Uber Is Headed for a Crash
I don&#x27;t know the last time I read an article so snarky and without substance as this.<p>Just a few points below:<p>&gt; 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.<p>Amazon was founded in 1994 and reported a quarterly profit in the fourth quarter of 2001 and, at $5 million. It then went back into the red for several years. [0]<p>&gt; 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.<p>So its easy to copy, is regularly copied, but none of them made any market-share gains? Maybe it&#x27;s not so easy to copy?<p>&gt; 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.<p>For drivers the economy of scale is that they are in a market. They can be in their own market, a market of 1, and alas, they&#x27;ll have no competition. But saying that a market adds no value to producers as it grows large is backward economics. The benefits of economies of scale for the passengers is more obvious and completely ignored by the article.<p>&gt; Unlike digital businesses, the cab industry does not have significant scale economies; that’s why there have never been city-level cab monopolies, consolidation plays, or even significant regional operators.<p>There are no benefits to scale economies in taxi markets, that&#x27;s why one never existed. Oh, except Uber, which does exist and is worth a lot but is stupid.<p>&gt; 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.<p>This is just a cynical view of anything financial. I believe something is stupid. If others agree, good. If others own it, it&#x27;s just because they know other people are stupid and they&#x27;ll pass it on to someone stupider.<p>[0] <a href="https:&#x2F;&#x2F;qz.com&#x2F;1196256&#x2F;it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017&#x2F;" rel="nofollow">https:&#x2F;&#x2F;qz.com&#x2F;1196256&#x2F;it-took-amazon-amzn-14-years-to-make-...</a>