic workplace stuff until Uber's founder said he didn't want to IPO, then they used it as a way to kick him out.

So basically the workplace is toxic, but that's not the real reason why he was kicked out (according to the comment you were replying to).

He effort you have him ousted was led by Bill Gurley of Benchmark and several other VC investors in Uber. Essentially the board asked him to step down and he did.

I mean if you expected a founder to be ousted partly because of not wanting to do an IPO, you'd expect the VCs to be the ones behind it no?

If you look it up, there are plenty of articles of rumors saying that the VCs schemed to kick him out because they wanted to IPO and the founder didn't.

Somebody chose to pay the IPO price. Nobody could've offered to buy at that price, or interested parties could wait for the price to fall (if the party felt the IPO price was unreasonable). Typically, the underwriters will ensure there's interest at a given price range, prior to the listing. The demand was there.

I place some blame on the companies (and it is their responsibility to list potential risks in their public filings), but also it's somewhat the fault of buyers who scooped up millions/billions dollars worth of shares at sky-high valuations.

The risks were/are in the filings.

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a...

Page 34 (by PDF count).

To further clarify, the germane risk (the topic of the post) was mentioned:

> Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.

Uber has never made money. They haven’t even come close to making money. It’s hard for me to have any sympathy for investors who keep funneling money into a company that defines “success” by lowering their quarterly loss to a mere billion.

It’s not as if this information isn’t public. Everyone can see that Uber can’t make money.

Amazon has gone very long stretches without making money, too. They're still a trillion-plus dollar company and nobody seems to care.

I was under the impression that the markets that are mature for Uber were profitable, and they've been plowing capital into growth, hence the losses. Feel free to correct me if you have sources that show otherwise.

You’re being downvoted because this is a commonly quoted and false claim about Amazon; here’s some reading on free cash flow vs. profits that will explain it better than I can:

https://www.vox.com/recode/2019/8/21/20826405/amazons-profit...

Bezos has been clear from the start that he’s optimizing for FCF instead of profitability, you can read his early shareholder letters to see this.

In summary though, Amazon has been “making money” for ages, they just reinvest it in R&D so it doesn’t make it down to the bottom line.

I'm not sure I follow the "holding the bag". The regulatory risks were really obvious when Uber IPO'd last year. If investors lose money because of those risks, it's their fault for not accounting for them.

As other commenters have mentioned, all the company has to do is disclose risks in their public filings and it's up to investors to do their due diligence. It's safe to say that unless they lied to investors, the majority of capital coming in is from people who know what they're doing and are comfortable with the risks.

To be fair, that is the investors' risk and part of their return. Uber very likely didn't lie about their risks in their investment prospects so everyone buying UBER should be aware of the inherent regulatory risk for the business.

I don't agree that investors should be protected from this (or from TSLA assertions), if you are investing you should be more sophisticated than buying stocks blindly, there is a risk to any investment and, obviously, that is why it can be so profitable.

Poeple shouldn't be protecting investors. It's literally public market job and only job to access risk and pick stock. Why are we protecting them from their only job.

Aren’t investors supposed to research what they’re investing in?

The Hertz investors clearly didn't :)

Isn't the other time bomb that they aren't profitable?

Ensuring that the only options aren't time bombs is the responsibility of whoever came up with the business plan.

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