<story><title>Can Uber ever make money?</title><url>https://www.economist.com/business/2019/04/27/can-uber-ever-make-money</url></story><parent_chain><item><author>rchaud</author><text>Looking at Uber, WeWork, JustEat etc., I get the feeling there&amp;#x27;s a growing gap between what we were brought up to believe about entrepreneurship and innovation vs. what the reality is.&lt;p&gt;We&amp;#x27;re all familiar with the &amp;#x27;&amp;gt;50% of small businesses fail&amp;#x27; stat (not the real number) and that we should be toiling and not taking a salary for years until we break even, i.e. reach a point where we&amp;#x27;re no longer losing money on every project&amp;#x2F;sale. If you aren&amp;#x27;t able to achieve this, your pricing, product-market fit, etc. have failed, because the all-knowing, all-equilibrium-izing market has spoken.&lt;p&gt;Every politician out there shows reverence for the &amp;#x27;small businessperson&amp;#x27; taking risks and bringing jobs and tax revenue into their communities. But once in office, the people they meet with are Travis Kalachian and others, people who cannot make a profit, but are excellent at convincing rich investors that they should make Travis a millionaire.&lt;p&gt;The reality is that a VC-backed company can simply outprice any competitor, and if it&amp;#x27;s not enough, can lobby city hall to change the laws to favour them. And this cash spigot can stay on for years, as long as you can show you&amp;#x27;re gaining customers every quarter. If you&amp;#x27;re a big enough play, you can move your whole HQ to a low-tax friendly country and administer local operations from there.&lt;p&gt;The jobs that are created by this are right around minimum-wage level, so how is this supposed to create wealth for anybody except the shareholders who got in early with cheap valuations?</text></item></parent_chain><comment><author>JimboOmega</author><text>The question (with Uber in particular) is that if this business model really covers up a huge ponzi scheme.&lt;p&gt;Before the last decade (or even 5 years?) the amount of money some of these companies have been raising would have been unheard of and required an IPO.&lt;p&gt;But if you can keep finding ever bigger investors to give you ever more money...&lt;p&gt;It&amp;#x27;s a really weird reality, because typically the worst kind of place to start a company is one with huge barriers to entry that requires a ton of money to get started.  Yet that seems to have done quite well recently.&lt;p&gt;Squashing minimum wage service providers seems to be merely a side effect... these companies can&amp;#x27;t really make money EVEN WHEN they ignore regulations and exploit their not-technically-employees.</text></comment>
<story><title>Can Uber ever make money?</title><url>https://www.economist.com/business/2019/04/27/can-uber-ever-make-money</url></story><parent_chain><item><author>rchaud</author><text>Looking at Uber, WeWork, JustEat etc., I get the feeling there&amp;#x27;s a growing gap between what we were brought up to believe about entrepreneurship and innovation vs. what the reality is.&lt;p&gt;We&amp;#x27;re all familiar with the &amp;#x27;&amp;gt;50% of small businesses fail&amp;#x27; stat (not the real number) and that we should be toiling and not taking a salary for years until we break even, i.e. reach a point where we&amp;#x27;re no longer losing money on every project&amp;#x2F;sale. If you aren&amp;#x27;t able to achieve this, your pricing, product-market fit, etc. have failed, because the all-knowing, all-equilibrium-izing market has spoken.&lt;p&gt;Every politician out there shows reverence for the &amp;#x27;small businessperson&amp;#x27; taking risks and bringing jobs and tax revenue into their communities. But once in office, the people they meet with are Travis Kalachian and others, people who cannot make a profit, but are excellent at convincing rich investors that they should make Travis a millionaire.&lt;p&gt;The reality is that a VC-backed company can simply outprice any competitor, and if it&amp;#x27;s not enough, can lobby city hall to change the laws to favour them. And this cash spigot can stay on for years, as long as you can show you&amp;#x27;re gaining customers every quarter. If you&amp;#x27;re a big enough play, you can move your whole HQ to a low-tax friendly country and administer local operations from there.&lt;p&gt;The jobs that are created by this are right around minimum-wage level, so how is this supposed to create wealth for anybody except the shareholders who got in early with cheap valuations?</text></item></parent_chain><comment><author>munificent</author><text>&lt;i&gt;&amp;gt; how is this supposed to create wealth for anybody except the shareholders who got in early with cheap valuations?&lt;/i&gt;&lt;p&gt;Spoiler alert: It&amp;#x27;s not.&lt;p&gt;The primary goal of a VC-backup startup is a positive return to its VC backers. Everything else is a necessary evil to attain that primary goal.</text></comment>