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Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

economist.com

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Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#111

Post by rovolo »

hervature wrote: post #89
dktoao wrote: post #74

Earlier quoted context omitted.

I think they mean it is sort of a ponzi scheme for those invested. It requires more and more investor money to operate and will eventually collapse leaving the last round of investors holding the bag while those that got in early may get out fine. I think the ponzi scheme is more an apt metaphor than the actual structure of the company?

A Ponzi scheme requires an element of fraud. Very difficult to tell me that building a global fleet of ride hailing and being transparent with the financials is a Ponzi scheme. The outcome might be similar (later investors bearing most of the losses) but that's more of an investor problem and not fraud.

They probably mean a Pyramid scheme. In regular use, Ponzi and Pyramid schemes are interchangeable terms because you need new money to stay afloat. Legally they're different because a Ponzi scheme requires lying about where the returns are coming from, but a Pyramid scheme can be entirely truthful about the finances.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#112

Post by letmeinhere »

Ekaros wrote: post #70
xoa wrote: post #19

A core aspect seems to come at the end as a tossed in aside but gets disappointingly little consideration: > Real business flywheels do exist. Software makers have managed to lock users in and thus generate gross margins typically above 70%. No, it's not just "lock in" it's the magic of minimal to zero marginal cost, near zero "stocking" cost, instantaneous reaction to demand, etc. Software and digital services firms…

Real software or even content have minimal marginal costs... But these gig-economies clearly aren't software or content. And they have very real minimum price. And not even robotaxis will fix that. Just because you make software doesn't mean you are such tech company, see WeWork...

I think that was their point

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#113

Post by dang »

mmazing wrote: post #79
newfonewhodis wrote: post #21

Earlier quoted context omitted.

> They are starting to get profitable I don't know what you are basing this on but it's definitely not based on data. $UBER EPS over the last few quarters: -1.28 0.61 -0.06 -0.54 -0.62 $DASH EPS -0.30 -0.34 -2.67 The only way they are getting profitable is on an "adjusted basis", in other words when they exclude most of their expenses. That's not a business, that's a game.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

Could you please stop posting flamebait and/or unsubstantive comments to HN? You've been doing it repeatedly, unfortunately, and it goes against what we're trying for here.

If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#114

Post by mmazing »

edanm wrote: post #104
mmazing wrote: post #79

Earlier quoted context omitted.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

> Actually, I think a lot of businesses are just that. Can you explain what you mean by that? People often say this and I never really understand what they mean. Most businesses which aren't unicorns just sell stuff for money. What's a ponzi scheme about it? I also think calling these startups ponzi schemes is disingenuous. They are not lying about anything - they're offering a very clear, risky bet to people, which…

I've known several entrepreneurs in my life that simply lived off investor money and never really got anything out the door.

They would come up with a new idea, get money, and then botch the execution, over and over.

I've been a part of companies where the owners cashed out millions of dollars after round 3 of funding where the business never really sustained itself, yet continued to receive funding.

In the end, both examples didn't really mind if the business failed, because they already got their massive paycheck from it. To me, that's some sort of legal ponzi scheme.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#115

Post by sofixa »

roystonvassey wrote: post #38

If there was any time to be skeptical of Uber's longevity, it is now (at least for me). My experience is anecdotal but I visit my home country every year for a few months and I can clearly notice the declining quality of Uber's services: 1. Vehicles, on average, take at least 10-15 mins longer to get 2. Even if you find a vehicle, 60% of these rides are canceled (either by the driver because they call me and find out…

I've been seeing the same thing in Paris. It's gotten very unreliable, often requiring 15+ minutes to get a driver at the very least, and pricing is worse and worse.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#116

Post by randycupertino »

ska wrote: post #42
fumar wrote: post #41

Earlier quoted context omitted.

What do you think about last mile delivery robots? https://www.kiwibot.com These little bots don't require the same level of human physical presence as Uber or DoorDash.

> What do you think about last mile delivery robots? I suspect these will need truly significant infrastructure changes to actually function as last mile.

Agree! If actual human doordash and instacart delivery people can't read the sign or follow instructions to determine our house from the inlaw apartment, I doubt any robot is going to be able to get it done.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#117

Post by lhorie »

ultraluminous wrote: post #102
lhorie wrote: post #91

Earlier quoted context omitted.

The 2B "loss" was a downswing of Didi stock, which Uber has a big stake on; AFAIK Uber didn't actually liquidate that position, so it's more of a paper money loss. See [0] As for "creative accounting", pretty much everyone in this industry segment uses EBITDA. That's the language investors and media use to talk about earnings calls for not just Uber, but also Lyft, Doordash, etc. If you want to make a case for why GA…

I agree with the gist of you're saying, and I didn't personally dig into their last few fillings, but I suppose what the parent comment is trying to express can also be stated as "Uber's core ride-sharing business model is not cash flow positive", which can be obfuscated when arguing GAP vs EBITDA.

Yeah, I get the insinuation and I'm responding to that: ignoring for a moment the thing about the proper definition of a ponzi scheme (sibling threads already go into that), the claim is more or less that Uber's business model bleeds cash unsustainably on core verticals to capture investor endearment, but that cash is limited and the party has to come to an end.

What I'm pointing out is that a) the argument about "duping investors" doesn't really make any sense anymore now that Uber is a public company (since raising VC rounds by giving them paper equity is no longer really a thing), b) the balance sheet numbers have been trending towards positive cash flow (and fairly aggressively, at that), even despite a pandemic that could accurately be described as the worst thing that could possibly happen in this industry segment and c) the core vertical (rides) is actually cash flow positive and funding other parts of the business.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#118

Post by ultraluminous »

lhorie wrote: post #117
ultraluminous wrote: post #102

Earlier quoted context omitted.

I agree with the gist of you're saying, and I didn't personally dig into their last few fillings, but I suppose what the parent comment is trying to express can also be stated as "Uber's core ride-sharing business model is not cash flow positive", which can be obfuscated when arguing GAP vs EBITDA.

Yeah, I get the insinuation and I'm responding to that: ignoring for a moment the thing about the proper definition of a ponzi scheme (sibling threads already go into that), the claim is more or less that Uber's business model bleeds cash unsustainably on core verticals to capture investor endearment, but that cash is limited and the party has to come to an end. What I'm pointing out is that a) the argument about "du…

Thank you for the informative reply. I definitely agree on all counts, especially re "ponzy" etc. I think that the pandemic forced the entire sector to focus on profitability and cut most loss-leading initiatives, so hearing they're trending towards core profitability makes sense!

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#119

Post by [deleted] »

dang wrote: post #113
mmazing wrote: post #79

Earlier quoted context omitted.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

Could you please stop posting flamebait and/or unsubstantive comments to HN? You've been doing it repeatedly, unfortunately, and it goes against what we're trying for here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

[deleted]

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#120

Post by mmazing »

dang wrote: post #113
mmazing wrote: post #79

Earlier quoted context omitted.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

Could you please stop posting flamebait and/or unsubstantive comments to HN? You've been doing it repeatedly, unfortunately, and it goes against what we're trying for here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

I genuinely thought it would spark an interesting discussion about how certain businesses are run, that is related to this article.

Can you please clarify what is wrong with that exactly?

I've been a part of this site for like 10 years, and I think that any site that invites public comments is bound to have controversial topics come up. Further, I do my damn best to be respectful on this website, so your blanket characterization of my comments is unfair.

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