Uber’s Still Not Profitable
doctorow.medium.com
doctorow.medium.com
How is that remotely possibly correct? As far as I know, Uber has had a single, highly publicized, fatal accident in its self-driving program and surely that car alone had driven more than a quarter of a mile on the day of the accident…
Mobility startups in particular keep failing, and new ones keep getting funded.
My daft question is why? Why do they keep betting on the same losing horse.
I often joke that my humble little website is massively more profitable than a few of those companies combined.
I think the writing may be on the wall for Uber.
It pays off better when loans are at 0.25% rather than at 3%.
This crap wouldn't fly in the 1980s economy of 15%+ interest rates. No one would fund your company when you can just make 15% on US Treasuries instead.
This is the effects of quantitative easing on our economy. We wanted to hypercharge our economy and encourage investments after the 2008 crash, but now things have become too bubbly. A lot of these companies that exist today are functionally useless / wastes of money / wastes of time for everyone involved.
I feel like the rising interest-rates will fix the problem. The price of "future money" is going up. Just a "little bit of profits" (or even operating for a loss) will be much harder moving forward.
A carbon tax would help with that one in particular but it’s seemed for a while that we just need more pure taxation on passive returns & wealth to discourage accumulation on that scale. The economy just doesn’t work efficiently with a handful of people making so many decisions, especially when they mostly weren’t capable of making that much money with their own skills.
The opposite. QE is an inflationary policy, much like lowering interest rates. As the central bank buys up debts in the open market, QE makes loans easier, meaning more companies get cheaper debt to finance their operations.
That is: QE inflates the bubble further. Arguably needed in the 2010-era to help us recover from the 2008 recession, we are beginning to see the ill-effects of this policy today. Which is fine, there's a time and place for all of these policies, and the rising interest rates will counteract the ill effects of that.
Its a question of "how hard to push the deflation buttons". Pushing too hard risks a difficult recession, pushing too lightly means inflation will get out of whack.
This is what I was referring to: my understanding was that QE was used to take most of the sting out of the 2008 collapse, but a key driver of the mortgage fraud was all of the people who lost money on unwise dotcom decisions seeking more “safe” higher-yield investments than actually existed.
2) no one wants income, because it's taxed at 35%. Everyone wants those massive capital gains taxed at 15%.
3) 14 years of ZIRP and QE meant there was basically unlimited money for anyone willing to gamble and take these positions.
The taxi business is profitable business and Uber launched app-based taxis.
So I expect Uber is not profitable because of conscious choices, not because the business has "no road to profitability".
So the fundamentals still aren’t there.
Edit: for all those who rely on Uber’s go modules, are any of you worried about long term support?
This article (from a month ago) can be seen without medium's tracking and ads on Doctorow's personal blag here: https://pluralistic.net/2022/08/05/a-lousy-taxi#a-giant-aste...
On a sub-topic: I wonder how many people commenting on California's Proposition 22 actually live in California. If they did, they would never question the idea that the idiot herd here was influenced by the advertising.
I think the source post for this is at https://pluralistic.net/2022/08/05/a-lousy-taxi#a-giant-aste...
I knew I read this before after reaching the 3rd or 4th paragraph, but I couldn't find the original link.
https://news.ycombinator.com/item?id=32374334
That other post has a Hacker News post on it already, with a big discussion thread.
While yes, their are rare expeditions (Southwest), airlines / buses / etc has never been a profitable sector.
https://www.forbes.com/sites/gabeklein/2019/04/23/why-making...
How is Cruise doing, by the way?
Both the left and the right tend to claim that election results are rigged, but of course only when they don't like it.
Prop 22 was directly voted by the people of California with a relatively huge margin for a Proposition - 58%. Yes Uber etc spend a lot of money promoting it but many other Props with big money support have failed. Treating voters like sheep that vote on whatever is being advertised is naive and dangerous.
The right will do the same thing, usually not claiming money influence but rather using the fact that big media is mostly left leaning.
Both sides have to trust the voters may know what they want and perhaps it wasn't the money or the articles that drove the election results, but policies.
Lol yeah, "perhaps" it wasn't. "Perhaps" proponents just spent that $200 million on the campaign for no reason.
If this wasn’t true then why do modern presidential races spend hundreds of millions on advertising?
I see considerable difference between "They lied to voters to get what they wanted" and "the counts are bogus because I don't like them" which still in 2022 appears to be a popular Republican position.
Not least practically the solutions are very different. Notice how the solution in the latter case is first pointless "audits", which maybe tells us that too many Republicans lack intro-to-arithmetic level understanding of how numbers work. Then though, attempts to stop people voting or to simply override the outcomes, with the effect that you get to "win" all subsequent elections regardless, thus quietly abolishing democracy...
Meanwhile a consequence of the former is that voters eventually realise they were lied to, but don't often get a do-over. People who've secured the vote they wanted will insist it's final and mustn't ever be reconsidered, I'd argue that's because they know they lied and the voters will eventually realise too so they don't want democracy any more.
By the time Brexit was "delivered" many of those who'd voted for it understood they'd been lied to, and the numbers keep going up, but you won't find many politicians with any interest in revisiting, not least because many of them got very wealthy betting against their own country's economy knowing it would be destroyed.
Turns out that you can get turkeys to vote for Christmas (hmm, is that a saying in the US, or do you say "Thanksgiving" here?), but, many of the turkeys are not so happy about that once they realise their fate.
> Both sides have to trust the voters may know what they want and perhaps it wasn't the money or the articles that drove the election results, but policies.
I don't agree that we need to just trust. We should work hard to ensure voters are better informed where possible, and - which is important here - we should use direct democracy (ie voting on issues like this proposition) only sparingly if at all. The reason we have elected representatives is so that they can dedicate their working lives to actually caring about these decisions. Are some of them corrupt? Incompetent? Lunatics? Sure, but replacing those representatives based on their character is an easier vote than having all these propositions.
I remember lots of friends were very happy when the Republic of Ireland got rid of its constitutional prohibition on abortion which they did via direct democracy. But I saw this as cowardly. The politicians didn't want to face the Catholic Church and a minority of potentially violent anti-abortion campaigners, so they said "Give it to the people".
Of course, any company that makes any profit could instead, in theory, give that money to its employees/contractors. But then no company would ever be profitable. In addition, the blog says that the main reason for profitability is higher consumer prices, but then calls the profits a transfer from labor.
The post itself says Uber investors have spent 32B and hasn't seen any returns. So yes, profits have to come from consumers spending more money than labor takes in. Revenue minus expenses. It's math.
Don't get me wrong, Uber is very very far from a perfect company. But taking a communist point of view on everything a company does, just to stir anger and resentment, is not helpful.
Taxi companies, for all of their faults, can order fleet vehicles that minimize maintenance costs. Its a lot easier to maintain 100x of the same car, with the same parts, with the same maintenance crews/training, rather than 100x individuals all spending full rate on their own car maintenance fees.
Whatever vehicle is most efficient (ie: Prius for the last decade), can serve as the low-maintenance backbone of your car network.
As a person who delivered pizza through high school, and college, it's just not that bad. And yes, driving 8 hours a night, stop and go, is bad for a car ... regardless if it is pizzas or people being delivered. (Pizza delivery is worse, I'd often deliver 8 pizzas an hour average on Friday nights, try that with people!)
However, I assure you I did not need to spend $500/week on repairs, 20 years ago. That metric has certainly not changed now. An example, by that metric, there are many brand new cars for under $15kUSD (pandemic issues are not part of this argument).
At $500/week income, and by your logic therefore $500 per week in "car repairs", one could buy a new car every 30 weeks, or about twice per year. And as a person who delivered pizza nightly, 8 hours, 5 days per week, you wouldn't even new tires in that 6 months, or brake pads, or ... well.. anything.
Personally, I used to buy used, but where high-cost items are in good shape. EG, transmission, etc, etc. I bought 2 cars in the 6 years I delivered pizza. Each 6+ years old, each only requiring tires, brake pads+rotors from time to time.
When it came time for a big repair? That's when I bolted to the second car.
My point in all of this, is that yes -- you pay for repairs. But the numbers I hear being thrown around, are just extremely excessive.
What he's saying is that this isn't what they did - their profitability is a balance sheet artefact caused by Uber selling parts of itself off (and incidentally getting over-inflated shares as payment). The main problem with this is that the bits of a company they sell off can only be sold off once.
The fundamentals of the business remain, and despite improvements in revenue vs expenses the reported profitability (using dubious accounting) is no more than a one-off event which they can only repeat by selling more of the family silver and not by running their actual business.