Uber has a problem. Uber is Uber.
Put aside their toxic environment for a moment. The company is hemorrhaging money, always has. The investors of Uber are trying to play a long game: Uber can only be profitable if they last long enough or technology rescues them. Neither is likely to happen.
Today, Uber released details about its financial status to Bloomberg:
The ride-hailing giant more than doubled gross bookings in 2016 to $20 billion, according to financial information Uber shared with Bloomberg. Net revenue was $6.5 billion, while adjusted net losses were $2.8 billion, excluding the China business, which it sold last summer.
They declined to release their first-quarter numbers, which doesn’t bode well. But let’s pass over that. As numerous commenters have noted, Uber cannot function without some fabulous mutation into a new product: there is no chance in hell of them becoming America’s tech sweethearts again. Uber-Eats will not save their Rand-worshipping executive suite. Uber’s entire theory of gain is this: if they can keep scabbing, they will eventually break even. That’s in theory. In reality, this cannot happen: Uber is a symbol of the modern economy, where profit without value is the goal. As their mystique continues to wear off, Uber will go down, and go down hard.
According to Gizmodo, last August Uber lost
$1.27 billion in the first half of this year, which is unprecedented, even for a tech company. By comparison, Amazon reported losses of $1.4 billion in 2000 during its biggest loss ever. Amazon CEO Jeff Bezos fired 15 percent of his workforce as a result.
Leaked documents showed that Uber paid out $2.72 billion to its drivers. This is still a meager fraction for the people who actually do the work. For Uber to live, the drivers must subsidize the company they work for: the majority of the costs (gas, insurance, phone, maintenance) fall on the shoulders of their employees. Headquarters does little itself except wheedle, release press statements, and “innovate.” Like our environment policies, Uber is unsustainable, and like our environment policymakers, the current team of decision-makers are ignoring all the relevant facts.
As Ryan Felton wrote in his magnificently-titled piece for Jalopnik, “Uber is Doomed”:
Uber is doomed because it can’t actually make money. ... it’s becoming more evident that Uber will collapse on its own. Barring a drastic shift in the company’s business—an implausible rollout of self-driving car fleets across the U.S., an increase of fares by three-fold, or a complete monopolization of the taxi and ride-hailing markets—Uber’s lifeline is shrinking. Its business model could collapse if one court case, and there are many, goes against it. Or perhaps more pressing, if it simply runs out of cash.
As Felton points out, to be successful, Uber has to either create self-driving cars, or break the unions. Even the most ambitious Ponzi scheme eventually runs out of volume. Eventually the feeding chain’s foundation stops growing.
Of the three options—science develops self-driving cars, science develops a forever pyramid, unions surrender to Uber—none of the above seems likely to happen, certainly not within the time window that even the most tolerant financial backer would allow. And here we come to the most interesting fact about Uber: there seems to be some kind of spell it casts on investors; a glamour that keeps otherwise clever people shoveling money into the furnace. What is it about this company? Perhaps what they say is true: if you attach the word “app” to anything—even the most mundane act—you can get the people on Wall Street to part with their lucre.
Whatever else may happen in the ride-sharing business, Uber will continue to be a polestar for the nutrition-free version of hip startups: a product that creates wild, frothing buzz … but cannot create value, and certainly has not done much for the world, except raise its own profit-line. Uber, properly understood, belongs to the world of Amway and sell-to-your-friends companies.
The Old America, of greengrocers and shipyards and foundries, was exploitative and grim in its own way—but it was harder then to get the very wealthy to put their hard-earned capital into dubious projects. You had to have something to show for your investment: a new kind of horse-breed, or a gun that exploded trains. Not so any more. Uber has been fooling people into throwing their money down the loss-hole for years now.
Businesses exist to make a return. Depending on your stance on economics, that’s a flaw or the entire point. But it’s what these concentrations of wealth do. That is the basic standard of success. Uber doesn’t do that. Uber cannot fairly—even by the most open-minded definition of the term—turn an actual long-term profit, because Uber is not a business. It is a promise to make money. An IOU. Uber is a voucher for ownership of a certain kind of future, where everything can be sublet. Oh, they can make profit in the short term, just as I can make a dollar with a promise to give you a root beer tomorrow. But I can’t operate forever on IOUs—I can’t get profit forever without actually bringing you something valuable. And neither can Uber.
This is curious. As one Facebook user, Ben Browning, put it:
Those of us who remember the Nineties have lived long enough to see the sharing economy become a term of opprobrium. Who said it wouldn’t catch on?
Whatever negative you can say for postwar America—and there’s plenty to say—there was a kind of consensus: everybody made profit, companies benefitted, but workers benefited too. The wealth was shared, to an extent. It was still unfair, and labor was still massively exploited, but it was better than everybody’s grandparents had done. Back then companies had a phrase: they created value. Labor and goods were added together, and cars and toasters and Monopoly sets flowed out the factories. Highways of concrete were poured across the Midwest. Homes were bought. Picket fences went up by the millions. People dreamed about the bomb, and worried about the hippies.
That’s the difference between our time and then. Back then, slick operators of stocks and currency and patent medicine salesmen could turn profit without having value. But it was harder to do. Back then, to be a magnate, even a small-town version, meant adding value to the world.
No more of that. All gone now. What happens in the current age? The cutting-edge doesn’t build anything here. Companies employ workers overseas, and sell the goods here. A lot of the conglomerates that live here in the States don’t plan to build value; they build profit. Profit has been disentangled from value. And Uber, like Theranos, like so many online companies, is in the business of value-free profit.
Uber is odd. That’s a polite word for it. A system which cannot make money but must somehow offset its losses; a “disruptional” model that is predicated on desperation staying reliable; a so-called innovative company that is parasitic on the established order. For that is what the whole business is: a with-it electronic development overlaid on developed infrastructure. To work, it requires roads already built, drivers already desperate, an infrastructure cut down by years of the wilting of the public sphere, a lack of mass transit, and most of all, the gullibility of the business press and the angel class of investors. It is safe to say that, short of the F-35, no project has ever been so thoroughly subsidized by the public, to such little public benefit.
It’s as if their CEO Travis Kalanick was evoking every bad Valley cliché without being entirely aware of it: the Bad, Fast Company. Enron was the quintessence of avarice for the Nineties—with its shell games, fetish for markets and deregulation, executive summits, marquees of the best and brightest.
To me, Enron felt like a deliberate mockery of the era. Enron could have been the creation of a bitter playwright who’d had their energy bill raised too high, and then decided to sit down and write the most vicious satire of the Clinton economic era possible. Uber is like that for our time: a saga of bad silicon-souled capitalism using fresh new rhetoric to drive the boot down on its clientele and its employees. We look at Uber on our phones, consider it convenient, and never think of the price we’re paying for it. I don’t mean the monetary one.
Uber is a brand that eats itself. Its own name, “Over,” denotes the status of the company’s honeymoon—and, hopefully, soon enough, the company itself.