Uber - Suddenly, Then All At Once

Tyler Durden's picture

Authored by Mark St.Cyr,

From the article “Is This Uber’s ‘Theranos Moment?'” To wit:

“Now, much like Ms. Holmes, the founder and CEO had to quit, or resign, to appease those calling for change.

 

And, much like the previous example – those closest, and who should be the greatest ally for change and stay as to help weather out the storm are also jumping.

 

Sound familiar?"

Now this appeared yesterday afternoon at about the market’s close, from Bloomberg™, again, to wit:

“Uber Backers Discuss Stock Sale to SoftBank, Others”

Uber Technologies Inc. shareholders and its board, led by early backer Benchmark, have discussed selling some of their shares to SoftBank Group Corp. and other potential investors, people familiar with the matter said.”

For those who may not have taken the time, nor cared, to click the link I used to note who that “closest” or should be “greatest ally” that was jumping ship was:. It was Bill Gurley of Benchmark™. And with that now makes two points I stated earlier very prescient.

Again, from the above article:

“The optics of such a “jump” while in the midst of such a sh*t-storm at Uber, from my perspective, shows only one thing: You know the jig is up, it’s all about managing the fall, and there’s no need to do that in plain view.”

And the leading lines into my original article:

“There comes that moment where the veiled threats against logic such as the go-to excuse of “it’s different this time” are exposed against the harsh light of reality for all to see with such clarity, “it’s different this time” is precisely the apt statement to show why it was all fallacy to begin with.

 

Uber™ has just had that moment, and the resulting fallout as I’ve iterated before: Will. Be. Legend.”

And as I stated Thursday: And just like that: Suddenly, then all at once.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Anteater's picture

Uber and GE Capital, and the Big Four SUV makers have been engaged in legalized debt slavery for the first time in US history, at least since TBTF and QEn, anyway. 100,000s of drivers, eager for extra income for their families to bridge the QEn downdrag, have instead been repossessed and their credit ratings ruined. Commercial cabs have been devastated. Slavery is not 'disruptive technology'.

Jubal Early's picture

So you are saying that people bought fancy cars hoping to pay off the loan and make money as Uber drivers, and now they are screwed?

tmosley's picture

Fools and their money.

Uber was and is a good idea, but going out and buying a NEW vehicle for it is ridiculous. Idiots should have bought a used car for cash, worked for a few months and paid it off.

Thinking that Uber would be a sustainable career was and is the height of idiocy. They have been gearing up for driverless taxis since fucking 2014. Everyone involved should have known that it wouldn't last.

That said, Softbank is a very interesting buyer here. They have the funds and the AI bona fides to speed deployment of driverless taxis. Should be interesting.

Peacefulwarrior's picture

People are hurting and are desperate to find a method to keep their heads above the waterline. If your Monday morning QB-ing makes them stupid in your opinion than so be it. I find the overall situation of suffering due to lack of "real growth mechanisms"/Jobs in our society, sickening!

tmosley's picture

Monday morning quarterbacking? I've been saying that since the start.

I drove for Uber for a while. Bought a used car for that purpose, and paid it off in two months. Still drive it. Wondered what the hell the people buying new cars for it were thinking. Got out when they dropped the fees such that it wasn't worth my time anymore. The other guys were stuck.

Yes, it was stupid, and yes, they should have seen it coming.

Peacefulwarrior's picture

I will agree going out to buy a new car to become an UBER driver is not the best use of capital... Glad you got out ahead.

yomutti2's picture

St. Cyr is a moron. HE starts right out of the gate with an incorrect claim. Elizabeth "Crazy Eyes" Holmes is still the CEO of Theranos. She hasn't resigned from anything.

TruxtonSpangler's picture

I drove Uber for 1 day (wed 8am - 5pm) to see what it was about. After gas and wear depreciation on my (already owned) vehicle, I earned $.75/hr

Creative_Destruct's picture

Why Uber Is A Scam - Math Explains

Very simple: after adding up all costs, including depreciation, sales taxes, etc. even for the highest per mile rate areas, you'll make around $2.00 per hour.

Other areas, less than a buck per hour.

Preying on the financial ignorance of the general public.

At best this is like a Pay Day Loan Service for desperate people.

philipat's picture

There are bigger reasons why Uber is a scam and I still suspect massive fraud. WIth a business model like Uber's, once the software is developed and scaled, the costs of operating such a business efficiently should be very low, even allowing for business development costs and legal costs of entering new markets. And costs need to be low because the barriers to entry are low so others will come along with other similar models at lower cost to the consumer OR slightly different models, all of which over time will reduce market share; so with such a mosel you need to pump out cash upfront. So how can Uber be losing so much money year after year, quarter after quarter?

Creative_Destruct's picture

Agreed. Where in the hell is all that revenue going??? Probably being looted, sent offshore, into a network of shell corporations and accounts.

jerry_theking_lawler's picture

Excluding a 'high medallion' area...it is hard to beat a taxi service out on pricing. This is their business and they are in it to make money. They make money by driving people around. If their assets are sitting still...they are not making money. So they will price their services so their assets are moving and making money. If someone wants to 'subsidize' a lower pricing to move people around (Uber) then so be it. The taxi services will go out of business until the Uber people can't stand it any more. Then taxis will return or Uber will go up on fees.

This is economics/business 101.

IronForge's picture

Try Fri thru Sunday

Also, where are you driving?

Antifaschistische's picture

Have you guys ever used Uber?   I love Uber...and I can't think of a single time I had a driver with a shiny new car...the newest I had was probably the lowest end Kia one could get.

As an Uber fan...I'll say, the only people who deserve to make money off of Uber are the drivers...sure, the dude who developed the Uber "app" gets a few nickels off of each deal....but a bunch of "traders" do NOT deserve to get wealthy off of this business.  If they lose?  and they will...then so be it.

Gordon_Gekko's picture

Softbank is known to buy all kinds of trash.

tmosley's picture

One man's trash is every other man's technological singularity.

mkkby's picture

Trash is often a good investment, IF you can buy it cheap enough.  Softbank should wait until the cash is almost fully burned, then force a bargain basement sale.

Uber served it's purpose.  The con men jacked the stock up high enough to get rich.  Too bad about the suckers who drove for them, and too bad for the taxi services that lost their monopoly.

By the time self driving really works (decades) uber will be a distant memory.  Any decent developer can make a similar app and I expect many will.

Freddie's picture

Softbank is usually pretty smart.  Uber has some of the biggest scum investors like Rahm Emmanuel brother and some other evil trash.

Oddly Lyft is running banner ads on Zh as I type for drivers.  Is Lyft any better?

TGDavis's picture

A good used car and fully synthetic oil make Uber a great option for some. 

King of Ruperts Land's picture

I am very skeptical that a driverless cab will be competitive. It assumes the that the customer will just step into the driverless cab with no reservations about safety or efficiency. Are Millennials that stupid?

CRM114's picture

There's any amount of evidence that they are that stupid. Student loans for one...

OneZero's picture

Uber Drivers must have a car that is no more than 3 years old and in perfect condition in order to be approved to drive. Uber had rates that provided a decent living for the drivers, then they dropped the rates and driving Uber became a money losing proposition. They dropped rates (to less than it costs to provide the service) and subsidized the drivers (a little) in order to drive their competition out of business:they dumped taxi rides to destroy the taxi companies, and hemorrhaged (other people's) cash in the process. Uber depends on a constant stream of new drivers who get in, drive a while, do the math and quit. Their dream is to have you let them "put your car to work for you" as a driverless taxi that drives passengers after it drops you off at work. Your car will be worn slam out and you will have traded wear-and-tear for a little cash. Uber will make bank on your inability to do simple math.

swmnguy's picture

Not everybody can or should go into business.  And nobody should ever think they're actually going into business when in fact they are becoming sub-minimum-wage employees who get no benefits and have to cover all the costs of their own employment, including tools.

Hugh G. Rection's picture

2 year Uber veteran here. I started driving in my spare hours for the extra cash. I can drive anytime as much or little as I want, and in Honolulu at least it has been good enough for me to stay afloat while trying to get my career moving. I already had a sedan I bought in 2013 for around $20k, and I would say I gross $23hr before fuel, taxes, etc. Lately I've been averaging 25-30 hours per week.
I did see a Tesla with an Uber sticker driving the other day, THAT guy is insane.

goldinpenguin's picture

Uber drivers are burning up their cars subsidizing uber corp and riders. The party is over when they need a replacement vehicle. Most drivers substantially underestimate their cost of operation and overestimate the value of their labor, accurate cost accounting would show them they're working for zilch. Live and learn.

Hugh G. Rection's picture

YMMV I have had no repairs to my car except one battery and a set of tires... still original brakepads at 87,000 miles lol

I avoid driving rush hour and after 10 pm. No pukers yet. 

I imagine your analysis is more accurate in some other locales, though.

OneZero's picture

I would have to see your manifests and receipts before I would believe $23 an hour, these days. I am ca;;ing Uber spammer.

 

Jballsquared's picture

TAxis were and are a horrible business model of gov enforced monopoly that enriched owners while keeping drivers dirt poor and overworked. Result was a cab ride virtually guaranteed to be a shitty overpriced endurance test. Uber is an infinitely better model. Not worth the hype price but a valuable service all the same. Equating drivers to slaves is fucking ridiculous. If that be the case, next obvious step is two million truck drivers also replaced by robots. Check out the loan payments on a freightliner

OneZero's picture

I made great money as a cab driver 1999 to 2003. The harder I worked, the more I made. Our city had no monopoly, there were three cab companies and several single-cab operators. I leased my cab for $350 a week and made really good money, as much as most of my friends who worked for banks and insurance companies. Of course, I worked a lot, but so did they.

Once Uber has put the locals out of business, they'll set new rates for their valuable service and those rates will have to be high enough to repay all the investor's cash that they have spent building their monopoly. I'd bet that the car owners won't see much of those new higher rates. We'll see.

 

Mazzy's picture

Slavery?

Is it slavery when it's voluntarily entered into?

People can choose not to use Uber, can choose not to ride in taxi cabs, can choose plenty of car rental options while traveling, and can choose to not finance overpriced vehicles for high monthly payments.  You want something? Save up and buy in cash.

oncemore's picture

U seem to live in a paralel reality

Buckaroo Banzai's picture

People have been selling themselves into slavery and indentured servitude for millenia. Just because you chose to do it, doesn't make you any less of a slave.

SubjectivObject's picture

Well, it's gotta live up to that uber name.

Michigander's picture

Not enough bouncing titties for my liking.

HowdyDoody's picture

Fucking stupid ugly shoes.

Peacefulwarrior's picture

There is NO more building of a real business and earnings anymore only Ideas as Opiates that then inflate letting the founders/early investors party hard prior to imploding. This could apply to many facets of the "new distorted business models".

Mazzy's picture

The problem is the distortion of risk, and the separation of poor outcomes with consequences.  Everyone gets a bailout....if you're on top.  If not, shit rolls down hill while the rewards are absconded with.

ikhan's picture

the future doensn't need us....time to learn to farm boys and girls! 

toady's picture

On it. Been planting the orchard for about 10 years now. Canned the first large apple/pear harvest last fall. Also cleared another acre over,the winter/spring, so I'm up to around 6 acres of garden now. I'm finally feeling good about "no more grocery store"!

 

tmosley's picture

Why? Indoor (vertical) farms will make fresh vegetables as inexpensive as bulk grain in a few years.

OneZero's picture

Ironic. I stopped driving a Taxi and took up farming organic vegetables.While producing good food is psychologically rewarding...

You know how people talk about "hedging"? You know,"Hedge against this, hedge against that." Well, farming is labor intensive (old school hard work like your Grandfather did and nearly impossible to find help that will show up on the second day), capital intensive and really hard to scale...farming is a hedge against making a profit.

I am learning to make wood products from sustainably harvested trees (mostly they get blown down in storms). I also learned how to weld...and I went to college.

BlindMonkey's picture

Make Taxi Medallions Great Again

 

 

Cluster_Frak's picture

Uber has too many fingers in too many pies. Instead of focusing on perfecting one thing, like Amazon, and then moving on to the next, they did too many things at once. That's one of the reasons behind their own impending doom.meanwhile Lyft is perfecting the art of ride share quietly yet steadily.

Temporalist's picture

What did amazon perfect? Not making a profit? Or stated another way - the only thing crapazon perfected is staying in business while losing shit-tons of cash.

Jballsquared's picture

Amazon perfected subsidizing company growth with Wall Street funding instead of profits to dominate their industry. They also perfected the exploitation of human desire for instant gratification. I can send shit back unpackaged and broken and they will credit my account within an hour of dropping it at the ups counter. Replacement is on my doorstep within 48 hours. That is vastly easier than engaging with some tard at a box store.