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> These companies are making profits and revenue Are they though? Uber said in its 2019 SEC filing that they may not make a profit [1], and while the company s

> These companies are making profits and revenue Are they though? Uber said in its 2019 SEC filing that they may not make a profit [1], and while the company says profitability is around the corner, they have not yet turned that corner. Not saying that Uber or any “gig economy” companies should continue to classify their workers as contractors, but if your business model does not generate a profit despite not providing benefits to your workers, one has to ask how viable that business model is. While I understand the long game is to use self driving cars, this is not a proven technology. It’s a problem that may be solved in the next few years, but there’s no guarantee. Imagine investing in fusion energy, which has been just a few decades away for the last fifty or so years. While sometimes the long play does work out, such as with Amazon, where you end up with a behemoth that dominates its market, you have to wait a long time to start seeing returns. I wonder if these long term, risky investment opportunities are a sign that the exponential growth in the economy that we’ve become accustomed to is slowing down and becoming more S shaped. I can imagine this being a world where wealth does not come from growing and generating more wealth, but from political and bureaucratic maneuvering (like worker classification) to give workers less benefits and distribute the wealth higher up the class hierarchy. [1] https://investorplace.com/2019/04/seriously-uber-never-turn-profit/ https://investorplace.com/2019/04/seriously-uber-never-turn-...

Ericson2314 5y ago
> Not saying that Uber or any “gig economy” companies should continue to classify their workers as contractors, but if your business model does not generate a profit despite not providing benefits to your workers, one has to ask how viable that business model is. Yes exactly. > I wonder if these long term, risky investment opportunities are a sign that the exponential growth in the economy that we’ve become accustomed to is slowing down and becoming more S shaped. We do have a demand and growth problem, but let's step back a bit. - Gig companies growing and paying net sub minimum wage will make growth worse: we live in a consumer economy and less purchasing power for the people will sap the rest of the economy. - carshare/taxis are inefficient in strictly material terms: cars take up too much space, one driver per person is ridiculous overhead. Bikeshare and buses and trains both immensely improve on both of those. Fundamentally Uber is the low productivity result of our terrible urban planning: a tax we now all pay. Maybe there is some deep societal reason we cannot prop up aggregate demand, but I don't think so: let the helicopter money begin! But Uber is worse than no stimulus because it low productive and wage deflating. The only good thing is in it's subsidization phase a bunch of Saudi money was dispersed to regular people, but once that ends the legacy is further eroded labor norms.
AlotOfReading 5y ago
The long term play isn't to use self driving vehicles anymore. Uber sold off ATG and Lyft just got rid of Level 5. They're dependent on others delivering commercial SDCs for them and anyone with the technical chops to do that isn't going to find the infrastructure of a ride-share service very difficult. As Uber and Lyft have both demonstrated, it's also straightforward to sell VC dollars for pennies to build up transport market share. The dominant theme of leading AV companies seems to be massive capitalizations, so it's hard to imagine the ride-share incumbents being highly competitive there either. It's hard to imagine a situation where their most profitable markets don't get immediately disrupted, leaving Uber and Lyft to figure out profitability with only the long tail low margin areas SDCs won't be deployed to for years afterwards.
paulpauper 5y ago
The stock price is sure acting otherwise. I think uber's businesis cash flow positive, simialr to Amazon and Tesla, but that cap-ex and other non-recurring expenses are erroding profitability.

Ericson2314 5y ago

> Not saying that Uber or any “gig economy” companies should continue to classify their workers as contractors, but if your business model does not generate a profit despite not providing benefits to your workers, one has to ask how viable that business model is. Yes exactly. > I wonder if these long term, risky investment opportunities are a sign that the exponential growth in the economy that we’ve become accustomed to is slowing down and becoming more S shaped. We do have a demand and growth problem, but let's step back a bit. - Gig companies growing and paying net sub minimum wage will make growth worse: we live in a consumer economy and less purchasing power for the people will sap the rest of the economy. - carshare/taxis are inefficient in strictly material terms: cars take up too much space, one driver per person is ridiculous overhead. Bikeshare and buses and trains both immensely improve on both of those. Fundamentally Uber is the low productivity result of our terrible urban planning: a tax we now all pay. Maybe there is some deep societal reason we cannot prop up aggregate demand, but I don't think so: let the helicopter money begin! But Uber is worse than no stimulus because it low productive and wage deflating. The only good thing is in it's subsidization phase a bunch of Saudi money was dispersed to regular people, but once that ends the legacy is further eroded labor norms.

AlotOfReading 5y ago

The long term play isn't to use self driving vehicles anymore. Uber sold off ATG and Lyft just got rid of Level 5. They're dependent on others delivering commercial SDCs for them and anyone with the technical chops to do that isn't going to find the infrastructure of a ride-share service very difficult. As Uber and Lyft have both demonstrated, it's also straightforward to sell VC dollars for pennies to build up transport market share. The dominant theme of leading AV companies seems to be massive capitalizations, so it's hard to imagine the ride-share incumbents being highly competitive there either. It's hard to imagine a situation where their most profitable markets don't get immediately disrupted, leaving Uber and Lyft to figure out profitability with only the long tail low margin areas SDCs won't be deployed to for years afterwards.

paulpauper 5y ago

The stock price is sure acting otherwise. I think uber's businesis cash flow positive, simialr to Amazon and Tesla, but that cap-ex and other non-recurring expenses are erroding profitability.