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Comment by noloblo | Hacker News Reader

> Just about all of silicon valley seems to have run the longest and broadest grift we've seen.

What do you mean by this

Silicon Valley creates companies with unsustainable business models that have to rely on tax/labor/regulatory loopholes. They pretend that profitability is due to actual technological innovation while negatively affecting actually functioning companies who don't have the same access to capital (bcs real companies can't pretend like they're capable of infinite growth). What most Silicon Valley companies wind up being are financial instruments that function exclusively as exit strategies. The Silicon Valley business is to essentially create innovation narratives they can sell without facing the consequences of poor business practices.

I always think about uber. The moment that they have to start treating drivers like employee's they can't make money because self driving cars are still a dream and the taxi business is cut throat and always has been.

> moment that they have to start treating drivers like employee's they can't make money

Revel, in New York, has employees and does fine.

Define "does fine". Spending and losing VC money doesn't count.

> Define "does fine". Spending and losing VC money doesn't count

Then Revel does fine.

I'm guessing by the rhetorical nature of the response, the details of "fine" aren't clear.

> the details of "fine" aren't clear

They’re not, particularly since “spending and losing VC money” is often tossed around Uber, which doesn’t make sense, since it’s no longer VC backed.

I’m interpreting your sentiment as having a cash-flow positive operating model. Ridesharing absolutely works on a fundamental level with enough gross profit to fairly compensate drivers. (It doesn’t if drivers can log on and off at will, nor in low-population density or poorer areas.)

I'm sure we'll see plenty of "gross profit" in their non-GAAP financial statements. I guess it doesn't take much to have people defend companies they know so little about in industries they have no experience in. Marketing really works I guess. Btw the Revel NY ridesharing isn't going so well:

https://www.wsj.com/articles/new-york-city-commission-thwart...

> sure we'll see plenty of "gross profit" in their non-GAAP financial statements

You claimed the “moment that [ridesharing companies] have to start treating drivers like employee's they can't make money.” I showed a counterfactual. You’re doubling down with hunches and suppositions.

> Revel NY ridesharing isn't going so well

You’re citing an article from 2021 on the TLC blocking Revel’s application for more vehicles [1]. (It was since approved.) How is the government telling a company to stop growing an indictment of their business model?

[1] https://www.wsj.com/articles/new-york-city-commission-thwart...

Many transit solutions are successful in NYC but not elsewhere.

> the taxi business is cut throat and always has been

For drivers, yes. But in many cities the taxi system was engineered so that the owners of "positions" got lavish profit.

"bcs real companies can't pretend like they're capable of infinite growth"

WeWork is a real company and managed it for a while

Wouldnt know what the OP refers to but silicon valley has been skirting regulations and running as close to a ponzi scheme as humanly possible, the likes of uber with blitzscaling, esentially growing their userbase with venture capital only to increase the amount of venture capital they can get to 'eventually' make a profit. Or SVB wanting to not be regulated because they hold less than 250B only to fail with terrible consequences. Then theres the numerous crypto startups that promise return on stake funded by new depositors to pay the old depositors. Money was cheap but in an economic downturn any weakness will result in investors leaving, cash drying up. So whoever cannot show profits will quickly wither and cause chain reactions in similar weak companies. I'm sure you can find an amazing list on hindenburg and you'll see most of them are tech companies because thats where the biggest venture capital pie was between 2008 and now.

The “innovations” of many (but not all) post-2008 unicorns are more about creating a legal grey area to bypass regulation than they are actual technological advances. Uber and Airbnb are prime examples. If Uber was forced to used licensed cab drivers or Airbnb forced to use licensed hotels, you would see the breadth of what these companies actually bring to the table, which isn’t nearly as much as their valuations would indicate. That’s before we get into the adverse externalities these services can create (looking directly at Airbnb here)

Yes, if Uber was forced to use the government cab cartel, then it wouldn't be better than the taxis. The entire point is they made taxis that actually work by getting around the taxi cartel.

Outside the US, well, Uber is not directly emplying their drivers. If Uber had all drivers on their payroll, taxi cartel or not, Ubers story, and financials, would look a lot different, wouldn't they?

People still choose to be Uber drivers, despite jobs that pay minimum wage existing. So, I'd bet the story would be way more complicated than your picture.

The main thing they get from offshoring the driving is scalable renting of capital. But well, I have no idea if one could not just rent it without the labor.

Does Uber use government maintained streets as part of its business?

But that's only half the story.

The other half is that they used nearly free money provided by the US central bank, routed through VC firms, and engaged in anti-competitive predatory pricing.

The pricing issue is stark and impossible to miss. I produce events for a living and I'm in a different city every week. The cost of an uber ride now is invariably 2-3x higher than it was a few years ago at minimum sometimes 5-10x higher.

I remember tooling around Chicago and getting fares that were like $2.17 and $3.22 a couple years ago. Any fares within downtown Brooklyn were $8, period, often discounted via a promo to $4-5. Now they're routinely $25, maybe $15-18 on a slow day.

That's where all the VC money went, and it simply wasn't possible to compete with that unless you had access to all that free money too, which local business didn't.

Did they make it work though? Function yes, profittably, not yet.

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