The Wheels Come Off Uber
The most worrisome aspect of this essay is that it questions whether Uber has a viable business model.<p>The OP argues that Uber will never be able to charge prices in excess of the level required by a traditional taxi&#x2F;limo operator to be profitable for long enough to recoup the billions of dollars the company has burned by subsidizing the price of rides.  Put another way, even if Uber drives every competing taxi&#x2F;limo operator out of business, as soon as the company raises prices to cover costs -- vehicle, insurance, maintenance, fuel, credit card processing, license fees, and (at least for now) labor -- new entrants (and revived old entrants) would quickly come into the market, preventing Uber from keeping prices up.<p>If the OP is right, Uber is truly in a precarious situation, because, as Brad Feld recently wrote: <i>&quot;the markets reward growth until they don’t. Then they reward profitability. The trick is to be in a position to make the switch when you need to. Lots of CEOs and boards fantasize about this, but don’t actually have a plan in place to do this as they expect the future – where the switch from growth to profitability – will never come. Or, they hope the exit will happen before this moment.&quot;</i>[1]<p>Uber doesn&#x27;t seem to have a plan to make the switch.  If the markets start demanding profitability (or at least a convincing plan for reaching profitability), Uber&#x27;s wheels could indeed come off very quickly.<p>[1] <a href="https:&#x2F;&#x2F;www.feld.com&#x2F;archives&#x2F;2017&#x2F;06&#x2F;lessons-internet-bubble-growth-vs-profitability.html" rel="nofollow">https:&#x2F;&#x2F;www.feld.com&#x2F;archives&#x2F;2017&#x2F;06&#x2F;lessons-internet-bubbl...</a>