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robertogreco : networkeffects   4

Uber’s Path of Destruction - American Affairs Journal
"ince it began operations in 2010, Uber has grown to the point where it now collects over $45 billion in gross passenger revenue, and it has seized a major share of the urban car service market. But the widespread belief that it is a highly innovative and successful company has no basis in economic reality.

An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business.

Uber’s investors, however, never expected that their returns would come from superior efficiency in competitive markets. Uber pursued a “growth at all costs” strategy financed by a staggering $20 billion in investor funding. This funding subsidized fares and service levels that could not be matched by incumbents who had to cover costs out of actual passenger fares. Uber’s massive subsidies were explicitly anticompetitive—and are ultimately unsustainable—but they made the company enormously popular with passengers who enjoyed not having to pay the full cost of their service.

The resulting rapid growth was also intended to make Uber highly attractive to those segments of the investment world that believed explosive top-line growth was the only important determinant of how start-up companies should be valued. Investors focused narrow­ly on Uber’s revenue growth and only rarely considered whether the company could ever produce the profits that might someday repay the multibillion dollar subsidies.

Most public criticisms of Uber have focused on narrow behavioral and cultural issues, including deceptive advertising and pricing, algorithmic manipulation, driver exploitation, deep-seated misogyny among executives, and disregard of laws and business norms. Such criticisms are valid, but these problems are not fixable aberrations. They were the inevitable result of pursuing “growth at all costs” without having any ability to fund that growth out of positive cash flow. And while Uber has taken steps to reduce negative publicity, it has not done—and cannot do—anything that could suddenly pro­duce a sustainable, profitable business model.

Uber’s longer-term goal was to eliminate all meaningful competition and then profit from this quasi-monopoly power. While it has already begun using some of this artificial power to suppress driver wages, it has not achieved the Facebook- or Amazon-type “plat­form” power it hoped to exploit. Given that both sustainable profits and true industry dominance seemed unachievable, Uber’s investors de­cided to take the company public, based on the hope that enough gullible investors still believe that the compa­ny’s rapid growth and popularity are the result of powerfully effi­cient inno­vations and do not care about its inability to generate profits.

These beliefs about Uber’s corporate value were created entirely out of thin air. This is not a case of a company with a reasonably sound operating business that has managed to inflate stock market expectations a bit. This is a case of a massive valuation that has no relationship to any economic fundamentals. Uber has no competitive efficiency advantages, operates in an industry with few barriers to entry, and has lost more than $14 billion in the previous four years. But its narratives convinced most people in the media, invest­ment, and tech worlds that it is the most valuable transportation company on the planet and the second most valuable start-up IPO in U.S. history (after Facebook).

Uber is the breakthrough case where the public perception of a large new company was entirely created using the types of manufactured narratives typically employed in partisan political campaigns. Narrative construction is perhaps Uber’s greatest competitive strength. The company used these techniques to completely divert attention away from the massive subsidies that were the actual drivers of its popularity and growth. It successfully framed the entire public discussion around an emotive, “us-versus-them” battle between heroic innovators and corrupt regulators who were falsely blamed for all of the industry’s historic service problems. Uber’s desired framing—that it was fighting a moral battle on behalf of technological progress and economic freedom—was uncritically ac­cepted by the mainstream business and tech industry press, who then never bothered to analyze the firm’s actual economics or its anticompetitive behavior.

In reality, Uber’s platform does not include any technological breakthroughs, and Uber has done nothing to “disrupt” the eco­nomics of providing urban car services. What Uber has disrupted is the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency. Its multibillion dollar subsidies completely distorted marketplace price and service signals, leading to a massive misallocation of resources. Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else."
huberthoran  uber  carsharing  taxis  transportation  2019  economics  technology  technosolutionism  huxterism  propaganda  regulation  disruption  innovation  scale  networkeffects  amazon  facebook  venturecapital  siliconvalley  latecapitalism  capitalism  exploitation  labor  growth  lyft  china  startups  cities  urban  urbanism  productivity  traviskalanick 
june 2019 by robertogreco
Everything wants to be digital | booktwo.org
"Everything beckons to us to perceive it. My appreciation of a contemporary text is an appreciation of the network: will this text link me to further texts which will, knowingly or unknowingly, connect me to other texts that will expand or heighten my appreciation, not of it or the other text, but holistically, will raise the network value of texts and experiences in general. And the texts want this too: they are longing for the network.

Literature always adapts to the most disseminable state, and that state, now, is far more complex than our literatures have addressed, or our mental models, our metaphors, have prepared us to be. They can’t help it, but it doesn’t mean the apophatic silence is hand-waving: it is a necessary condition of the present.

The network is an emergent property of the internet…

Everything wants to be, and being is a hybrid, digital state now. Everything wants to be digital. It aspires to that higher form, to be capable of being networked…"
augmentedvalue  texts  howwelearn  howweread  literature  networkeffects  networkeffect  information  freedomofinformation  digitalization  ebooks  robingandy  flatland  poetry  craigdworkin  rolandbarthes  internet  online  web  networkedreading  2012  reading  books  digital  jamesbridle 
december 2012 by robertogreco
Unit Structures: Social Network Transitions
"So what will be the next big thing? It will be a situationally relevant social experience that exploits dense, underserved clusters, treating the ego-centric aspects as a sub-feature. I'm almost certain that the experience will be mobile based, incorpora
trends  socialmedia  socialnetworking  migration  facebook  flickr  future  locative  networkeffects  networking  socialsoftware  socialobjects  socialnetworks  myspace  community  social  mobile  networks  gamechanging 
november 2007 by robertogreco
Half an Hour: The Personal Network Effect
"For example, networks that are more diverse - in which each individual has a different set of connections, for example - produce a greater maximal value than networks that are not."
connectivism  personalnetworks  socialgraph  culture  dunbar  education  effectiveness  efficiency  learning  networking  networks  technology  social  interdisciplinary  networkeffects 
november 2007 by robertogreco

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