Saturday, May 18, 2019

Some Alternative Thinking On Uber

Although this thread starts off on the wrong foot with "never" (see after the jump) the tweeter raises a couple interesting points.
Thread

Regarding the "underwater investors", as early as June 2015 we were posting:
This and the rabbit post below are an attempt to distract Uber's late investors, the currently-being-raised series F and February's series E Uber investors, from the earlier news out of California.
The series A guys, First Round, Benchmark et al. should still be okay.
(they ponied up $11 million at a $60 million valuation)
And combining the autonomous schtick with concern for tardy investors here's our intro to an April 2017 post "Uber isn't sure if it can 'remain a viable business' without building self-driving cars"
If I were a late round Uber investor this would be a bit concerning.
We've posted on Kalanick and his "existential" quote, which is one thing, but this is a statement to a Federal Court....
A look at Uber's evolving explanations-for-being show that Uber's top management knew from the very beginning that the predatory pricing they were using to drive out competition was not sustainable in a war of attrition vs. the incumbent taxi operators. Here is a near-genius encapsulation of that evolution. The creator, Tom Slee made his bones in the data world with a deep dive into what Airbnb was up to. This post is also from 2017, February this time, so prior to Travis Kalanick's forced resignation in June of that momentous (for Uber) year.

"A Lone Data Whiz Is Fighting Airbnb — and Winning"
We don't have any prior posts on Mr. Cox. 
Re: Mr. Slee, on February 1st we followed a hat tip and referral chain back to one of the funniest (because it's true) descriptions of Uber you're likely to find: 
Uber's Master Plan, The Short Version
...[and now Slee at Grasping Reality]
It sounds like Ben Thompson is falling for the Uber bait and switch. Stages of which:
– Uber has a nice business as a status product (Uber Black Car ~ 2010)
– Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015)
– UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016)
– UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015)
– UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016)
– Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-)
– Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016)
See also:
September 2018
Uber's Long Road To Profitability: eBikes, That's The Ticket !!
Can't Stop Laughing."....

The whole thing was what we call a Create-a-Corp fraud, where you take in investor's money on a false premise/promise and cast about for a viable business while still making the pitch you know isn't true.
Again from February 2017:
Jalopnik: "Uber Is Doomed"
Readers who have followed the Uber story over the last few years, especially if you read Izabella Kaminska at FT Alphaville, know that despite posting on the lurid details from time to time (us more than she) our (and her) focus has been on the business/finance/econ aspects of Uber, although the political economy and other social science stuff can't help appearing, because what Kalanick built was in his own image....

...So yeah, although the focus has been on the quantifiable, the soft science stuff is there as well and may be the thing that takes Uber down. At least that's the charitable interpretation, that Kalanick, blinded by hubris didn't see the flaws in the business plan.

The less favorable interpretation is that he knew all along and kept pushing in the hope that magic would happen.
That would be a fraud.
 So yeah, knowing the low fares/higher driver pay model wouldn't work, but being unable to say that without cutting off the absolutely essential flow of new investment we got stuff like this out of the CEO:
"We're at the very beginning stages of becoming a robotics company," Uber CEO Travis Kalanick said at the Vanity Fair Summit in San Francisco in October. "As we move toward the future, autonomy is a pretty critical thing for us. It's existential."
-via c|net, Dec. 2016
I think he chose his words carefully, an existential threat literally threatens the existence of a firm and he has known since at least 2014 that without major breakthroughs in autonomous vehicles Uber could never be worth what they had convinced investors to pay:
"When there's no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away."
-Uber CEO Travis Kalanick, May 28, 2014

And just so you know, we were on top of the flying vehicles:

October 27, 2016
Uber to Challenge Airbus in the Autonomous Electric Flying Taxi Business
As the only analysts covering the nascent as-yet-theoretical autonomous electric flying taxi market we intend to be the the go-to source for all things autonomous electric flying taxi and/or theoretical....
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