"#Uber has no conceivable path to profitability. Its business model has been based on a massive internal contradiction: using a ginormous war chest to try to achieve a near-#monopoly position in a low-margin, mature business that is fragmented geographically and locally."
#PlatformCoop #VC #SharingEconomy #GigEconomy #startups
http://www.nakedcapitalism.com/2017/06/wheels-come-off-uber.html
@inmysocks @mattcropp In the case of Uber, their numbers really might not add up, no matter how you look at it. Read this earlier post at Naked Capitalism: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html
Basically, they had a lot of VC, which allowed them to subsidize every ride, as it seems. Their "story" might be that their business model might work once self-driving cars become the norm.
@mattcropp @inmysocks Even unethical business models and an aggressive management style don't always lead do economic success, I think. Apparently, many investors like to believe this, though...
@inmysocks @mattcropp The financial crisis was a good case study: "[...] banks with more shareholder-friendly boards performed worse during the crisis."
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1433502
Apparently, behaving badly because your investors expect it doesn't always make your investors rich.
@mattcropp crash the uber with no survivors
@mattcropp Uber would have done better if they'd begun by focusing not on urban centers, but on rural places where cabs and public transport just don't exist. Then instead of being an only slightly-differentiated competitor in a crowded market, they'd have been an economy-changing new thing.
@HedgeMage I was involved in a feasibility study for a rural ridesharing co-op - the reason Uber didn't do that is the same reason that it took massive public funds to electrify rural areas in the 1930s - most rural areas aren't dense enough to offer unsubsidized services to, and only remain populated due to significant transfers of public funds that are not framed as "socialism" in the US b/c most beneficiaries are white... 🙄
@mattcropp Uber's aim was to disrupt the cab market. They succeeded partially but not totally. Silicon Valley investors are continously looking for disrupting possibilities on a glabal scale, because it makes money and because they really think that this is the future of mankind.
@mattcropp sorry, it is continuously..
@mattcropp that is only if you assume that their business model has to do with acting as a taxi service. Their profitability has nothing to do with making money by driving people around, it is people farming.
There is only a contradiction if you insist on judging them by traditional business rules that don't apply to them.