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It's interesting how often Silicon Valley companies blitzscale an unsustainable business model and then leave public investors holding the bag. In the Uber and

It's interesting how often Silicon Valley companies blitzscale an unsustainable business model and then leave public investors holding the bag. In the Uber and Lyft case, the time bomb was the regulatory issue. Which investors should have known about, given that these companies have been breaking the law since day 1. Tesla with their full self driving is also an example of this dump the risks on the bag holders pattern.

DeonPenny 6y ago
Poeple shouldn't be protecting investors. It's literally public market job and only job to access risk and pick stock. Why are we protecting them from their only job.
favorited 6y ago
Isn't the other time bomb that they aren't profitable?
- bdcravens 6y ago
  Ensuring that the only options aren't time bombs is the responsibility of whoever came up with the business plan.
cwhiz 6y ago
Uber has never made money. They haven’t even come close to making money. It’s hard for me to have any sympathy for investors who keep funneling money into a company that defines “success” by lowering their quarterly loss to a mere billion. It’s not as if this information isn’t public. Everyone can see that Uber can’t make money.
- mullingitover 6y ago
  Amazon has gone very long stretches without making money, too. They're still a trillion-plus dollar company and nobody seems to care. I was under the impression that the markets that are mature for Uber were profitable, and they've been plowing capital into growth, hence the losses. Feel free to correct me if you have sources that show otherwise.
  - theptip 6y ago
    You’re being downvoted because this is a commonly quoted and false claim about Amazon; here’s some reading on free cash flow vs. profits that will explain it better than I can: https://www.vox.com/recode/2019/8/21/20826405/amazons-profits-revenue-free-cash-flow-explained-charts https://www.vox.com/recode/2019/8/21/20826405/amazons-profit... Bezos has been clear from the start that he’s optimizing for FCF instead of profitability, you can read his early shareholder letters to see this. In summary though, Amazon has been “making money” for ages, they just reinvest it in R&D so it doesn’t make it down to the bottom line.
JMTQp8lwXL 6y ago
Somebody chose to pay the IPO price. Nobody could've offered to buy at that price, or interested parties could wait for the price to fall (if the party felt the IPO price was unreasonable). Typically, the underwriters will ensure there's interest at a given price range, prior to the listing. The demand was there. I place some blame on the companies (and it is their responsibility to list potential risks in their public filings), but also it's somewhat the fault of buyers who scooped up millions/billions dollars worth of shares at sky-high valuations.
- MattGaiser 6y ago
  The risks were/are in the filings. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9ae-31ea-40c2-ac8b-36d85158c8a2.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a... Page 34 (by PDF count).
  - JMTQp8lwXL 6y ago
    To further clarify, the germane risk (the topic of the post) was mentioned: > Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.
cocktailpeanuts 6y ago
To be fair, the founder didn't want to do IPO and according to rumors that was the reason why he was kicked out. All the toxic workplace stuff was just a narrative tool to make it happen more easily. Also, it's a public market. No one is "holding the bag". This may be true if Uber crashed before the IPO because private investors can't easily sell, but once on the public and liquid market, it is the public investor's own choice to invest or divest in these companies.
- aggie 6y ago
  > All the toxic workplace stuff was just a narrative tool That's a pretty bold claim. What of all the reports of a toxic workplace? I've heard first-hand accounts.
  - belval 6y ago
    I think he was arguing that the execs at Uber didn't really care about the toxic workplace stuff until Uber's founder said he didn't want to IPO, then they used it as a way to kick him out. So basically the workplace is toxic, but that's not the real reason why he was kicked out (according to the comment you were replying to).
    - neuroanalysis 6y ago
      He effort you have him ousted was led by Bill Gurley of Benchmark and several other VC investors in Uber. Essentially the board asked him to step down and he did.
      - strangeloopworm 6y ago
        I mean if you expected a founder to be ousted partly because of not wanting to do an IPO, you'd expect the VCs to be the ones behind it no?
      - cocktailpeanuts 6y ago
        If you look it up, there are plenty of articles of rumors saying that the VCs schemed to kick him out because they wanted to IPO and the founder didn't.
bzb4 6y ago
Aren’t investors supposed to research what they’re investing in?
- mrnobody_67 6y ago
  The Hertz investors clearly didn't :)
lbarrow 6y ago
I'm not sure I follow the "holding the bag". The regulatory risks were really obvious when Uber IPO'd last year. If investors lose money because of those risks, it's their fault for not accounting for them.
MattGaiser 6y ago
> then leave public investors holding the bag. Their labor issues are hardly new. If you did not know about them when you invested in Uber, you didn't even read the news articles, yet alone the filings. You were supposed to price that in to your investment if you purchased.
Akababa 6y ago
As other commenters have mentioned, all the company has to do is disclose risks in their public filings and it's up to investors to do their due diligence. It's safe to say that unless they lied to investors, the majority of capital coming in is from people who know what they're doing and are comfortable with the risks.
piva00 6y ago
To be fair, that is the investors' risk and part of their return. Uber very likely didn't lie about their risks in their investment prospects so everyone buying UBER should be aware of the inherent regulatory risk for the business. I don't agree that investors should be protected from this (or from TSLA assertions), if you are investing you should be more sophisticated than buying stocks blindly, there is a risk to any investment and, obviously, that is why it can be so profitable.

DeonPenny 6y ago

Poeple shouldn't be protecting investors. It's literally public market job and only job to access risk and pick stock. Why are we protecting them from their only job.

favorited 6y ago

Isn't the other time bomb that they aren't profitable?

bdcravens 6y ago
Ensuring that the only options aren't time bombs is the responsibility of whoever came up with the business plan.

cwhiz 6y ago

Uber has never made money. They haven’t even come close to making money. It’s hard for me to have any sympathy for investors who keep funneling money into a company that defines “success” by lowering their quarterly loss to a mere billion. It’s not as if this information isn’t public. Everyone can see that Uber can’t make money.

mullingitover 6y ago
Amazon has gone very long stretches without making money, too. They're still a trillion-plus dollar company and nobody seems to care. I was under the impression that the markets that are mature for Uber were profitable, and they've been plowing capital into growth, hence the losses. Feel free to correct me if you have sources that show otherwise.
- theptip 6y ago
  You’re being downvoted because this is a commonly quoted and false claim about Amazon; here’s some reading on free cash flow vs. profits that will explain it better than I can: https://www.vox.com/recode/2019/8/21/20826405/amazons-profits-revenue-free-cash-flow-explained-charts https://www.vox.com/recode/2019/8/21/20826405/amazons-profit... Bezos has been clear from the start that he’s optimizing for FCF instead of profitability, you can read his early shareholder letters to see this. In summary though, Amazon has been “making money” for ages, they just reinvest it in R&D so it doesn’t make it down to the bottom line.

JMTQp8lwXL 6y ago

Somebody chose to pay the IPO price. Nobody could've offered to buy at that price, or interested parties could wait for the price to fall (if the party felt the IPO price was unreasonable). Typically, the underwriters will ensure there's interest at a given price range, prior to the listing. The demand was there. I place some blame on the companies (and it is their responsibility to list potential risks in their public filings), but also it's somewhat the fault of buyers who scooped up millions/billions dollars worth of shares at sky-high valuations.

MattGaiser 6y ago
The risks were/are in the filings. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9ae-31ea-40c2-ac8b-36d85158c8a2.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9a... Page 34 (by PDF count).
- JMTQp8lwXL 6y ago
  To further clarify, the germane risk (the topic of the post) was mentioned: > Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.

cocktailpeanuts 6y ago

To be fair, the founder didn't want to do IPO and according to rumors that was the reason why he was kicked out. All the toxic workplace stuff was just a narrative tool to make it happen more easily. Also, it's a public market. No one is "holding the bag". This may be true if Uber crashed before the IPO because private investors can't easily sell, but once on the public and liquid market, it is the public investor's own choice to invest or divest in these companies.

aggie 6y ago
> All the toxic workplace stuff was just a narrative tool That's a pretty bold claim. What of all the reports of a toxic workplace? I've heard first-hand accounts.
- belval 6y ago
  I think he was arguing that the execs at Uber didn't really care about the toxic workplace stuff until Uber's founder said he didn't want to IPO, then they used it as a way to kick him out. So basically the workplace is toxic, but that's not the real reason why he was kicked out (according to the comment you were replying to).
  - neuroanalysis 6y ago
    He effort you have him ousted was led by Bill Gurley of Benchmark and several other VC investors in Uber. Essentially the board asked him to step down and he did.
    - strangeloopworm 6y ago
      I mean if you expected a founder to be ousted partly because of not wanting to do an IPO, you'd expect the VCs to be the ones behind it no?
    - cocktailpeanuts 6y ago
      If you look it up, there are plenty of articles of rumors saying that the VCs schemed to kick him out because they wanted to IPO and the founder didn't.

bzb4 6y ago

Aren’t investors supposed to research what they’re investing in?

mrnobody_67 6y ago
The Hertz investors clearly didn't :)

lbarrow 6y ago

I'm not sure I follow the "holding the bag". The regulatory risks were really obvious when Uber IPO'd last year. If investors lose money because of those risks, it's their fault for not accounting for them.

MattGaiser 6y ago

> then leave public investors holding the bag. Their labor issues are hardly new. If you did not know about them when you invested in Uber, you didn't even read the news articles, yet alone the filings. You were supposed to price that in to your investment if you purchased.

Akababa 6y ago

As other commenters have mentioned, all the company has to do is disclose risks in their public filings and it's up to investors to do their due diligence. It's safe to say that unless they lied to investors, the majority of capital coming in is from people who know what they're doing and are comfortable with the risks.

piva00 6y ago

To be fair, that is the investors' risk and part of their return. Uber very likely didn't lie about their risks in their investment prospects so everyone buying UBER should be aware of the inherent regulatory risk for the business. I don't agree that investors should be protected from this (or from TSLA assertions), if you are investing you should be more sophisticated than buying stocks blindly, there is a risk to any investment and, obviously, that is why it can be so profitable.