I see a lot of businesses that don’t create value, like Uber, or even destroy value in multiple senses, like Uber, that go relatively unpunished by markets and create huge financial windfalls for executives, investors and some employees. Similar things have happened with some cryptocurrencies.
Often a business is run solely to generate enough hype to externalize losses onto an acquirer or public retail traders or unwitting retirement plan holders, while creating space for personal profit for a small set of people.
When we're talking 'value' here for startups, we mean value to the user. If Uber didn't produce any value for the user people wouldn't be taking them. Or if there was no value for the drivers they wouldn't drive. Whether or not people get windfalls from the process doesn't change what the end-user gets in the transaction.
> “If Uber didn't produce any value for the user people wouldn't be taking them”
At current prices, which are unsustainbly low due to VC subsidy, people find value in the trade of money for the service. At a price that fairly reflects the cost of delivering the service unsubsidized and maintaining driver quality of life at a socially acceptable level, nobody would pay for it.
So the game was to lever perceived market value up very high with VC subsidy and hype, all the while knowing that they are selling a dollar for fifty cents, just long enough to be acquired or go public at prices that pay back the original VC subsidizers at a multiple allowing them to profit, while whomever bought in is left holding the bag when the company is left in an unsustainable operating position and there’s no more hype-profit carrot to attract new subsidy investors.
This is a very possible outcome, but not the only realistic one. Depending on the rate of development/adoption of autonomous vehicles there may still be a future without deprived drivers and selling at a loss.
In any case, I am glad for the more efficient use of space and energy that Uber has provided over the congestion of roaming and standing taxicabs in the downtown core with service virtually nowhere else.
Uber and similar ride-hailing services have not led to more efficient space or energy use. On the contrary, these services have led to serious and alarming increases in congestion and pollution and diverted funds away from public transit.
The real economics of taxi services, for example round trip costs for servicing lower density out-lying regions, implies much higher prices and lower ride inventory.
Uber and others providing an inflated amount of inventory at unsustainably low prices is not some sort of shift in transit patterns. It’s nothing but temporarily selling a dollar for fifty cents in order to compel all competitors out of the market, at which point it instantly goes right back to being just as hard to get an Uber in the suburbs as it was to get a taxi there in the 90s, because that’s precisely how the price equilibrium of that supply and demand always worked.
I see your point, thought I’d say “often” is not fair, we just see a disproportionate amount of coverage for these companies - for the problems you’re alluding to. My post is for those who want to build a solid business
(I disagree with the other post above that startup = VC and hockey stick on HN - there’s plenty of overlap between here and indie hackers, for example).
Often a business is run solely to generate enough hype to externalize losses onto an acquirer or public retail traders or unwitting retirement plan holders, while creating space for personal profit for a small set of people.