Unicorns Watch In Horror As Uber Careens Towards Extinction Event: A Down Round

Tyler Durden's picture

Authored by Mark St.Cyr,

For the average person the daily headlines containing the words “missile” and “nuclear” bring about thoughts of fear and anguish, especially when they pertain to the realization in which this time – it may be different. In other words, the sudden misstep resulting in an actual nuclear incident is far more probable than possible. e.g., N.Korea as the latest example.

However, not withstanding or minimizing any of the above, there is something just as closely being watched and the implications for what many (especially myself) would deem as a possible extinction level event is playing out right here in the U.S. Although, this one does not involve anything pertaining to military.

No, this one is the current nearly unstoppable “chain reaction” type event happening in the once unfathomable business unicorn known as Uber™.

This slow motion train wreck of what was once The unicorn of all unicorns in the current stable seems to be not only imploding – its once argued defense shield worthy of DARPA against any and all criticism seems to not only have been assailed, but appears to be all but destroyed by Uber itself with the latest headline that its head of communications (i.e., PR) Rachel Whetstone has now joined the growing list of high level executives to “dive out the door” of this still moving investment vehicle.

Regardless of the reasons, or innuendos circling about with this latest staff change, one element is undeniable, and it is this:

When a company’s head “PR” person quits smack dab in the middle of what can only be recounted as one of the most disastrous yearly beginnings in Uber’s short history (i.e., scandals, senior management leaving, CEO melt down caught on video with a driver, and more) and that company just so happens to be the most valuable start-up (e.g. a unicorn said to be worth some $68 BILLION), while also claiming the title of “disruptor of the disrupters”, and, is a cash burn machine with no concrete date for IPO? It’s the equivalent of a harnessed team of (e.g., all of The Valley’s) unicorns running smack dab, and full stride – into a concrete abutment. The resulting carnage will be legend.

The last couple of months have been a constant PR battle for the CEO Travis Kalanick (via Axios).

  1. Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it's at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.
  2. Uber's newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here's more on the difficult position of former employers in this case.
  3. A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. "I need leadership help," Kalanick said in an apology he issued shortly after.
  4. Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she's hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who's leading the investigation.
  5. Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars' registrations were revoked in December because it refused to get the permit.
  6. Charlie Miller, one of the two famous car hackers who joined Uber's Advanced Technology Center in August 2015, announced he's leaving the company.
  7. The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.
  8. Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company's problematic culture isn't limited to the men who work there.
  9. Ed Baker, Uber's head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.
  10. A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.
  11. California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.
  12. A new report says Uber used a secret program dubbed "Hell' to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.

But, Uber, according to The Wall Street Journal's Unicorn tracking database, remains the most valuable private company in the world.

Unicorns everywhere (primarily the ones whose sole goal was for the explicit reason to disrupt, regardless of profitable business metrics, fundamentals, or even laws, get funded, IPO, and cash out, rinse repeat) have hitched their dreams to the likes of Uber ever since it entered the marketplace.

Many held this company up as “the role model” for how to run, how to fight, and how to play by your own rules regardless if those rules may turn out to be in violation of known laws. i.e., “It’s all about disrupting and the Benjamins – screw everything else.” (i.e., AirBnB™ and it’s now legal issues as one example)

That works when it’s all “free money” supplied by an ever complacent Federal Reserve. But when that complacency is over (which now it clearly is) business fundamentals such as cash on hand, cash burn, net profits, management team, business metrics, execution, et cetera which were shunned in the “go-go” period come back with a vengeance.

So much so anything to do with “funding” seems more like being hailed to the executioner’s block rather than being invited to the all night parties which transpired after drooling V.C.’s threw money at their heads.

Suddenly, here’s where “funding round excitement” takes on a whole different connotation.

2016 was supposed to be the “rebirth year” of the IPO. Hint: It wasn’t. 2017 was also supposed to be the make up year for all prior sins with the announcement and fanfare of Snapchat™. Again, hint: It’s been anything but an unequivocal disaster in terms of stock price swings from gains to now losses on nearly everyone who’s purchased since the opening quotes, but that’s just my view. If you were one of those who did purchase? You have my condolences.

And, I’m sorry to say, “It appears to be getting worse.” Why? Because it’s (once again) sliding back into “teenager” territory, threatening to even make those early coveted $17 pre opening bell holders into losers as well. Only time will tell, after all, it’s only been 45 days or so to wipe out nearly all the gains prior.  And if there’s any solace in the old adage “Misery loves company?” Cheer up, for I’m betting you’re far from going to be alone in the not so distant future.

If – and I do mean just that, Uber needs to go back to the “funding” rounds (and it’s easy to speculate it will need to with its self verified cash burn woes) with all the exposed dirty laundry, and excess baggage now exposed to the entire investing world and “Valley”, coupled with its extraordinary cash burning metrics and collapse in “growth ” story (i.e., China being just one) where the last funding round (June of 2016) was made via the Saudi Arabia’s Public Investment Fund.

Who’ll want to step in after it’s assumed that this company has now also burned through $3.5 Million of Saudi dollars – and now needs more?

Bueller?

And what will it take to entice? If it’s a “down round?” (insert hair-band ending Europe’s Final Countdown song here in sympathy)

This is what is now creating the fear and loathing in not only the current V.C. cadre with investments sunk so deep into the remaining unicorns awaiting IPO pastures, any (if not most) returns are appearing to be all but lost. That’s bad enough – but that’s not all.

It’s also manifesting in much the same ways for any of those remaining “Valley” models looking, and still believing, they can just launch another funding round to survive. All I’ll say after looking at the current turmoil growing ever-the-worse by the day with its star unicorn, is this: “Good luck with that.”

In my opinion: They are all teetering on the edge of extinction if (or when) Uber has to do the near unconscionable act and hit the button and launch – a down round.

This I’m quite confident (just like when I stated most IPO’s were dead already but just didn’t know it a year ago) if it happens will force many in the current “unicorn stable” to tell their current investors: “After careful consideration it seems making a true net profit is once again a business fundamental which they can no longer circumvent, and will now liquidate in an effort to conserve any (if there is) possible cash or value.” Rather than face the executioner’s V.C.’s newly found funding wrath.

And with that here’s what may be a small window into what future “funding rounds” may look like after the glitz and glamor of the past where “metrics to nowhere” or “who cares about customers, investors, or profits – we’ve got a party to throw!” and more have been the norm, only to be dispatched (as they should) to the trash bin of investing history. To wit:

“Are there any takers to invest in this once in a lifetime opportunity to disrupt _______?” (fill in the blank.)

“Anyone?”

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LawsofPhysics's picture

Free market animal spirits?

 

...tryng to be optimistic here...

who am I kidding, the Fed continues to give FREE (NIRP/ZIRP) money to bankers and financiers and their political puppets...

fuck it, the casino is still open, place your bets...

Canadian Dirtlump's picture

That's the rub. The casino is open, place your bets. I look forward to the day we can start using our storable food when this party ends. At least I'll be right.

AVmaster's picture

"board member Arianna Huffington"

 

Say no more, there's the cause of Uber's bad luck RIGHT THERE...

 

She is the destroyer of worlds, she then crushes and pops a squat on your soul....

Joe Davola's picture

You beat me to it - once you pack your board with big name hacks, you're toast - see Theranos.

NoDebt's picture

You don't suppose it has anything to do with the fact that the only people who make money off these garbage "tech" IPOs are the investment banks underwriting the deals and the founders of the companies, do you?  

It's everything but the gun and the mask.  The only chance you have to make anything for yourself is hope the place can hold on long enough for Google or Amazon to buy it and then you MIGHT break even again.

 

Icewater Enema's picture

It really is about pumping it up and cashing out. These management teams don't even really seem to know much about the industry they are in or the regulatory/market environment. "Regulation? We don't need no stinking regulation. We do as we please. We break the law and we call it 'disruption.' We're removing 'market inefficiencies' doncha know" Tesla, Uber, AirBnB (Well, at least Tesla makes a thing that actually works). THen there's 23 & me. We do a medical diagnostic test but we forgot to clear it with the FDA. Oops. Or there's Theranos, that just doesn't even fuckin work, but it's still worth billions. Profitable operations are so last century.

 

P.S. Ms. Rigetti - better sue Uber ASAP, while there's still something to recover. 

Handful of Dust's picture

Uber needs some clear-thinking management---maybe recruit Munoz from Uniter or that CEO from Target?

Uber needs to proclaim it will hire 10,000 rapefugees and also create transgender cars and special  "social justice vehicles."

iamerican4's picture

AH is a whore and prostitute of the worst kind.

BorisTheBlade's picture

Man, $68 bln. valuation and $12 bln equity funding. That's a lot of money placed on disruption of taxi service globally. Too bad their business model is replicated at a fraction of these ammounts.

BarkingCat's picture

Like 1 teenager in some basement.

Extremehedger's picture
Extremehedger (not verified) LawsofPhysics Apr 17, 2017 10:35 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2oDPG2G

pods's picture

Yeah but at the end of the day your asshole is dilated and twitching.  It's winking like a Cyclops in a rainstorm.

/Doug Stanhope

techpriest's picture

I actually read the link once.

It's click fraud - you get paid to click on ad links when you have no intention of buying anything.

VD's picture

Uber, Theranos, Snap and at some point Tesla..... all ponzi schemes in slightly different variations... and so many more....

Buck Johnson's picture

Sounds like it's all coming apart for them. 

 

Canadian Dirtlump's picture

In it's current form, the only long shot I thought Uber had was to be the forced choice of women in beekeeper suits in gulf states in absence of a better offer. Or drunk Western Femenazis whose merlot and anti depressants didn't mix so well.

Boris Alatovkrap's picture

Dear Canadian,

There is Uber in Canadia for ride share of dog sled?

Boris

Yukon Cornholius's picture

Yes, but they are self-driving dog sleds.

Also solar powered igloos now too. It's polish technology.

Canadian Dirtlump's picture

Uber Grey is what they call it here. I use a guy here called Uljook. Very professional. Always on time.

 

Many may not know, but the Mayor of Calgary has waged his own personal Jihad AGAINST Uber. Notable highlight ( besides the time and money wasted politicall on it) was him being caught on tape uncorking a Jeremiad while on a business trip while taking another Ride Share:

https://www.youtube.com/watch?v=YKglTLcw2rs

Nenshi and his gang of would be machiavellian mongoloids also apparently directed criminals ( and purportedly at least 1 sex offender ) to apply to Uber to "test their background check" system. A little chilling.

http://news.nationalpost.com/news/canada/calgary-mayor-naheed-nenshi-cap...

 

But yeah Uljook takes good care of me on my quarterly supply runs to the outpost.

 

Arnold's picture

Unicorn Meat is very tasty when flavored with Snowflake Tears.

Enough pondering for the day.

Snark Time.
The glue factory is going under for lack of raw material.

robertocarlos's picture

Afgan mountain-side housing. LMAO.

OccamsCrazor's picture

It cant be a day too soon when this unethical TURD of a company implodes.  They only are able to exist off the backs of truly stupid drivers, who don't get how underpaid they are, and can't do the real math on how much their cars actually cost to operate.  The business model doesn't work, and their cash burn rate is so horrendous, its a wonder that investors haven't dumped this pig of a stock months ago.  The Uber riders are pigs themselves. 

Socratic Dog's picture

Maybe you can tell me what's unethical about kissing another company employee?  Lack of consent was not described or implied.

I'm having a little bit of trouble with that one.

Bendromeda Strain's picture

Yeah, that place sounds like a regular Sterling Cooper.

insanelysane's picture

Uber will be around for another 100 years.  Their business model cannot be duplicated so there will never be any competition.

orangegeek's picture

an app that puts drivers together with passengers

 

in college, it was called hand written notes on a cork board at student services

 

uber paved the way by crushing the taxi unions/licence monopolies

 

next gen drive sharing app is coming soon

BustainMovealota's picture

It was called a thumb in my day,, worked pretty well.

RAT005's picture

I remember those ride boards and the lovely coeds I gave rides to a couple of times. They really got fancy when you matched number of riders and luggage with the kind of car and distance.

iamerican4's picture

Inculcated from birth by an ancient satanic cult psychosis now called "Rabbinical Talmudism," Satan's presence appears manifest in (((Travis Kalanick's))) company.

Muad'Grumps's picture

This is nothing compared to what's going on in China.

williambanzai7's picture

actually this is worse than China because the Chinese don't know better. The people backing this speeding shit vaporiser are managing your retirement assets.

Yes We Can. But Lets Not.'s picture

I look forward to Facebook too being MySpaced.

And then Google being broken up.  It is time.

Pigeon's picture

MySpace didn't have implicit govt, i.e. NSA, CIA, backing. That was the flaw in Diller's business model. But yeah, totally agree with you. Just saying, it won't happen - unless people just quit these things altogether.

williambanzai7's picture

Well Eric Holder is leading the investigation. What could go wrong?

Bendromeda Strain's picture

Dead people could forget to wait for the word "Cut!" .

souljaboy's picture

Funny they left this out.

Former Obama aide David Plouffe fined $90,000 for illegally lobbying Emanuel on Uber's behalf   

http://www.chicagotribune.com/news/local/breaking/ct-david-plouffe-uber-...

Able Ape's picture

Uber and Under...

VK's picture

How is is possible that they're losing $2.8 Bn? All they do is connect the driver to the customer. They don't have fleet expenses, driver expenses and are likely evading tax as much as they can, so how can a company which charges 25% just to introduce two people be making such deep losses?

Turin Turambar's picture

Very good question.  Still, for all of the negative press about Uber, I love the service and think it's a brilliant use of technology.  I hate cabs, and anything that promotes individual enterprise to some extent like Uber has my support.  It really is mind-boggling that it is losing that much money.  Then again, I have no idea how much money is spent just on legal fees and compliance/licensing just to get in or stay in business due to gubbermint.

Yukon Cornholius's picture

Coders and SF rental costs aren't cheap either.