Our New York Magazine Article: “Uber Is Headed for a Crash”

We thought New York Magazine readers might enjoy seeing Hubert Horan’s hard-hitting assessment of Uber’s dubious economics and less-than-rosy financial prospects.  I liked the photo that the editors chose for the story.

If you are so disposed, please comment at New York Magazine as well as here. Thanks!

By steamrolling local taxi operations in cities all over the world and cultivating cheerleaders in the business press and among Silicon Valley libertarians, Uber has managed to create an image of inevitability and invincibility. But the company just posted another quarter of jaw-dropping losses — this time over $1 billion, after $4.5 billion of losses in 2017. How much is hype and how much is real?

The notion that Uber, the most highly valued private company in the world, is a textbook “bezzle” — John Kenneth Galbraith’s coinage for an investment swindle where the losses have yet to be recognized — is likely to come as a surprise to its many satisfied customers. But as we’ll explain, relying on the extensive work of transportation expert Hubert Horan, Uber’s investors have been buying your satisfaction in the form of massive subsidies of services. What has made Uber a good deal for users makes it a lousy investment proposition. Uber has kept that recognition at bay via minimal and inconsistent financial disclosures combined with a relentless and so far effective public-relations campaign depicting Uber as following the pattern of digitally based start-ups whose large initial losses transformed into strong profits in a few years.

Comparisons of Uber to other storied tech wunderkinder show Uber is not on the same trajectory. No ultimately successful major technology company has been as deeply unprofitable for anywhere remotely as long as Uber has been. After nine years, Uber isn’t within hailing distance of making money and continues to bleed more red ink than any start-up in history. By contrast, Facebook and Amazon were solidly cash-flow positive by their fifth year.

The fact that this glorified local transportation company continues to be a financial failure should come as no surprise. What should be surprising is that the business press still parrots the fond hope of Uber’s management that the company will go public in 2019 at a target valuation of $120 billion. That’s well above its highest private share sale, at a valuation of $68 billion. And Uber’s management and underwriters will no doubt hope that the great unwashed public looks past the fact that more recently, SoftBank bought out insiders at a valuation of $48 billion, and its offer was oversubscribed. Why should new money come in at a price more than double where executives and employees were eager to get out?

Uber has never presented a case as to why it will ever be profitable, let alone earn an adequate return on capital. Investors are pinning their hopes on a successful IPO, which means finding greater fools in sufficient numbers.

Uber is a taxi company with an app attached. It bears almost no resemblance to internet superstars it claims to emulate. The app is not technically daunting and and does not create a competitive barrier, as witnessed by the fact that many other players have copied it. Apps have been introduced for airlines, pizza delivery, and hundreds of other consumer services but have never generated market-share gains, much less tens of billions in corporate value. They do not create network effects. Unlike Facebook or eBay, having more Uber users does not improve the service.

Nor, after a certain point, does adding more drivers. Uber does regularly claim that its app creates economies of scale for drivers — but for that to be the case, adding more drivers would have to benefit drivers. It doesn’t. More drivers means more competition for available jobs, which means less utilization per driver. There is a trade-off between capacity and utilization in a transportation system, which you do not see in digital networks. The classic use of “network effects” referredto the design of an integrated transport network — an airline hub and spoke network which create utility for passengers (or packages) by having more opportunities to connect to more destinations versus linear point-to-point routes. Uber is obviously not a fixed network with integrated routes — taxi passengers do not connect between different vehicles.

Story continues here. Thanks again!

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  1. Watt4Bob

    New York City just set a minimum wage for Uber and Lyft drivers;

    The city’s Taxi and Limousine Commission (TLC) said on Tuesday that it passed rules that will require “high volume” drivers of for-hire vehicles to receive a wage per trip that corresponds to $27.86 per hour, or $17.22 after expenses. The rules will go into effect in mid-January.

    Considering the estimated current wage is something like $10/hour, this is gonna hurt.

    Is Uber going to pony up in the hopes that this won’t happen in other markets, or will they attempt to fight New York City?

    My guess is that this is not going to end up helping many Uber drivers since Uber probably can’t survive this sort of pressure, but it will probably hasten the demise of their fraudulent scheme.

    It’s sad that Uber’s gigantic fraud has done so much to immiserate the lives of taxi drivers all over the country, indeed, the world.

    I will never understand why municipalities did so little to protect their legacy taxi operations.

    1. Big River Bandido

      Cities (“municipalities”) are like every other level of government when it comes to viewing the public as cash cows to be milked, rather than citizens to be served.

      Witness the “AirTrain” in New York — where a 7-minute ride from the dysfunctional NYC subway to JFK costs you $5. Or witness the 75-year agreement with which the City of Chicago “leased” its street parking to Morgan Stanley, and which Toronto wants to copy.

      Examples of public ripoffs like this by cities are legion.

      1. Bullwinkle

        I’ve used the Air Train several times to JFK and rather liked it. I didn’t take the subway though. I took the LIRR from Penn and I believe it is one stop – Jamaica (not certain though). Beats the $50 plus for a taxi.

      2. landline

        The AirTrain is indeed a rip off. If one has the time, he/she can take the B15 bus to and from the New Lots subway stop. Free transfer between bus and subway within 2 hours (iirc) of swiping the MetroCard. $2.75 gets you anywhere on the MTA bus/subway system.

        The easiest way to purchase a MetroCard for visitors arriving at JFK is to ride the free AirTrain to Howard Beach, buy the MetroCard and backtrack one stop to Lefferts Boulevard to get the B15.

        If there is a cheaper way, I will likely find it.

        1. barefoot charley

          Oakland airport propeller-heads recently spent $600 million replacing the fast and trouble-free shuttle bus from BART with a retro-ish cable car on stilts, somewhat slower, for $6 a ride. C’mon, why not?

          1. landline

            Now, you are in my neck of the woods. AC Transit has a bus between Coliseum BART and OAK airport with a round trip discount transfer (good for a couple days) between BART and AC Transit. Even in the days of AirBART, it was a cheaper and often faster option.

          2. John

            Across the bay, we used to have a free shuttle bus connecting Caltrain from Millbrae to SFO. Not only was it free it was fast. When you got off the train the shuttle was waiting. Now we have Bart. It coasts more and you have to wait a long time for a Bart train. We used to use Caltrain to SFO a lot. Now we drive.

    2. Larry

      Uber did nothing to protect taxi drivers because of lobbying and political pressure from the 10% up.

    3. Michael

      Wish they had defined high volume driver.
      According to this link, based on IRS and AAA stats, the average cost per mile for an Uber driver at 10,000 miles per year is .55 per mile in a small sedan. That drops to .37 per mile at 20,000 miles.

      The average of all vehicles driven 30,000 miles is still .37 per mile or $8.85 per hour at 24mph (1250 hrs).
      The article breaks down operating and ownership costs over 5 years.

      Does a high volume driver replace their vehicle every 5 years at 150,000 miles or more often at 40,000 miles per year? Will more drivers attempt to become high volume drivers to get the higher wage? Is a full time business earning $55,720/year (2000 hrs x $27.86) before operating costs ($8.85) and taxes ($ ?) worth it?

      Maybe for some folks

      1. RMO

        It varies from place to place (in the world and depending on which Uber webpage you read…) but about ten years is the maximum age they accept. They also insist on four doors, five seats and air conditioning so wagons, minivans etc. are prohibited – despite the fact they would be pretty practical.

        From what I can tell one would be better off collecting empties and selling plasma than being an Uber driver.

    4. JimTan

      “I will never understand why municipalities did so little to protect their legacy taxi operations.”

      The answer to that is unfortunately part of Ubers business model. Large Gig Economy companies like Uber employ armies of Lobbyists, Lawyers, and more Lawyers to enforce their interpretation of existing employee protection laws.

    5. NotTimothyGeithner

      Without shouting “corruption,” my experience is state and local governments like to be perceived as doing something more than nothing. Uber presented an easy, quick way for an improvement to transportation. With devolution, the states are less nimble than they once were, so there is less opportunity for governments to appear to be reactive.

      1. jrs

        also it maybe masks (and mitigates although as we know to a very limited degree) the true level of unemployment and desperation, as desperate people do drive for Uber. Local governments might think that’s a plus, having them be occupied and have a cash flow and not show up immediately on every measure of desperation.

        Municipalities like most organization in this cynical society, protect their own personal jobs, but beyond that not always so much so.

      2. oh

        Local governments can’t keep from stumbling over each other to hand out tax holidays and subsidies to mega corporations, to build stadiums for NFL teams and to roll out the red carpets to conventions, all loss leaders. But when it comes to helping the homeless they don’t even try.

        If it’s not corruption, I wonder why they do that time and again? Are the people too naiive to figure out what’s going on?

  2. voteforno6

    I once tried to explain to a technology-savvy coworker why Uber probably wouldn’t survive long-term, and while he acknowledged their financial problems, he thought they would persist because they have “mindshare.” I suspect that the technology press suffers from the same misconception – that there’s some magical way to monetize buzzwords.

      1. Kurtismayfield

        The same thing can be said for Snapchat and Twitter.. both are thought by their users to be indispensable, have eyeballs all over them, and yet they lose money hand over fist. I am almost afraid to see what happens if these companies disappear because their users are so reliant on them

        1. barefoot charley

          When I started reading Yves’ criticisms, I assumed Uber was really all about data-vacuuming, that the taxis were ornaments to capture data-packets formerly known as passengers. I’ve never seen how Uber’s location and consumption data are monetized–but obviously it’s worth less as the great wholesalers of one-stop privacy violations consolidate their monopsonies on its sale. I’d guess data was Uber’s secret sauce which broader-based data thievery has watered down the value of.

          1. Yves Smith Post author

            Yes, cell phone operators know more about where you are and have been than Uber will ever know. And they also know your web surfing habits, as in customer attitudes.

    1. Anders K

      I mean, Uber did have a great advantage at start – their app, which was much better than what was available before. There are still taxi companies without an app, and I have been disappointed many times by their service (long wait times, not showing up when agreed, sometimes not showing up at all “had a trip that was closer to their location” but not giving feedback to me).

      The most important thing about the Uber app is the illusion of control and the feedback. The illusion of control is in the choices you can make (black, XL, helicopter, bike – all of them not available everywhere) with the actual choice being similar as on airplanes with an expensive “first class” experience and an affordable “everone else.” So far, so standard.
      Where Uber actually succeeds is in the feedback – I see what car is coming and who is driving it (illusion of control comes into play here too), and even if “my” car is diverted, a new car appears as if by magic and keeps me appraised of when they are likely to arrive. This is why I use Uber, as the taxi companies in Sweden in general do not have as good apps, and the ones who have a comparable app does not have the area covered that I want to go to.

      One of the ideas that Uber could have made “digital” scale on is by selling its app and installed userbase to taxi companies, thus at once getting rid of the concerns of driver, car and other capital intensive parts. It would also have to give up (or at least postpone) some of its dreams as well, but I really believe that that could have worked. It would have been an uphill struggle for sure, but there is indeed a market for the One True Taxi App (particularly for international travellers).

  3. The Rev Kev

    Excellent article this. So, remind me again – why doesn’t Wall Street tell their clients to bail on Uber? The case laid out in that article is solid and the analysts on Wall Street have access to the same if not better information. Or is this a case of ideology where Wall Streets wants them to succeed and continues to prop them up – with other people’s money. Or am I misreading the situation totally?

    And so who exactly is pumping in the money to keep this turkey afloat after so many years? I would assume it to be institutional investors but do the people that have their money with these institutional investors really know that their money is being put into Uber? If you had to write an economics book about Uber, the sub-title would have to be something like “A Misallocation of Capital and Resources” as if it tried to stand on its own merits, it would fold like a cheap lawn-deck chair. It needs to follow Lambert’s second Law of Markets – and go die.

    1. Yves Smith Post author

      Because the company is privately held. Owners can’t sell their shares except in special circumstances prior to an IPO or a sale of the company. And insiders sold like crazy when given the chance.

      The $68 billion valuation was dumb retail after a round with Saudis, who are also considered dumb money. Softbank, which at least got a way better price than the Saudis or the $68 billion round, is also seen as liking to throw darts at things that are cool.

      Toyota just invested $500 million but that was for autonomous vehicles, and they are still looking for a third partner, so I suspect this investment was not at the parent level (investing at the subsidiary level protects you better in the event of bankruptcy). Someone can correct me if I am wrong, but in the articles I saw, consistent with that interpretation, did not mention a valuation associated with the investment. And they borrowed $2 billion, which I see as a bet on the 2019 IPO, and not on the company per se.

  4. Pete

    I really enjoy reading these uber articles. Latley i have not had the energy to read much but these are great.

  5. Nik

    This is an astoundingly excellent distillation, Yves. As I started reading my thought was that you couldn’t possibly touch of such a broad range of issues, and yet you nailed pretty much everything important.

    Well done!

  6. KLG

    Great article! Go NC! Uber has done one thing for 20-somethings: Only the totally clueless ever get caught driving while impaired. So, to keep revenues up, the local police have begun a crackdown on “public intoxication” in most college towns: Be a little tipsy while walking to the next pub in the crawl, get arrested…Is this a great country or what? Back in my day the only way to get arrested for public intoxication was by directing traffic while naked. And not having any friends, because the cops on the scene would first ask the crowd of spectators if one of them could take the jackass home and make sure he got to bed.

    1. Louis Fyne

      that’s the one nugget of goodness. presumably less DUIs/road accidents/deaths.

      But makes me wonder….does Uber ironically in the end encourage more public drinking as now everyone in your group has a chance to fully imbibe.

      1. KLG

        Kind of off topic, but…Among the young, public drinking is not the problem. Since the completely madd raising of the drinking age to 21 across the entire country, sneaking around as an “underage” drinker probably results in more mortality and morbidity. It’s hard to get alcohol poisoning when paying by the drink, in public. You’ll fall off the stool and the bartender cuts you off long before that happens.

  7. Mark

    “I will never understand why municipalities did so little to protect their legacy taxi operations.”

    My take, at least from my local context. Legacy taxi operations offered poorer service; the in care treatment was poor, the user interface in ordering a service was poor, and the price wasn’t great. Uber provided a better service, probably through loss making means but that is WHY it has been successful in market penetration. For users Uber has been great. (I’m not one.)

    So in many ways I see Uber as a positive shake up of the market. Everybody I know users it, from the consumer perspective it is great.

    Of course that does not mean it can or will generate profits. As has been often pointed out there is little network effect and economy of scale. Neither the ’employees’ or the users are bound to the service beyond the fact that it is currently the biggest.

    1. Watt4Bob

      Having driven a taxi for many years when I was younger, I have a different perspective.

      Taxi drivers like members of every other group of service sector workers include good and not-so-good, and like all the others, the good suffer the consequences of the public’s experiences with bad service.

      (Taxi drivers are regulated, and licensed in most places, which means bad actors are subject to license revocation)

      IMO, the price of taxi services is about right, in that a hard working driver can pay the rent and feed his family, he won’t get rich, probably can’t save much but that is the norm for many people these days.

      Add to the picture that driving a taxi is one of the rare jobs that an immigrant may be able to do as a new arrival to this country, and so become subject to the negative effects of our famously denied implicit racial bias.

      All of this means taxi drivers are looked upon as belonging to the working class, by which I mean that the credentialed class looks down on them, they are ‘other’.

      So in many ways I see Uber as a positive shake up of the market. Everybody I know users it, from the consumer perspective it is great.

      I’d disagree, I’d say that from your self-centered perspective, it’s been positive, but from a wider perspective it’s been terrible;

      1. Uber drivers are ripped off.
      2. Legacy drivers have seen their already precarious earnings diminished.
      3. Taxi owners have seen their investment in licenses wiped out.
      4. When legacy taxis are driven out of business, Uber and the like are/were certain to drive the price up, probably at least as expensive as taxis ever were.
      5. When Uber goes down the drain, and it will, we, our society, still suffers the effects of #s 1-3.

      We do not need ‘market shake-up‘ in non-monopoly services at the bottom of our economic ladder, the destruction caused is not ‘creative‘, it’s just destruction.

      And all I’ve said so far, ignores the fraud being perpetrated on investors…

      1. pebird

        Certainly if Taxi companies not only did not need to make a profit and indeed could burn a billion $ annually, taxi service would look a lot better.

        And the high tech libertarians who decry government regulation for it distorts the market are more than happy to accept private subsidies and imaginary valuations.

      2. JTMcPhee

        Right on, about that “self-centered perspective.” We all have it, to varying degrees. Even here, where many of us seem to be groping for “weird tricks” and special insight and knowledge, maybe some substantive “organizing principles,” as to how our species can continue existing on something other than the ragged edge of self-extinction. No surprise, maybe, given the broad demographic distribution, there are those “self-centered” folks who rationalize behaviors that are “just my tiny little impact, so it doesn’t matter really, and after all, I can AFFORD it, and I have the RIGHT to CHOOSE.” Bearing in mind the old dictum that “the right to swing your fist around ends just short of the point of my nose.”

        And since billions of “Nimitz-F-35 unit” dollars are disappearing into the Uberpit, maybe one could suggest, oh, I don’t know, nationalizing the thing as a utility. Of course, paying “just compensation” per the “law” the Uber thing flouts, of course? And speculating that various accountants and economists and attorneys would have a field day, debating how to value the Uberpit, net of externalities… Also bearing in mind my cynical observation that anything “government” is subject, in our libertarian-neoliberal-polluted nation, to pretty-quick regulatory capture, because there’s not, at present, people inculcated into a sense of public duty and group sharing and responsibility. That might be in the process of developing — I don’t have a wide acquaintance among the whatever generations we are on, but many I know sure are sensing the need. And where is the FDR/AER (the real-deal, Dolly Madison twofer) and his/her cabinet, that could integrate the mortal threat response to the biosphericide with jobs programs and regulation of the “run it like a business” crowd? One wonders how much can be done by people acting in concert, working toward a homeostatic political economy and relationship to the rest of the biosphere.

      3. rd

        The one thing that has baffled me about Uber/Lyft is why the taxi companies did not get together to develop their own app for ordering their taxis, providing directions to their drivers (as well as cleaning up their cars a little bit), and paying the fare at the end of the ride. If they did that, they could be competitive on service even if they were still more expensive based on the regulated fares their meters have. They had enough political clout that they could probably even have gotten city legislation changed to allow for pre-negotiated fares (like Uber/Lyft) instead of metered or zone fares.

        Instead, they just appear to be baffled about what happened to the value of their restricted quantity of medallions.

          1. Watt4Bob

            I would always let the customer tell me the route they wanted to follow, in the belief that I knew the ‘best’, as in cheapest way to go, and following the customers directions could only make more me more money.

            There is also the old rule that customer is always right.

            In the very few times I took a cab in NYC, I had the distinct impression that what might have looked like questionable routes were actually time-saving maneuvers.

          2. Anders K

            I suspect this differs between regions; in Sweden it has taken quite some time for the taxi companies to react and provide apps of equal quality (for the customer; can’t speak to how well Uber or taxi apps work for the driver). This has allowed Uber to get that precious “mindshare” mentioned above.

            I have also had (a few) taxi drives where the driver had no idea where they were going, either lacked GPS or the desire to use one, and had to be directed by me to where we were going. Both in the boonies, and in the big city (big for Sweden, top 3). Integrating with Google Maps does cost something, but it is a very low cost (for now, at least) and allows the taxi companies to skip the GPS (yes, sunk cost and all, but for new vehicles).

            The point still stands that there are taxi companies that provide a lackluster service, either due to organizational inertia or due to effectively monopoly power (barriers to entry not being zero, after all, and in some places – the NYC medallions I read about above – quite high). These companies needed some sort of external factor to change their behaviour, which Uber (and other rideshare companies) has provided.

            It is a shame that it is the drivers that get punished for this change, certainly, and I hope Uber gets stopped before it can get legislation to make it profitable (and legal), but I do believe in giving the Devil his due.

      4. oh

        Uber takes away ridership from public transportation and will be the death knell of public buses and trains. This will really hurt the poor who can’t afford a car, let alone a ride on Uber.

        I remember that one time I returned late one evening from the airport to the local bus terminal. I had a hard time finding a cab even though I had called them ahead of time and was assured that cabs would be available. I was lucky enough to get a ride. It made me wonder how the poor person on a minimum wage with two jobs would be able to get to and from work.

        The constant cries of “public transportation” needs to be profitable by neolibs has resulted in cutting back of services after 7 PM in many cities. IMHO, public transportaion does NOT need to be profitable. In a democracy, some services need to be subsidized to help all.

        1. cnchal

          > . . . IMHO, public transportaion does NOT need to be profitable.

          Exactly right. It just needs to be paid for, so tax the crap out of the elite to pay for it.

          Currently it’s like the network effect in reverse. Service gets cut back due to not enough riders paying a high enough fare to cover all costs, which result in more service cuts and the vicious circle does another revolution til public transportation ends up being one bus every couple of hours and so useless it might as well not exist.

          These Nimitz units, were they applied to improving public transportation instead of sunk into Uber would have been a far better use of resources, but then the dumb money in Uber wouldn’t have their multi billion dollar payoff fantasy, and Wall Street their fat fees for running the scam.

          1. Anders K

            Don’t forget the eventual rip-off of pension funds when the investors offload their shares in a “soon to be super successful Uber IPO” which “everyone has to get into on the ground floor.”

            After all we can’t let the plebs think they can stop working just because they get old – but getting rid of pensions by fiat is iffy. Much better to do “poor investment decisions” by an undisclosed fund manager who is in no way liable for any poor decisions (but strangely enough well compensated for “good” decisions).

    2. LyonNightroad

      I don’t really understand this comment. You acknowledge that the service is only better for the same cost because uber subsidizes their rides and yet you think it’s positive, as if taxi companies couldn’t have offered better service for a higher price all along. Riders just don’t actually value those things enough to pay the higher cost. Uber does nothing to change the fundamental economics of running a taxi company.

    3. FluffytheObeseCat

      Thanks for the brief, rational explanation Mark. Your observations are in line with mine. Livery and taxi services across the US have been characterized by price gouging, abuse of clients, and abuse of drivers (i.e. subleasing of medallions, New York City) for decades.

      Uber is undeniably ugly. They provide a way for downsliding middle class American to work themselves into deeper holes. However, the industry Uber attacked was abusive across the board. My best friend and neighbor c. 2010 worked dispatch for a local Reno-Tahoe limo service after losing a real job in the Great Recession. I got to hear and see how one of these “Old Economy” livery service providers operated immediately before Uber broke out. They deserved to get crushed. Uber does too IMO, but the trend here in comments is to eulogize these abusive bums because they hate Uber more. Which is baloney. It’s perfect possible to deplore Uber and corrupt, abusive older livery service systems at the same time. Even in the same sentence!

      1. Watt4Bob

        They deserved to get crushed. Uber does too IMO, but the trend here in comments is to eulogize these abusive bums because they hate Uber more.

        Painting with a pretty broad brush there.

        Nobody is eulogizing anybody, what we’re pointing out is that a major economic fraud is being perpetrated on Uber’s drivers and investors, and it happens that a major part of the story is the simultaneous destruction of the legacy taxi industry the world over.

        Your best friends experience at a livery service in Reno NV, (I’m guessing a low regulation, highly libertarian state) does not rise to the level of evidence that any business ‘deserves’ to be crushed.

  8. cnchal

    Another quarter, another quarter Nimitz unit down the drain, on pace to sink approximately one per year. Another couple of years and they will have sunk the equivalent of the entire fleet.

    With any luck, the venture capitalists behind this abomination will get sucked into the swirling vortex never to be heard from again. When the dumb money finds out that investing in Uber is worse that owning a yacht, which is a hole in the water into which one throws gobs of money, but at least you have a yacht, here they just throw money into a black hole which disappears in the hope that all the suckers alive buy you out at the IPO, watch out.

  9. Todd

    Just ancillary, I was listening to the radio the other day and the hosts were complaining about how poorly the cars that picked them up were. It’s no longer the shiney new black cars that drivers had bought to drive their fares in. That was they norm 2 years ago. These cars were older, dents, needed cleaning inside and out.

    The host did state it’s not the best part of town and the cars looked like what you would expect to be driven by people that live around that area.

  10. JTMcPhee

    Focus on the “business case” might nip at the heels of the Uber owners — given the credulity of the “market,” though, not likely to bring the beast down. Too bad no mention that what Uber, that UNREGULATED “taxi company with an app attached,” does is (or was, until legislation or rules to “fix the problem” gets injected, via “corruption”) illegal in most jurisdictions, if I understand the case right. Can’t even call Kalanick and successors “buccaneers,” to any effect — our minds are trained now to see that word as summoning up the image of Jack Sparrow, the world’s best pirate.

    1. rd

      The taxi companies in many jurisdictions had abused their monopoly power and so the public sentiment was behind Uber. Politicians heard the voters talking.

  11. IowanX

    Just a quick note that Lawyers, Guns & Money linked to your NY Magazine article last evening…over 500 comments there!

    1. Arizona Slim

      And there’s more good news. This article is the most viewed on the New York magazine site.

      Yay, Yves!

      1. Conrad

        It’s almost as though there’s a hunger for critical analysis of the fluffy claims of the new disruptors! Whocoodanode?

  12. Samuel Conner

    Re: the rush-hour and back-haul issues; I wonder whether there could be (perhaps already is) an app to “aggregate/ride share people going in the same direction”. This wouldn’t be a prime income generator, just a congestion-reducer with a small $ incentive to stimulate driver participation. I imagine it would be simple to code. Perhaps city traffic managers would want to get involved in the design or promotion of tools like this. Or perhaps they already exist.

    1. Arizona Slim

      Wait a minute. I think I rode on one of those things this morning.

      Here in Tucson, its name is SunTran. Most of us just call it the bus.

      1. lyman alpha blob

        Ha! That reminds me of the discussion I saw somewhere about how to fix the problems that “self-driving” cars have navigating real roads with real people on them, with the solution being to create special dedicated lanes to run alongside highways.

        Non app-addicted people call those train tracks.

    1. Yves Smith Post author

      It may be already. Vanguard, Fidelity, Blackrock, and four other mutual families have funds that own Uber shares. If you are in a “growth” fund, I might check it out. They have to disclose their holdings every quarter, so they should tell you if you ask.

      1. Bobby Gladd

        Interesting you should say that. We have two IRA accounts, mine is at The Principal, my wife’s (the bulk of our retirement funds) is Fidelity. We met with our Fidelity account mgr today. Had I known this I’d have asked about it. I certainly will going forward. Ugh.

  13. ChristopherJ

    Thank you Yves, not news to the NC commentariat, thanks to your efforts and persistence.

    I think uber thought they could get to the self driving car bit and eliminate those expensive drivers before now.

    That, as we know, is going to take a while to solve and probably requires that the humans get off the road. Succeed at that and you will find that noone needs to own a self driving vehicle or have parking at home, work and everywhere else. All the cars will be working…

  14. anarcheops

    Thanks for the article Yves. Herbert Huran’s series of posts have been great, but it’s nice to have one link (with a ~mainstream~ publication) to throw at people when you hear them credulously repeating the Uber hype.

    Personally I’ve had enough problems with supposedly licensed & regulated cabs that I can only hope Uber’s crash and burn happens soon and the pendulum swings back towards MORE regulation. One regulation (in many areas) often ignored by Uber et al. is the requirement that they pick up/serve disabled people. For most disabled people (and I’m using a broad definition here), taxis & public transit are an absolute necessity, yet the service they’re provided is incredibly bad as it is *with* regulation. I hate cars and driving as much as the next person, and I *really* hate cabs, but we need to at least make them usable for the people who actually *need* them.

  15. junkelly

    Does anyone else have a problem with the comment section on nymag?

    I can’t get any of the comments to show up. I have firefox and chrome with addons like ghostery and privacy badger, but even when disabling them I can’t read the comments. I’ve tried privacy mode and also Safari which doesn’t have any extensions. The comments on nymag don’t load on any of my three web browsers. Just checked and it does work on my phone. . .

    1. Yves Smith Post author

      Sorry about that and you are not the only one having problems. I’ve sent your comment to my editor at NY Mag. Hopefully they’ll get this fixed.

  16. Watt4Bob

    Lyft has announced its IPO;

    From the Rueters article;

    High-profile tech unicorns such as Dropbox Inc DBXC.O and Spotify (SPOT.N) dominated the U.S. IPO landscape this year, but the recent turmoil in financial markets due to escalating trade tensions between the United States and China could dampen enthusiasm for offerings from Lyft and Uber.

    Investors fear that stock market weakness could result in reduced interest in their road shows or fail to fetch them a reasonable valuation.

    “Market declines mean that the offer price will be lower than otherwise. But there’s a danger of waiting to go public as well – markets could go even lower, and the companies could raise less money if they waited longer,” said Jay Ritter, an IPO expert and professor at the University of Florida.

    W4B; emphasis mine.

    Or maybe if you wait too long, mr. market will wake up to the fact that you’re offering shares in a totally fraudulent endeavor.

    And don’t you just love the blaming of international relations for lack of market enthusiasm!

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