Like Lyft, Uber practices #AlgorithmicWageDiscrimination, #VeenaDubal's term describing the illegal practice of offering workers different payouts for the same work. Uber's algorithm seeks out "pickers" who are choosy about which rides they take, and converts them to "ants" (who take every ride offered) by paying them more for the same job, until they drop all their other gigs, whereupon the algorithm cuts their pay back to the rates paid to ants:
https://pluralistic.net/2023/04/12/algorithmic-wage-discrimination/#fishers-of-men
20/
Lyft is actually slightly better off than Uber overall. It spent less money on expensive props for its long con - #FlyingCars, #robotaxis, scooters, overseas clones - and abandoned them before Uber did. Lyft also fired 24% of its staff at the end of 2022, which should have improved its margins by cutting its costs.
Uber pays its drivers less.
19/
Meanwhile, #Lyft - Uber's also-ran competitor - saw its margins worsen over the same period. Lyft has always been worse at lying about it finances than Uber, but it is in essentially the exact same business (right down to the drivers and cars - many drivers have both apps on their phones). So Lyft's financials offer a good peek at Uber's true earnings picture.
18/
Uber's bezzle destroyed local taxis and local transit - and replaced them with *worse* taxis that cost more.
Uber won't say why its margins are improving, but it can't be coming from scale. Before the pandemic, Uber had *far* more rides, and *worse* margins. Uber has *diseconomies* of scale: when you lose money on every ride, adding more rides increases your losses, not your profits.
17/
Yes, it's that stupid: Uber holds shares in dying companies that no one wants to buy. It declared those shares to have gained value, and on that basis, reported a profit.
Truly, any big number multiplied by an imaginary number can be turned into an even bigger number.
Now, Uber also reported "margin improvements" - that is, it says that it loses less on every journey. But it didn't explain *how* it made those improvements.
14/
At the end of 2022, Horan showed how Uber invented a made-up, nonstandard metric, called "#EBITDAProfitability," which allowed them to lose *billions* and still declare themselves to be profitable, a lie that would have been obvious if they'd reported their earnings using #GenerallyAcceptedAccountingPrinciples (#GAAP):
https://pluralistic.net/2022/02/11/bezzlers-gonna-bezzle/#gryft
Like clockwork, Uber just announced - again - that it is profitable, and once again, the press has credulously repeated the claim.
12/
So once again, Horan has published one of his magisterial debunkings on #NakedCapitalism:
Uber's $394m gains this quarter come from paper gains to untradable shares in its loss-making rivals - #Didi, #Grab, #Aurora - who swapped stock with Uber in exchange for Uber's own loss-making overseas divisions.
13/
In 2021, Horan showed how Uber had burned through nearly all of its cash reserves, signaling an end to its subsidy for drivers and rides, which would also inevitably end the bezzle:
https://pluralistic.net/2021/08/10/unter/#bezzle-no-more
In mid, 2022, Horan showed how the "profit" Uber trumpeted came from selling off failed companies it had acquired to other dying rideshare companies, which paid in their own grossly inflated stock:
https://pluralistic.net/2022/08/05/a-lousy-taxi/#a-giant-asterisk
11/
At the end of 2022, Horan showed how Uber invented a made-up, nonstandard metric, called "#EBITDAProfitability," which allowed them to lose *billions* and still declare themselves to be profitable, a lie that would have been obvious if they'd reported their earnings using #GenerallyAcceptedAccountingPrinciples (#GAAP):
https://pluralistic.net/2022/02/11/bezzlers-gonna-bezzle/#gryft
Like clockwork, Uber just announced - again - that it is profitable, and once again, the press has credulously repeated the claim.
12/
In 2021, Horan showed how Uber had burned through nearly all of its cash reserves, signaling an end to its subsidy for drivers and rides, which would also inevitably end the bezzle:
https://pluralistic.net/2021/08/10/unter/#bezzle-no-more
In mid, 2022, Horan showed how the "profit" Uber trumpeted came from selling off failed companies it had acquired to other dying rideshare companies, which paid in their own grossly inflated stock:
https://pluralistic.net/2022/08/05/a-lousy-taxi/#a-giant-asterisk
11/
One person Uber has *never* fooled is #HubertHoran, a transportation analyst with decades of experience who's had Uber's number since the very start, and who has done yeoman service puncturing every one of these financial "disclosures," methodically sifting through the pile of shit to prove that there is no pony hiding in it.
10/
#NarrativeCapitalism has its limits. Once Uber went public, it had to produce financial disclosures that showed the line going up, lest the bezzle come to an end. These balance-sheet tricks were as varied as they were transparent, but the financial press kept falling for them, serving as dutiful stenographers for a string of triumphant press-releases announcing Uber's long-delayed entry into the league of companies that don't lose more money every single day.
9/
They pissed away hundreds of millions on California's #Prop22 to institutionalize worker misclassification, only to have the rule struck down because they couldn't be bothered to draft it properly. Then *they did it again* in Massachusetts:
https://pluralistic.net/2022/06/15/simple-as-abc/#a-big-ask
Remember when Uber was going to plug the holes in its balance sheet with *flying cars*? Flying cars!
7/
This #VenturePredation let investors - like #PrinceBoneSaw - cash out to suckers, leaving behind a money-losing business that had to invent ever-sweatier accounting tricks and implausible narratives to keep the suckers on the line while they blew town. A bezzle, in other words:
https://pluralistic.net/2023/05/19/fake-it-till-you-make-it/#millennial-lifestyle-subsidy
Uber is a true bezzle innovator, coming up with all kinds of fairy tales and sci-fi gimmicks to explain how they would convert their money-loser into a profitable business.
5/
They spent $2.5b on #SelfDrivingCars, producing a vehicle whose mean distance between fatal crashes was *half a mile*. Then they paid another company *$400 million* to take this self-licking ice-cream cone off their hands:
Amazingly, self-driving cars were among the *more* plausible of Uber's plans.
6/
This #VenturePredation let investors - like #PrinceBoneSaw - cash out to suckers, leaving behind a money-losing business that had to invent ever-sweatier accounting tricks and implausible narratives to keep the suckers on the line while they blew town. A bezzle, in other words:
https://pluralistic.net/2023/05/19/fake-it-till-you-make-it/#millennial-lifestyle-subsidy
Uber is a true bezzle innovator, coming up with all kinds of fairy tales and sci-fi gimmicks to explain how they would convert their money-loser into a profitable business.
5/
Predatory pricing used to be illegal, but #ChicagoSchool #economists convinced judges to stop enforcing the law on the grounds that predatory pricing was *impossible* because no rational actor would choose to lose money. They (willfully) ignored the obvious possibility that a #VC fund could invest in a money-losing business and use predatory pricing to convince retail investors that a pile of shit of sufficient size *must* have a pony under it somewhere.
4/
Uber lost $0.41 on every dollar they brought in, lighting $33b of its investors' cash on fire. Most of that money came from the #Saudi royals, funneled through #Softbank, who brought you such bezzles as #WeWork - a boring real-estate company masquerading as a high-growth tech company, just as Uber was a boring taxi company masquerading as a tech company.
3/
#Bezzle (n):
1. "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it" (#JKGabraith)
2. #Uber
--
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/08/09/accounting-gimmicks/#unter
1/
Uber was, is, and always will be a bezzle. There are intrinsic limitations to the profits in operating a taxi fleet, even if you misclassify your employees as contractors and steal their wages, even as you force them to bear the cost of buying and maintaining your taxis.
The magic of early Uber - when taxi rides were incredibly cheap, and there were always cars available, and drivers made generous livings behind the wheel - wasn't magic at all. It was just #PredatoryPricing.
2/
#Bezzle (n):
1. "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it" (#JKGabraith)
2. #Uber
--
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/08/09/accounting-gimmicks/#unter
1/
Uber was, is, and always will be a bezzle. There are intrinsic limitations to the profits in operating a taxi fleet, even if you misclassify your employees as contractors and steal their wages, even as you force them to bear the cost of buying and maintaining your taxis.
The magic of early Uber - when taxi rides were incredibly cheap, and there were always cars available, and drivers made generous livings behind the wheel - wasn't magic at all. It was just #PredatoryPricing.
1/
#Bezzle (n):
1. "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it" (#JKGabraith)
2. #Uber
--
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2023/08/09/accounting-gimmicks/#unter
1/
nostr:npub1un9ykx5suypm4c7lsj5wsea3gvh7f63ue7yycmzdar3qsyee3l3ss3xpeq It is - it's a hybrid event.
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--
Today's top sources: Gregory Charlin.
I'm kickstarting the audiobook for "The Internet Con: How To #SeizeTheMeansOfComputation," a #BigTech disassembly manual to disenshittify the web and bring back the old, good internet. It's a #DRMFree book, which means #Audible won't carry it, so this crowdfunder is essential. Back now to get the audio, Verso hardcover and ebook:
http://seizethemeansofcomputation.org
eof/
