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Comment by potamic | Hacker News Reader

> Son’s strategy depended on writing such large checks—to the likes of WeWork, Uber Technologies, and DoorDash—that his portfolio companies would be able to operate at a loss for years, theoretically giving them time to establish market dominance and long-term profits.

This right here is the root of the problem. It is so blatantly anti-competitive and cause extensive damage to society. It hurts small businesses, discourages innovation and quality, monopolizes the industry, increases consumer costs in the long runs, it entices investors to eschew fundamentals and gamble on hype. It's just no way to run a stable economy. We as a society need to find a stop to this or it can be disastrous in the long run.

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I sort of agree? If Son was succeeding with this strategy I would totally agree that it's a huge problem.

But he utterly failed. All he did was redistribute investor money into consumer pockets(and weirdly distort some markets in ways that are difficult to understand).

It seems like Softbank is a story of would-be monopolists losing their shirts and consumers(and even employees in those sectors) benefitting from the competition.

It’s a huge problem in the sense that these companies destroy a lot of otherwise viable businesses.

It shouldn't matter if they were successful or not, the method is, as parent wrote, sustainable and has no place in a supposedly stable economy.

Just like a robbery is illegal no matter if it was successful or not.

Plenty of other companies employ the same tactic but within one company and calling products "loss-leaders". Microsoft can run GitHub without making any profits with GitHub itself, as they can spend money earned elsewhere on running GitHub as a "loss-leader", just in order to push out any competitor that doesn't have a huge corporate behind them.

But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in the door, for example.

The argument is that you should be. There's no free lunch; somebody is paying for it, and for every time that you notice that you're getting a deal there will be another time where you're getting screwed, whether or not you happen to realize it. And in the meantime, allowing large companies to throw their weight around like this reduces competition, which harms consumers in the long run even if you benefit in the short term.

Not saying I disagree but in my country, the minute Uber Eats started charging for delivery and stopped giving out subsidized free food was the minute a bunch of competitors popped up

So yeah, for a while it was only uber eats but they didn't maintain that lead without those subsidies that were (apparently) a net positive for consumers

> somebody is paying for it

Ok, and what if it was the investors who were paying for it?

VC funded startups have been a very successful method of transferring wealth from rich investors to consumers.

Different products. GitHub, more or less, has zero marginal cost for an additional customer. So they can afford to give away their product solely to starve the market for competitors.

Supermarkets can't do that because they have a significant marginal cost for each good sold/given away. They can't afford to give away milk to 10 million people to get 500k of them to pay for something else. So the market distortion effects are much more limited in the case of physical goods.

Loss leaders are fine, but it should be illegal to run at a loss in order to drive out competition. (And, I believe, it already is.)

Presumably determining if a loss leader exists to destroy competitors is tricky though?

Like, MS aren’t going to come out and say “we want to bury gitlab”, even if that was the intended goal. there’s always going to be some vague brand building excuse to hide behind.

(I don’t think this is the case for GitHub, but to illustrate the point)

It is somewhat tricky, but sometimes it can be (and has been) proven; people do say all kinds of things while doing illegal stuff, and sometimes even write it down or send it as an email.

This is a good point — the LIBOR scandal springs to mind when thinking of the inexplicably brazen things written down whilst committing white collar crime!

This method has 2 parts: lose money while creating a monopoly, then jack prices once consumers have no choice.

However, none of the Uber style businesses have an actual moat, so they can never implement part 2. This whole set of investments is one big subsidy to consumers.

The fact that businesses get destroyed by a cheaper or free alternative is not a bad thing unless that consolidation leads to higher prices in the long run.

Github is a great example in saas area. Utterly trivial for most customers to switch away or self host. They have no moat so they can't really jack prices.

Now there are political issues with... essentially private companies creating public goods(see google search, social media, github to some extent, youtube/Twitch). However these are governance issues, rather than economic ones.

> However, none of the Uber style businesses have an actual moat, so they can never implement part 2. This whole set of investments is one big subsidy to consumers.

The big bet on Uber was against the ability of the governments to fight back against predatory bullshit - and for a while, it did seem like the big coffers of Uber cash would win over the established system of taxi regulations and employment laws. And at that point, they'd have the moat to crush the competition.

All of the Uber style businesses are also based around convenience, and as a consumer my elasticity for convenience is not very elastic(I don't know if this is the same for the general population). Pre-Uber, I can almost count on one hand the number of times I took a taxi somewhere but Uber made it cheap and fairly frictionless, so why not! Now it is still fairly frictionless but more expensive, and is just not worth it as much.

(Disclosure, I worked at GitHub at one point)

> Github is a great example in saas area. Utterly trivial for most customers to switch away or self host. They have no moat so they can't really jack prices.

I'm not sure I agree with this. It may be true for single developer code hosting, but GitHub as a business is much more than just that.

GitHub makes money off three things, only one of which is the "core" code hosting business and two of which have solid moats: - GitHub Enterprise {Cloud, Server} - Actions (Azure compute minutes) - Advanced Security (code scanning, secret scanning, etc.)

For customers operating in this environment, it's _extremely difficult_ to move because the latter features are built in to their business process (e.g. a compliance requirement that there are no known vulnerabilities dictates the use of GHAS, and they've already gotten signed off so switching to a different provider requires going through a more stringent audit in the future). GitHub doesn't have to raise prices, they just slowly add new functionality that boosts the usage of Actions, GHAS, etc. which both provide actual benefit to those customer segments and increase revenue (and eventually get new, larger customers on board).

That large scale usage also offsets the cost for their free tiers, which in turn keeps the single developers hosting their code on GitHub. Even though it's fairly easy for them to move their repos elsewhere, the halo of other features plus the community (which is really the asset) keeps developers on the platform.

> the method is, as parent wrote, sustainable and has no place in a supposedly stable economy.

But isn't the parent's point that if SoftBank is losing money, that it'll eventually correct itself?

You need to explain what exactly needs to be made illegal, cause it's just regular VC to me. Many VC businesses lose money for a long time, including the likes of FB or Amazon, the strategy being illegal doesn't sound right to me.

It is only a relatively small problem, because the guy at the helm appears to be not sufficiently successful with his approach. That said, he did have some notable wins ( Alibaba comes to mind ), so whether we discount is as luck or something else, the approach mirrors venture's unicorn search ( 19 will be busts, but one will be a massive payoff ).

Separately, just because Son is losing a lot does not mean that a better equipped investor won't try to do the same, but better. At that point, this strategy would absolutely be an impediment to regular consumer.

> But he utterly failed. All he did was redistribute investor money into consumer pockets(and weirdly distort some markets in ways that are difficult to understand).

One might argue that the effects of "gig economy" and similar "modern tech" companies on local economies are damaging as well, beyond "weird distortions":

- residents suffering from noise and rising rents thanks to AirBnB and copycats

- taxis going out of business because they can't compete with Uber leading to people depending on regulated, discrimination-prevented taxis having issues, and to people in "high demand" situations like airports or event venues being squeezed for their money

- restaurants, many of which were already at the edge of financial survivability prior to COVID, facing extortion by delivery apps - either use them and depend on them, or having the delivery apps simply subsidize your competition until you go broke

- employees of all these companies who end up with down-pressure on their wages, and city governments with funding issues because employment tax income collapses as well, and as a result of that everyone else because governmental services degrade

Someone will always pay for the supposed "inefficiencies" that cut-throat capitalism "identifies" - and in almost all cases it is those at the lowest rungs of society that bear the worst load.

I would not minimize the amount of damage done to transportation, hospitality and dining, considering the importance of those industries in a lot of cities.

Softbank radically destabilized several economic sectors in an attempt to monopolize them. That kind of thing used to be a crime, and it should be again.

As a consumer, Uber was superior to taxis in a number of ways: clearer pricing, competitive pricing, ride sharing, transparent routing, digital history and receipts, integrating with other apps, etc. What damage do you think was done to transportation?

There's research out there showing Uber has increased congestion on public roads, and I think also driven up carbon footprint per passenger. In part this is because it's cheaper than it should be. Incentivising less people per vehicle (taxis versus e.g. busses) is bad for society at large.

Is there a research on how many DUI deaths and accidents Uber has prevented? How about people who didn’t buy cars because Ubering is much easier?

6% or ~500 lives per year according to this article (though it notes an increase in vehicle related deaths, so some of that may be cancelled by the additional road traffic) - https://qz.com/2038153/drunk-driving-deaths-dropped-as-more-...

Not a bad result, but probably not worth the problems that their current business model entails. There's clearly opportunities for better transportation options, they just need to make economic sense.

There's a lot of research and much of it is conflicting, here's two examples with vastly different conclusions

https://jamanetwork.com/journals/jamasurgery/fullarticle/278...

https://www.nber.org/papers/w29071

Both researches show benefits but the nber one somehow twists it into a different narrative. I understand why hackernews users hate uber, but shouldn’t professional economists try to be unbiased?

The point of the nber study is that there's a ton of varying answers out there. If it's biased towards anything it's "good science."

Yeah, the app was nice, no argument there. The problem is two-fold - one, it harmed economic actors who were not using a PE subsidized model. That means actual businesses were lost in exchange for one that basically cannot be profitable without a monopoly on pricing.

Second, their below-cost pricing also enticed municipalities to replace public transportation services with ride shares paid for by the muni. Now that the rates are jacked up, those calculations make no sense (which of course, they never did without subsidy). If your city already sold the busses and laid off transit employees, you are SOL. Not a problem in NY or SF, but definitely an issue in towns and small cities.

A free bonus one would be the audacity that Uber and Lyft demonstrated in forcing through a California proposition to create a special labor classification in order to keep enabling their less-than-profitable businesses.

> it harmed economic actors who were not using a PE subsidized model

The only impact on the "economic actors" I noticed was that traditional cabs are now less likely to rip me off knowing I can always call an Uber

> Second, their below-cost pricing also enticed municipalities to replace public transportation services with ride shares paid for by the muni

The point of public transportation is to help people, not the other way around. Public transportation isn't a good in its own right. Let's be clear that public transportation failed the least well off. Trains and buses run less frequently in poorer neighborhoods and on off peak hours. Uber was a god-send for these people. If a private solution can do a better job than public transportation, be more accountable, be sustainable in terms of profit without the need for public funding, then I say private solution should win

> The only impact on the I noticed

That's probably more about what you pay attention to than the actual impacts.

> If a private solution can do a better job than public transportation

I just explained why it didn't - the price point was completely based on private subsidy. I live in an urban area of a major city, and there are times and areas where it takes 30+ minutes to get a ride, including a few months ago when I was maybe 10 minutes from the international airport at a reasonable hour (~10PM). Busses and trains have schedules which are fairly reliable. They run late sometimes, but there is a pretty reasonable guarantee that they will show up. They won't cancel after 10 minutes, the muni is ADA complaint, and will only cost you $2.50 to get within a few blocks of your destination. Yes, buses have a coverage problem in the suburbs, but my suburban relatives (who love ridesharing) have also been complaining about the price and availability the last 12 months, so it doesn't seem like Uber/Lyft are able to fill the last-mile niche reliably at this point anyways.

Public transportation is also heavily based on subsidies. The ticket price only covers a fraction of the cost.

Public transportation is a service, not a business meant to run a profit. I don’t mind subsidies when the public pays for its own stuff.

> What damage do you think was done to transportation?

Uber/Lyft drivers destroyed traffic etiquette. I don't even drive and I saw it. For a few years there anytime you saw a driver doing something weird and/or dangerous it was Uber or Lyft.

> As a consumer, Uber was superior to taxis in a number of ways

I'd say that likely depends where you are.

> But he utterly failed.

Maybe. If so, we're talking about a single investor out of at least hundreds that have similar, if not so insane, models. They work out fine, many of those posting here work for a company funded by such back in those days.

In the late 90's/early 00's it was interesting to see which sites took off and which did not. I owned a hosting company and was fairly active in the community. It was an open secret that the giant sites of today were simply losing money on a monthly basis due to infrastructure costs with rich investors picking up the tab.

Other competing bootstrapped companies with regular Joe founders simply could not keep up when their competitors could simply burn $100k/mo in bandwidth and server bills while instead they needed to be responsible with sustainable growth. I had more than a handful of founders/company owners who had previously perfectly sustainable models built up over half a decade only to be crushed by loss-making VC money.

I often wonder how much different the Internet would look like if a startup remained a startup, and not some high finance big business industry that took over the title.

That's not all. Softbank's oversized investments into hype machine companies drove investors away from funding legitimate companies in those spaces. The approach of throwing huge sums of money at dubious companies is a huge tax on innovation.

I believe Son has succeeded with this strategy if the bar for success is him getting rich and getting others rich. In the early 2000s he came from nothing, made a fortune, lost it all, and then remade it again. But at the end of the day, his strategy essentially hypes a company which then IPOs and he offloads his risk to the general public. He might be a good example of survivorship bias, how many have tried this very same thing only to fail miserably?

> and weirdly distort some markets in ways that are difficult to understand

The hypocrisy of social engineers presently touting outcome-based economic management policy generally (doesn't apply here apparently, or maybe that's HN selection bias), and the general lack of antitrust enforcement post Nixon don't have something to do with it?

Well articulated.

As consumers we benefit from the innovation and probably lower prices for a while, but I’m not sure the externalities are worth it.

Maybe an Uber rolls into town with their funny money. 5 years later, we’ve lost lots of small taxi companies, everybody is working in the gig economy, all the profits are booked in a tax havens and the prices are going up even higher than they were.

I started using Uber in April 2014. As a blind person I have taken 2047 trips for a total of 9379 miles. Contrary to your hypothetical, Denver still has its original terrible taxi companies, and Uber is still a good deal, 8 years later. Heck, the Taxi companies are actually now better because they provide apps, something that they were super reluctant to do before Uber because it removed the excuse of the broken credit card reader. Anyone remember that one? I'm so tired of people pointing at theoretical harms like this rather than evaluating the actual situation. If you had told me 10 years ago that I could press a button on my phone and be guaranteed to be picked up, rather than calling some creepy cab company at 2 AM and being told that someone would be there in 30 minutes and having to wait all night, I would still find that hard to believe. And yet, here we are.

Another thing that really grinds my gears is seeing people cite how there are more emissions now because more people are using Uber. Buddy, that's me you're talking about. My Uber is making those additional emissions. Because in the old days I was trapped at home without easy access to transportation and now I can travel anywhere in the city at any time just like you can, which means I went from producing 0 emissions to actually, you know, living my life.

I've heard a saying (living in Tokyo and close to the Startup scene) that if you have a startup and Softbank comes in calling, you better take their investments or they'll bankroll your competition enough to put you out of business.

This seems to be a case of the market working as intended.

The are making risky plays to establish monopoly but the market actually doesn't reward that unless the government helps to solidify those monopolies.

Thus they use billions with this strategy.

Its questionable if the consumers are hurt, as basically SoftBank is subsidizing the consumers.

Now one can argue that in this process society is hurt in some more subtle ways. But that's hard to quantity. And we also get decent netflix shows out of all that wasted investment.

> Its questionable if the consumers are hurt, as basically SoftBank is subsidizing the consumers.

This subsidization is not free though. They are distorting and ruining markets in the process. Driving actually profitable competitors out of business, then collapsing themselves.

> are distorting and ruining markets in the process

Which markets did they ruin?

Ride sharing and food delivery are bustling at the local level. The one who got screwed tried to match Son’s scale.

Ride sharing has largely been unprofitable over the last few years. The food delivery apps take a gigantic (Apple App Store) cut from local restaurants.

Housing. Airbnb has been disastrous for housing costs in places

Not sure who markets are ruined for the long term. If the subsidizing stops, the market will reestablish itself. There is nothing destroyed inherently here.

Tell that to all the normal people that went out of business and lost life savings because they couldn't compete with loss-leader.

Yeah and many normal people beyond drivers also made money and consumers gained, while some existing producers and Uber investors lost.

The market always producers winners and losers, there is nothing that can really be done.

You can't really make it illegal to invest in growing companies that lose money.

What's the difference between this and Google offering YouTube or Analytics for free (and at a loss) for years? What's the difference to SaaS companies never turning a profit and operating at a loss for their whole life?

You could indeed make the same argument about those products, it seems to me? We might've had much better alternatives to those products if they hadn't.

German law forbade the "sale" or combined sale of any good at zero cost, even carrier bags until the turn of this century. Coincidentally or not, they have the Mittelstand high technology SME sector and, until the beginning of this century, a high wage low inequality economy.

But also have regulation that identifies businesses which have "arguably" predatory business models. Just because you don't charge money for something, doesn't mean you are offering something for free whilst at the same time operating on a investment type ponzi/pyramid-like scheme that relies on user numbers and ad-eyeballs increasing.

As much as I'm an absolute free-market capitalist advocate, we need to all get it into our heads that it only works in an absolutely free market that isn't propped up in some areas by regulation. As soon as we start fiddling, we have to make sure we fiddle in the right spots, otherwise we're just solidifying and promoting an unhealthy/unfair/predatory market.

Predatory pricing is a very real component of monopolization, and can thus result in antitrust inquiries.

Tech companies DO get involved in these lawsuits from time to time.

There is no difference. That should also be stopped. Though good luck with the millions Google spends on lobbyists according to Opensecrets.

Analytics is a special case because the metrics they got from it can be fed into their advertising system to better deliver ads. They may have run it "at a loss" but they did it for data that they certainly made a profit off of.

Google's a publicly traded company which is profitable in other areas. Search can carry the load financially while they achieve market dominance in other areas.

This model is based on removing public market forces on a company while the company bleeds money in order to achieve dominance.

W/R/T other SaaS companies doing the same, SaaS startups exit strategies include acquisition that D2C business don't really have. Who's going to be big enough or see enough value in buying Uber/WeWork/Doordash to augment their current offerings? Amazon can't buy them all at the peak of their valuation.

Agreed. However, IMO SoftBank is just a symptom, when world's banks are (were) so liberal with the money, you get these type of deformations, zombie companies is another one.

This. The disease is gross wealth inequality that leads to a certain sector of society having to figure out where to put all that money while the bottom 99.99% are facing real problems.

It's important to understand that SoftBank is no ordinary bank; while it had been a reasonably successful bank, the distortion truly began with the Saudi government turning up and asking them to invest $200bn for them.

There simply isn't $200bn of real positive capturable return investment opportunities out there available at once. Anything physical would be hopelessly bottlenecked by its own size and would be unable to scale rapidly enough for the investors. So it had to be thrown at all these hugely speculative projects with the goal of capturing entire markets.

The real problem is that, due to a century of fossil fuel dependence, there's a huge amount of wealth concentrated in weird desert monarchies.

SoftBank was never a bank. It was a software company that turned into a cellular provider.

As I understand it, Rockefeller's initial strategy with Standard Oil was highly risky in retrospect, because it would only have paid off if new major fields weren't discovered outside of the Pennsylvania, etc. area before he managed to consolidate.

Of course, oil was eventually discovered in Texas, etc. but luckily for Rockefeller that was only after his bet had paid off.

>This right here is the root of the problem. It is so blatantly anti-competitive and cause extensive damage to society. It hurts small businesses, discourages innovation and quality, monopolizes the industry, increases consumer costs in the long runs, it entices investors to eschew fundamentals and gamble on hype. It's just no way to run a stable economy. We as a society need to find a stop to this or it can be disastrous in the long run.

Surprised this is not more unpopular on HN. The entire YC model of startups is literally this, grow so big so fast you consume the entire market.

> grow so big so fast you consume the entire market

That isn't the unpopular part. The derided part is doing so with poor unit-economics. You still need to make a profit or what is the point?

Another big difference is that is very common to run at a loss early on in the life of startup ... but when examined more closely the marginal costs should still make sense. If you are small enough that R&D overhead, or hiring ahead of revenue (growth investment) is overshadowing the top-line ... well that is the just normal startup finances. But there still needs to be a business model where it will make sense with enough sales, and the cost will have sub-linear growth relative to the revenue.

>Another big difference is that is very common to run at a loss early on in the life of startup

How many Unicorns are actually making a profit? Hell how many Deca or Centi-Unicorns are profitable? There's probably hundreds of billions of value in companies that are not and don't have clear paths to profitability.

So I think we've moved from it being ok to be unprofitable when you start a company to it being ok to be unprofitable for decades...

Isn't this how most fast growing companies work? Or initiatives from large companies?

Your comment makes it sound as if this is just Softbank, but I don't see the difference between this and any other hypergrowth company out there to capture and dominate a market with investor funding, operating on losses for years in order to drive out competition.

What makes Softbank different is its incompetence, not its method. But this is actually doing the market a favor by losing in the end, opening up space for competition again.

But all new business, big or small, have traditionally expected to eat losses till they establish themselves. How is this any different though. Even govt gives taxbreaks to new developers.

The world without Softbank is not infested by monopolies, bot at all. There never were taxi medallions worth hundreds of thousand of dollars, there is no monopolistic ponzi game in real estate, the world is a perfect competition as the economics 101 predicted. If only not for Softbank ruining it for everyone right

> We as a society need to find a stop to this or it can be disastrous in the long run.

We, as a society, just did that: by demonstrating that this business model doesn't work. You're welcome!

No one has demonstrated anything. SoftBanks portfolio has taken a hit, but it is hardly a nail in the coffin. Son's actions have generated enormous wealth gains for the people he backs, but in the end the public eats a majority of the losses. Son has still made billions and billions using this model, so how can you say it does not work? You would have to look at funds that tried this same thing and went bankrupt.

This reminds me of counterfeit capitalism https://mattstoller.substack.com/p/wework-and-counterfeit-ca...

"Engaging in such a strategy used to be illegal . Capitalism works because companies that thrive take a bunch of inputs and create a product that is more valuable than the sum of its parts. That creates additional value, and in such a model companies have to compete by making better goods and services.

What predatory pricing does is to enable competition purely based on access to capital. Someone like Neumann, and Son’s entire model with his Vision Fund, is to take inputs, combine them into products worth less than their cost, and plug up the deficit through the capital markets in hopes of acquiring market power later or of just self-dealing so the losses are placed onto someone else."

Really? As a bottom dweller, rather than a master of the universe, I don't see any great harm.

Take Uber. A great service, cheaper rides, what's not to like. If investors stop subsidizing then and Uber was wiped from the board, who cares? I'll find some other way to get a ride. In fact their impact has only been positive, in shaking up the moribund taxi industry. I certainly don't see how it increases consumer costs in the long term, and quality has clearly benefited. Some of those benefits will stick even if Uber tanks.

As to "entices investors to eschew fundamentals and gamble on hype", frankly who the hell cares? Investors are big boys and girls, they don't need hand holding.

True in the short term, imagine if a company becomes so dominant that little competition exists and little interest exists to create competition ( search engine ? ) that they can set the price they want. Then you are stuck paying whatever they demand obviously within reason . at 100 for a 5 min ride will entice some competition

> imagine if a company becomes so dominant that little competition exists and little interest exists to create competition

This is the core of Softbank / Vision Fund investing thesis. The current events seem to show that this is not so easy to achieve even with tens (hundreds ?) of billions to burn in the process.

If they run out of steam, a lot of companies will have been over-bloated and then run to the ground in the process, but this will not have caused any new monopoly.

It's called dumping. You have artificially low costs temporarily in order to put competitors out of business. Once that's achieved, you then increase prices.

I'm actually not sure how dumping would work when done by Uber, though. Individual taxi drivers will go out of business, but there's little barriers to entry to new taxi drivers starting out again once Uber starts to flex its pricing power. Of course the picture changes if Uber starts to lobby for regulatory protection. You have to look at the micro details of the market to see whether there's a problem there.

Unless it's changed over recent years my understanding is that in many cities there was a high barrier to entry for taxis in the form of licensure. In some cases only a finite amount, causing sky rocketing prices. From what I've read it's similar to how some areas in the US have limited alcohol licenses (usually a per capita system in that case iirc), often they are then auctioned off for higher and higher prices where permissible.

Bigger cities typically regulate taxis and sell licenses to operate to taxi companies, who then employ or contract the drivers.

Uber was always an unlicensed taxi scheme. Their planned business model was to ignore the law to reduce costs, then sell rides below cost until everyone else is out of business.

That law is classic regulatory capture and anti-consumer, though. I have no problem that bad laws which are hostile to people are being broken.

> That law is classic regulatory capture and anti-consumer, though.

Taxis are usually regulated by law to provide mandatory service to an entire area at the same tariff - no discrimination based on the time of the day, the source or destination (e.g. "surge pricing" for events or effectively no service in poor neighborhoods), or if the passengers have any sort of disability.

When the regulated option goes out, a lot of people suddenly live at the whims of capitalist overlords and AI algorithms, but not under the rule of law any more.

When Uber has wiped out half of the taxi industry and has made public transit infrastructure and development non existent, what you are left with is a damaged society.

When WeWork buys hundreds of properties and prevents companies from establishing their offices in the city center, making you even more dependant on cars and leaving a dead city center, what you are left with is a damaged society.

When DoorDash forces thousands to live a precarious life, surviving only by delivering orders 16 hours a day to barely make minimum wage when taking into account gas and depreciation of your car, forcing small restaurants to lower their prices or close (because they cannot ever match the economies of scale of McDonald's), what you are left with is a damaged society.

It is a form of social dumping, of selling at a loss, and only benefits you for a very brief moment, before leaving with with a damaged society. Then, the options are, the company succeeds and inevitably raises their prices threefold to make up all of that lost money, fucking you over, or the company fails, and all your infrastructure is gone.

They don't need hand holding. I don't give a shit about their well being. They need hand cuffing, to protect our society from their destructive practices.

With Uber, there's creation of positive economic surplus by (1) optimizing how well drivers are able to connect with riders based on distance, and (2) allowing drivers to create individual brand value through ratings which incentivizes better service. In a decentralized network of taxis, you get waste because riders can't connect with the closest taxi easily, and worse service because there's no brand equity to protect.

So on this point, I actually put the causal blame onto the homeowner lobby for causing our cities to facilitate cars over public transport. Uber is just downstream from planning decisions made a long time ago.

I have little sympathy for the other marketplace companies like DoorDash, though, because I don't view the end service (delivering unhealthy food) as particularly valuable to anyone except themselves, so all we're left with is rent seeking.

If you don't believe Uber's goal is rent seeking, I have a bridge to sell you.

Your points about how Uber creates brand value and optimization is nice and all, but maybe have a look at the consequences of it not on the economy, but on people: same problem as Doordash, paid like crap, having to work 16 hours a day while paying for gas and your vehicle. I will not praise such a predatory model because I can rate a dude 5 stars for giving me a bottle of water. You know why ? Because if I don't rate him 5 stars, at some point Uber will just decide "fuck off, your average score is below 4.5, you don't deserve to work" and kick them out. In every country they've come, Uber has abused every kind of gray area (or straight up black area and just decided to pay the fines) to destroy any existing or potential competition. Forcing employees to register themselves as individual contractors when they work all the time for Uber, while not getting any of the benefits that Uber should be paying for ? Yeah, that's their standard.

It's not a "homeowner lobby" pushing for cars. It's a first and foremost car lobby (reminder that jaywalking is a crime invented by the car lobbies), as well as a lack of foresight (and corruption) from the competent authorities. I don't know about the case in the US, but no homeowner lobby in Europe will say "oh no, don't build a tramway line" or "oh no, a bus stop". Public transit nearby makes a home's value skyrocket.

Rent seeking is their goal, but that's irrelevant to whether they also create positive surplus value through the mechanisms I outlined.

The economy vs. people distinction is a false dichotomy. Consumers (who are also people) can benefit from more efficient service provision and higher quality service.

> It's not a "homeowner lobby" pushing for cars.

It's the homeowner lobby pushing for sprawl, which indirectly leads to cars because public transport can't be properly provisioned across spawl without huge cost. Once you have sprawl enforced by law, everything else follows as a guaranteed consequence: networks of roads to connect that sprawl, and therefore cars.

>Consumers (who are also people) can benefit from more efficient service provision and higher quality service.

Consumers can also benefit from child slavery to buy their clothes ever cheaper, but we've decided as a society that it was kind of uncool to do it. But if you're willing to sacrifice a bunch of workers to drive for your comfort 16 hours a day, being paid like shit, feel free to. But pretending it creates positive surplus value while ignoring every single negative externality is laughable.

I am not "pretending" that it creates positive surplus value. It does create surplus value through simple mechanisms.

Also, it's unfair to say I am ignoring every single negative externality. All I did was challenge the questionable claim that Uber has much to do with the state of our cities being car-centric and underprovisioned by public transport, because the root cause of that situation is homeowners, not Uber. I didn't give my blessing to all of Uber's practices.

> sacrifice a bunch of workers to drive for your comfort 16 hours a day, being paid like shit

Putting aside the false analogy to child labor, I don't accept the framing that all low wage labor is uncool. It's a type of mindless compassion that can actually lead to anti-utilitarian outcomes in practice. Although I have no positive or negative judgment of Uber in particular regarding this point, because I haven't looked into it for Uber. https://news.ycombinator.com/item?id=32627174

Many cities and their suburbs were car-centric before Uber and many will be car-centric after Uber. Perhaps somewhat fewer will feel the need to own a car (or a second car) but that doesn't really change the basic nature of transportation options. If anything, there's probably been a (little) bit more attention paid to public transit and things like bike lanes in some cities during the period Uber has existed. Many of us use Uber or Lyft once in a blue moon. My life wouldn't change one iota if Uber vanished tomorrow.

Well first of all Uber drivers don't have to work 16 hours of day, that's a straight up lie(in Europe). Can you work 16 hours a day? Sure, you can. But you have to be very clear about the sort of person that works 16 hours a day driving Uber: It's a person that literally cannot get hired to 99.9% of other jobs. Uber didn't cause this, but previously these people would be either on unemployment or doing crime.

You don't seem to understand. There are no "Uber drivers". Except in very select countries (I believe that Uber recently lost a case in Italy ? Can't remember), there are self employed people, whose (only and very demanding) client is Uber. This means that worker protection is out of the window. There are no legal limits to it, if you want to work for three consecutive days, go for it.

And having talked to many Uber/Freenow/etc drivers (because, yes, i also am brought to using it sometimes) in Paris and throughout France, many, many, many of them start their day at 6,7AM and go on until 10PM or later. These guys are not criminals, they were previously contracted taxi drivers, electricians, all kinds of jobs who just fell on a bad thing in life and had to make money another way, now leaving them mostly stuck with this job. The ones making those hours were open about what they make, on average about 2000, 2200€ per month. Which, for 16 hours a day is fucking miserable,and for a city like Paris isn't a whole lot.

But actually, don't take it from me. The median take home in France for an Uber driver is 1617€ per month, with a median work time of 45 hours. Hint: it's barely above minimum wage. And, since Uber doesn't guarantee work and they're paid by the ride, many of them work on the side to guarantee they don't get fucked out of two day's salary when unlucky. https://www.journaldunet.fr/management/guide-du-management/1...

When people say Uber drivers, they don't mean "oh he is employed by Uber as a driver", they just mean "he drives Uber".

Your 2nd paragraph above confirms my comment. Uber isn't the one who forced those shit working conditions on them, except for those who were employed as taxi drivers previously. They fell on a bad time, and Uber allows them to make money in bad conditions. Would you like them to just wait it out at pole emploi instead?

You misunderstand the trap that is poverty. Uber isn't "allowing them to make money in bad conditions". Uber has become the condition. There is no getting out of being a Uber driver when your day is spent driving around. No ability to look for other employment related to what you were doing, no ability to get training for another job. Uber thrives on misery.

So, yes, pôle emploi is a better option for many. Note that driving an Uber doesn't even get you qualified for unemployment later on, should you want to stop.

Uber isn't the condition because it's still better than having no job, which is the alternative that you seem to falsely believe is preferable for these people.

App driving: simultaneously a poorly-paid exploitive arrangement and something in such demand that app companies can arbitrarily harm drivers by kicking them out.

Perhaps it’s worth looking into why so many people are seeking to be drivers on the platforms?

Sure, let's go, I'll start:

Poverty, unemployment, lack of opportunities, industries destroyed, invisibilisation of the working class, not wanting to die out in the streets because your country has potentially no or bad social nets, destruction of said social nets forcing people to take even miserable jobs. We can go on.

Here's a hint for you, since it's your turn: the amount of people doing Uber because they love driving people around a traffic-jammed city in a 300000km piece of shit car is close to zero

I talk to a lot of Uber drivers who seem to enjoy driving for Uber. I can imagine times in my younger life when I'd have enjoyed it as well.

How is any of that Uber’s responsibility or in their capacity to solve? Every single one of those issues is societal, which can only be solved by the people and their government.

"Lads, is it immoral to abuse the misery and despair of people to make money?"

Increasing the demand for labor increases prices for labor sellers. I do not see how it could be construed as worse than not creating that increase in demand.

If workers are choosing DoorDash, it seems like your ire should be directed at all employers other than DoorDash who are offering a worse or no deal to them.

> In a decentralized network of taxis, you get waste because riders can't connect with the closest taxi easily

I don't get this point. What was decentralized about taxis before Uber? Each city had a few competing taxi services, each with a dispatcher who would connect rides to drivers in a centralized manner. I assume they used some information about location when they did this. But even if they didn't, there's nothing decentralized about it. The only centralization Uber did was creating a huge conglomerate that spans numerous cities. But there's little efficiency to be gained by this. Uber is not going to dispatch a driver from a neighboring city to come pick you up.

I should have used the word fragmented. Fragmentation reduces the efficiency gains from physical network effects. If the overall network isn't fragmented, you get smaller average distances between driver and rider.

Another efficiency gain is from replacing a human dispatcher with a ML model.

Isn't this just an argument for a monopoly? Several competing taxi services would be fragmented. One monopoly taxi service would be more efficient. But in that case, I'd argue the municipality should just operate it as part of the public transit system.

It's a monopoly in the narrow vertical, but that power is diluted given the existence of close substitutes (driving yourself, bus, train, and some remaining old-school taxis). No doubt there is still some monopoly power, though.

> I'd argue the municipality should just operate it as part of the public transit system.

I'd probably prefer it if you just regulate their monopoly power. I don't like the idea of each municipality or country having to write their own software for an Uber-like platform. Seems like a lot of duplicated effort. And after the Obamacare website cost blowout, I don't trust government to write software well, it'd end up as money being stolen by people like Accenture.

Do you have any sources you can cite on point one? I can see that there could be a reasonable hypothesis that centralised services will reduce costs for drivers heading to pick up customers, or carbon emissions, both due to shorter journeys.

What I'd be interested in is whether or not that has been studied, how variable the gains are by locale (eg big city, small city, town, etc) and what the consequences are for driver pay and conditions. Likewise, effects on things like price paid per journey, both average and 95th percentile so as to gather peak pricing (which, in the UK at least, cabs don't charge).

It'd also be interesting to understand why this isn't done on a municipal level - eg, a unit of local government could buy one of the many, many off the shelf systems for this and require taxis to use it. Perhaps a few tweaks to make it multi tenant, so as to preserve the existing structures of taxi companies. I suspect this would confer the benefits of more efficient allocation, without the ill effects associated with Uberisation.

Doordash can deliver healthy food, too. It may contribute to bad eating and laziness for some, but it can also help people with limited mobility (or time) get better food than they otherwise could.

> and has made public transit infrastructure and development non existent

Can we stop blaming companies for bad public infrastructure investment?

Like seriously, lots of countries manage to invest in public infrastructure even while uber exists. Did Switzerland stop building trains? Did Paris stop improving the Metro?

Cities like Amsterdam keep improving their bike infrastructure despite uber existing.

Yes! The funniest part of this is that Uber just started showing public transit routes and selling tickets in Berlin, competing with official BVG app (no, thanks, I will continue using BVG).

How does DoorDash force drivers to work for them? It seems like they’re offering a compensation policy and drivers are determining that it’s among their best option.

Drivers have no better option. It's easy to blame them as if they had the myriad employment options software engineers do. They don't, and the opportunity/operational cost of gig-work is not obvious or easy to overlook when you need to put food on the table tonight.

If DoorDash represents the drivers’ best option, it seems to me that we should be at least somewhat supportive of the arrangement they voluntarily enter into.

Taking away the drivers’ best option is, as you observe, not likely to leave them better off.

True, they can choose between working a miserable job that at least allows them to live for a bit longer (which is a low fucking bar), or just die out in the streets. Capitalism is magnanimous.

There is nothing voluntary about not wanting to die. It's working under threat.

Isn't this just how survival works? You hunt / till the land / turn the wheel in the factory / deliver food ordered on the internet / X to eat. It's a lot easier now than before, for sure.

If in 2022, in some of the wealthiest, most advanced countries on the planet, you need to _survive_, there's something pretty fucked up in your society. I'm not saying all out FALGSC no-one needs to work and thrives, but you should be able to live decently without selling your body to corporations treating you as nothing more than expandable meat.

It turns out that it takes raw materials, labor, and energy for you to survive. Someone, possibly you, has to provide those things.

Imagine having a competitor receiving billions to take over the market, no oversight. They can afford to operate at a loss long after all competitors are bankrupt.

Competing against them would be foolish.

To get an idea of long term damage, imagine Uber and Lyft went bankrupt as they're running at a loss, what would you then use for transportation?, or imagine they 5-10 the price, not like you have alternatives. Sure, the taxis were crappy as alternative, but that was mostly due to limited number coming from regulation, they had no need to compete either.

> Competing against them would be foolish.

In default country maybe. Companies like InDriver, Didi, Yandex, Gett, Taxi Maxim clearly show that you can launch a competitor and grow for many years, eventually outcompeting American startups which then abandon the markets they don’t consider of high importance (see Uber-Yandex deal).

Somehow SoftBank managed to invest in companies that work on highly competitive markets and do not have any innovative breakthroughs to defend their position. Creating an app is certainly not a breakthrough nowadays, you need to optimize the core of the business, which remains labor- or resource intensive. Uber tried to invest in self-driving vehicles, but that happened too early. In the end the winners in transportation will be the fleet management branches of automotive giants like VW, when they will start rolling out their solutions on the streets. Similar thing will happen to delivery. Companies like WeWork will grow organically (even if they begin like startups — last investor will loose the money).

> To get an idea of long term damage, imagine Uber and Lyft went bankrupt as they're running at a loss, what would you then use for transportation?

Some other competitor that would gladly replace them. The still existing local car services? Public transportation?

I worked for a European competitor before Uber and there were tons of taxi and car services that were already in operation. It was just not centralized in one app. And for most people that mostly stay in 1 city its totally fine.

Uber really is mostly useful if you travel a whole lot.

Sure the price might be higher because is no longer subsidized by Soft Bank but that's not bad, that's simply paying a fair price.

But many countries have anti-trust regulations that take effect once competition is reduced to a certain level.

If a company like Uber can be divided into multiple Ubers that have to compete with each other, then the over-investment by venture capitalists can still be turned into a societal win.

> Competing against them would be foolish

Lyft does fine, as does Didi. Revel, an upstart in New York, is expanding.

Have you tried Uber lately?

It used to be way cheaper than taxi's, and you'd reliably get one much faster than calling a cab or trying to hail one.

Now they've approached monopoly and need to actually start becoming profitable, it's become as expensive if not more expensive than taxi's. Plus for anything other than very long rides at surge prices you will get repeatedly cancelled, over and over.

I have just gone back to calling or hailing cabs.

It's almost as if taxi rates are prized the way they are for a reason. If you actually want to turn a profit that is.

Taxi rates are almost exclusively set by local regulation

Yes, but by and large that local regulation isn't divorced from actual costs--except perhaps to some degree in the case of fleecing visitors going from the airport to downtown.

That's not really true. Uber/Lyft have almost always been marginally profitable. Meaning they charge more for a ride than they pay the driver to perform it. Their massive losses mostly come from ridiculous overhead plus marketing to grow the business.

On the other hand, the taxi market never really worked because there's no price fluctuation to mediate supply and demand.

On one side you have places like Dallas, Atlanta, Phoenix, and others where taxis basically didn't exist for locals. On the other you had places like NYC where demand often outstripped supply. You wouldn't be able to find a cab or they wouldn't take you where you wanted to go.

You can also see it in medallion prices. They were so profitable in places like NYC people were paying a million plus simply for the opportunity to operate a cab. An obviously broken market.

Part of Uber's (not sure about Lyft) marketing budget goes into subsidizing rides.

For new customers/drivers yes. Not really for existing ones.

That "marketing" budget is not going to billboards, radio spots and banner ads, it's going to voucher codes and driver "performance bonuses". It's just subsidies by another name.

Again, just not true at all. Here is Lyft's financial statement:

https://investor.lyft.com/news-and-events/news/news-details/...

They have 875.5 million revenue against 440.3 million COGS and 126.3 million in Sales and Marketing. Even if every dollar of sales and marketing was a direct subsidy they're still taking in 308.9 million as gross profit. Or, in other words, they're taking 35% or so of fares.

Right, in a free market rides are incredibly cheap and have a 50% chance of getting more expensive at the end when the driver who hasn't had a background check robs you.

Honestly, it was pretty obvious that something along these lines was going to eventually happen. Taxis were generally not a high margin business. Why should Uber have ended up with lower pricing especially with all their overhead?

And the urbanites who baked subsidized Uber into their lifestyles will just have to adjust.

Because they were supposed to "optimise" the routes and enable true ride & cost sharing? It did look like that for a while with their lowest tier.

In Chicago Uber and Lyft are regularly twice as expensive as a taxi, with less money going to the drivers.

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