The Long, Loser Game of Uber

I've said a few times that I'm not a fan of Uber (and Lyft) because their business models are based on cheating, relative to the ways other hired drivers are regulated, as well as undermining public transit and worsening congestion and fuel consumption.

They also are not even profitable, despite being in business for over a decade now, while exploiting their workers (who they don't acknowledge are employees). Oh, and they've been spending big money to make that exploitation a model for others.

Alison Griswold, who calls herself as a former journalist, has a Substack called Oversharing, which she describes as an "accessible guide to the most important trends in the gig economy, mobility, and urban policy." She posted a thread to Twitter yesterday about Uber's lack of profitability:

Can Uber be profitable? It's crazy that this is still a question! Uber is 13 years old. It does biz in 72 countries and 10,500+ cities. Last year it had 118 million monthly active users and did 6.3 billion rides/deliveries

Uber has always said it would reach profitability at scale, thanks to network effects, etc. But Uber is the definition of scale and consistent/reliable profits are still nowhere in sight.

Uber loses a lot of money. Like, a LOT of money. Since Q1 2017, Uber's total net income (loss) is -$24.7 billion. This is like losing the equivalent of:

-The market cap of Delta Air Lines
-The GDP of El Salvador
-365,812x the U.S. median household income

Uber has tried a lot of things. It unloaded driverless cars, offloaded bikes and scooters, strategically exited food delivery markets, and did several rounds of layoffs....

Uber's CEO told staff, "We have to make sure our unit economics work before we go big." But like I said, Uber is already big! That ship has sailed! That's the thing about unit economics — if you lose money on each order, then more scale just means bigger losses

This is the albatross of Silicon Valley capitalism: investors make bets and weaponize huge amounts of money to turn them into winners. The system makes the market irrational. 10 years ago it was ride-hail, today it's 'instant' delivery.

And so you get companies like Uber that seem to have it all: great service, scale, network effects, a clear value proposition. But 13 years later they’re still asking: can we be profitable?

Cory Doctorow has described Uber as a bezzle, "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it."

Commenters in the thread point out that the bottomless pockets behind Uber come from Saudi oil money. That sure makes me like it even better (not). They must be playing a very long game.