joecrow:

theemperorsfeather:

This is an incredible, unrelenting article.

Uber’s investors, however, never expected that their returns would
come from superior efficiency in competitive markets. Uber pursued a
“growth at all costs” strategy financed by a staggering $20 billion in
investor funding. This funding subsidized fares and service levels that
could not be matched by incumbents who had to cover costs out of actual
passenger fares. Uber’s massive subsidies were explicitly anticompetitive—and are ultimately unsustainable—but they made the company enormously popular with passengers who enjoyed not having to pay the full cost of their service.

The resulting rapid growth was also intended to make Uber highly
attractive to those segments of the investment world that believed
explosive top-line growth was the only important determinant of how
start-up companies should be valued. Investors focused narrow­ly on
Uber’s revenue growth and only rarely considered whether the company
could ever produce the profits that might someday repay the multibillion
dollar subsidies.

Most public criticisms of Uber have focused on narrow behavioral and
cultural issues, including deceptive advertising and pricing,
algorithmic manipulation, driver exploitation, deep-seated misogyny
among executives, and disregard of laws and business norms. Such
criticisms are valid, but these problems are not fixable aberrations.
They were the inevitable result of pursuing “growth at all costs”
without having any ability to fund that growth out of positive cash
flow. And while Uber has taken steps to reduce negative publicity, it
has not done—and cannot do—anything that could suddenly pro­duce a sustainable, profitable business model.

Uber’s longer-term goal was to eliminate all meaningful competition and then profit from this quasi-monopoly power…

…

These beliefs about Uber’s corporate value were created entirely out
of thin air. This is not a case of a company with a reasonably sound
operating business that has managed to inflate stock market expectations
a bit. This is a case of a massive valuation that has no relationship
to any economic fundamentals. Uber has no competitive efficiency
advantages, operates in an industry with few barriers to entry, and has
lost more than $14 billion in the previous four years. But its
narratives convinced most people in the media, invest­ment, and tech
worlds that it is the most valuable transportation company on the planet
and the second most valuable start-up IPO in U.S. history (after
Facebook).

Uber is the breakthrough case where the public perception of a large
new company was entirely created using the types of manufactured
narratives typically employed in partisan political campaigns. Narrative
construction is perhaps Uber’s greatest competitive strength. The
company used these techniques to completely divert attention away from
the massive subsidies that were the actual drivers of its popularity and
growth. It successfully framed the entire public discussion around an
emotive, “us-versus-them” battle between heroic innovators and corrupt
regulators who were falsely blamed for all of the industry’s historic
service problems. Uber’s desired framing—that it was fighting a moral battle on behalf of technological progress and economic freedom—was
uncritically ac­cepted by the mainstream business and tech industry
press, who then never bothered to analyze the firm’s actual economics or
its anticompetitive behavior.

In reality, Uber’s platform does not include any technological
breakthroughs, and Uber has done nothing to “disrupt” the eco­nomics of
providing urban car services…
Uber’s most important innovation has been to produce staggering levels
of private wealth without creating any sustainable benefits for
consumers, workers, the cities they serve, or anyone else.

Late stage capitalism at its most egregious.