Brits Have Suddenly Stopped Buying Cars

 Unless the press or Robert Mueller come up with a smoking gun, a dead body, and a cache of rubles, we can assume Donald Trump will be our president for a full four-year term. But Trump as President continues to sabotage himself. He risks becoming irrelevant because no one will take him seriously. Which might be a good thing.

The United States Of Unicorns

The United States is home to 105 unicorn companies valued at $1B+.

As of 7/25/2017, CBInsights.com reports that six private US companies are worth over $10B. The two most valuable unicorns in the US are Uber ($68B) and Airbnb ($29.3B). Palantir Technologies and WeWork, both valued at $20B, are tied for third.

Of the top four highest valued, only WeWork (which is based in NYC) is headquartered outside California.

California has the highest unicorn “population” of any US state by far, with 62 billion-dollar startups inside its borders. New York ranks second with 15, followed by Massachusetts and Illinois with five each. Eight other states and the District of Columbia are also home to at least one company worth $1B+.

click image for huge legible version

Key insights about the companies in this map:

• Collectively, US unicorns are worth approximately $360B.


• Combined, these companies have raised just over $73B.


• After California, New York, Massachusetts, and Illinois, the next-highest unicorn populations are found in Utah (with four) and Florida (with three).


• The top five most well-funded US unicorns are: Uber ($15.1B raised), Airbnb ($4.4B), WeWork ($2.76), Infor ($2.63B), and Lyft ($2.46B).


• The oldest unicorn in the US is the greentech company Bloom Energy, which reached a valuation above $1B in 2009.


• The newest unicorn in the US is 3D printing startup Desktop Metal, which became a unicorn in July 2017 after raising a $115M Series D.


• The three most active investors in US-based unicorns, by total number of deals to these companies, are the VC firms Sequoia Capital, Andreessen Horowitz, and Tiger Global Management.   – CBINSIGHTS

Meet DiDi: China's Answer To Uber

For better or worse, just about everybody has heard of Uber. Over the last few years, the ride-haling company has grown to dominate the market in the U.S. and beyond, currently operating in over 400 cities around the globe - despite significant resistance and outright bans in some places. DiDi, on the other hand, is unlikely to be on your radar. Having bought out Uber"s operations in China last year, the company currently enjoys 95 percent market share in its home country.

As Statista"s Martin Armstrong notes, the infographic below shows if it were to come to a game of Top Trumps, DiDi wouldn"t be such a bad card to hold.

You will find more statistics at Statista

Founded in 2012, and working on the basis of almost $16 billion worth of funding, it has amassed 38.5 million monthly users (compared to Uber"s 40), is active in around 400 cities and is valued at $50 billion.

As illustrated in the Statista report "The Chinese Passenger Car Market Outlook", revenue from ride sharing in China is projected to see a CAGR of 32 percent from 2016 to 2021. Likewise, the number of users is expected to grow by 15 percent.

As Uber begins to falter and face stiffer competition from alternatives like Lyft, it might not be long before DiDi is the biggest ride hailing company in the world.

Gauging The Economic Impact Of Uber

Authored by Andrew Zatlin via MoneyballEconomics.com,

Uber has been in the headlines for all the wrong reasons over these past couple months.

I’m sure you’ve seen or heard the headlines.

From sexual harassment, to discrimination, to “Greyball” – software that helped Uber drivers evade law enforcement.

Everything seems to be imploding for Uber. Amidst all the controversy, CEO Travis Kalanick resigned yesterday.

Yet we should not overlook the major economic impact of Uber (and its main competitor Lyft).

According to Uber and Lyft, there are over 400,000(K) registered active drivers in the US.  

An active driver is someone who has provided at least 4 rides per month.

The number of taxi and limo drivers reached 77K in 2013 – an increase of 18% from 2010. Taxi and limo driver payrolls hit 8K in 2015 and 2016. But dropped to 76K this year… essentially leaving payrolls flat for the last 4 years.

You could even argue the 5% decline in payrolls this year were taxi and limo drivers jumping ship to Uber.

But looking from an even higher view,  we now have 400K part-time contractors.

These part-time contractors are not included in the non-farm payrolls numbers.  So any employment upside is being missed in the government data.

Who Wins, Who Loses?

Uber & Lyft will generate $8 billion (bn) in revenue in 2017.  

The U.S. Taxi industry generates $19B annually (per IBIS World).

This hasn’t changed much even with the advent of the ride-sharing economy.  Which means that Uber is not replacing the taxi industry as much as it is augmenting it by releasing pent-up demand.

Understand that the taxi industry is a local monopoly.  New York, LA, Las Vegas, San Francisco – the taxi rights are owned by individual companies.

The origins of the U.S. regulated taxi industry goes back to the Depression.  

To make ends meet… car owners offered ride-sharing. But supply overwhelmed demand and prices plunged.  

To prop up workers, cities began to regulate the industry in order to limit the number of drivers. They created a limited number of licenses (aka medallions) which they sold.  

Eventually a market emerged for those medallions and some smart business people began to scoop them up. Some became billionaires by doing this.

(The fight against Uber is really a fight between billionaire monopolists and a monopoly-busting service. Banks also have a heavy interest in keeping the taxi industry alive because they borrowed a ton of money to buy up the medallions.)

But limiting the number of licensed taxis also capped the number of rides.

If you’ve been to San Francisco, you know hailing a cab is pointless. There aren’t very many.  

As Uber is showing, massive pent-up demand has existed and is generating $8bn of incremental economic activity that is being distributed across hundreds of thousands of workers.

Is Uber Cyclical (part of a booming economy), Counter-cyclical (part of trying to make ends meet), or a bit of both?

There are full-time Uber drivers but most are part-time drivers trying to supplement their income.

An active economy creates the demand for drivers. But when the economy turns down, we’ll likely see even more drivers but less demand. Unlike the Depression, price regulation will be in place because Uber has to make a profit somehow.

KEY TAKEAWAY: Uber has disrupted the ride-sharing economy. However, the government, banks, and taxi monopolists won’t allow Uber to completely put them out of business… at least for the foreseeable future.

When the economy turns, more people will take up driving (increasing supply) as consumers pull back their wallets (decreasing demand). Prices will drop.

Eventually more regulation will be put in place for companies like Uber and Lyft.

How Much Do People Actually Make From "Gigs" Like Uber And Airbnb

Via Priceonomics.com,

Coined shortly after the financial crisis in 2009, the so-called “gig economy” or “sharing economy” refers to the growing cadre of companies like Airbnb, Lyft, and TaskRabbit—platforms that employ temporary workers who provide a wide variety of services: delivery, ridesharing, rentals, and odd jobs. A recent Pew study estimated that nearly a quarter of all Americans earn some money through these platforms.

But how much money are the service providers in the sharing economy actually making from their "side-gigs"?

We analyzed anonymized data from Priceonomics customer Earnest, a loan provider, and examined tens of thousands of loan applicants to see how much people are earning on side-gig platforms and how these platforms stack up against each other.

We looked at a span of data accounting for just over two years, and for each worker, we analyzed a pay period of between one and 27 months. We do not know how many hours of work the income represents for each platform, as each one has a unique pricing and commission structure. 

Furthermore, this data is just reflective of the Earnest user base, who are typically refinancing college loans and therefore may be more likely to be treating these services as a “side-gig” than the typical service provider who may be more likely to treat it as a fulltime job and have different earning levels.

We found that 85% of side-gig workers make less than $500 a month. And of all the side-gig platforms we examined, Airbnb hosts earn the most by far.

In our data, on all but Lyft and Uber, we excluded any worker who made a total $10 or less from a platform to eliminate data points that could simply represent a refund from the company. For Lyft and Uber, we excluded anyone with a total income of $50 or less. Then we tallied the average monthly incomes made by workers at each company.

Data source: Earnest

Making an average of $924 off their platform each month, Airbnb hosts make nearly three times as much as other workers. Workers at the general task-service platform, TaskRabbit, rank second at $380 per month. Overall, Lyft and Uber drivers make roughly the same average per month at $377 and $364 respectively. We also observed that nearly a quarter of Lyft drivers also earned income from Uber—and of that subset, we saw that the average income was actually higher for Uber ($481 vs $396.)

Of course, on all of these platforms, there is a wide range of earners. Several Airbnb hosts in our records, for instance, made over $10,000 per month, while others made less than $200.

To really understand these averages above, we took a deeper look at these ranges. Below, we’ve charted out the income distribution for each company. The figures represent the percentage of workers who fall into each month income bracket.

Data source: Earnest

Airbnb hosts enjoy the highest average monthly earnings because there is a much wider range of income distribution on that platform than at other companies: Nearly half of all hosts make more than $500 per month.

Conversely, the majority of workers at some other companies (Etsy, Uber, Fiverr) fall into the $100 or under per month bracket.

Tallying all of these companies up, the overall distribution tilts strongly toward the lower end.

Data source: Earnest

Some 84% of all gig economy workers make less than $500 per month—but in particular, workers at Getaround (98.3% under $500 per month), Fiverr (96.3%), and Etsy (95%) have especially high percentages of low-earners.

Reasons for the low income could vary—some workers may be simply trying the platform, or put in very few hours.

Lyft, Taskrabbit, and Airbnb seem to beat this “84% under $500” average.

Data source: Earnest

It might be easy to look at this data and assume that gig economy workers are working at below market rates. After all, $500 per month is hardly a livable wage. For the industry, the key question is how many of these workers are utilizing these platforms to make a little extra cash as a side-gig versus trying to forage a full-time living.

Uber CEO To Take Leave Of Absence, "Dimished Role" After Holder's Report On Workplace Scandals

Uber no longer has a COO, CBO, CFO, CMO, or Head of Engineering; and is now temporarily without a CEO after the release of today"s "official" investigation into workplace scandals (by former U.S. Attorney General Eric Holder). 

"If we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve... During the interim period, the leadership team, my directs, will be running the company."

As The Wall Street Journal reports, over the past several weeks, Uber workers have been summoned to the nearby San Francisco office of Mr. Holder’s firm, Covington & Burling LLP, to describe their experiences, according to employees who have been interviewed or were requested to be. On Sunday, Mr. Holder’s firm presented its report to company directors, which unanimously approved all of the recommendations following a marathon board meeting in Los Angeles, according to people familiar with the matter. The fallout of that report was evident Monday, when Uber’s chief business officer, Emil Michael, resigned from the company. His exit, which people familiar with the matter say was recommended by the report, was surprising given his close relationship with Mr. Kalanick.

And now we have the results (and the findings)... Bloomberg reports that Uber Chief Executive Officer Travis Kalanicktold staff he plans to take a leave of absence, without disclosing a return date.

Kalanick decided to take a leave while also coping with the death of his mother, whose funeral he attended Friday.

The company will strip him of some duties and appoint an independent chair to limit his influence after a slew of scandals, according to an advance copy of a report prepared for the board.

At a staff meeting Tuesday, the company began conveying the results of a probe conducted by Eric Holder, the former U.S. attorney general who Uber hired to look into allegations of harassment, discrimination and an aggressive culture.

The 47 recommendations include creating a board oversight committee, rewriting Uber’s cultural values, reducing alcohol use at work events, and prohibiting intimate relationships between employees and their bosses.

Several of Uber’s planned changes are symbolic. For example, a conference room known as the War Room will be renamed the Peace Room.

The company also plans to scrap many of its cultural values, notably “Let Builders Build, Always Be Hustlin’, Meritocracy and Toe-Stepping, and Principled Confrontation,” which the Holder report described as being “used to justify poor behavior.”

“Many of Uber’s 14 cultural values, while well-intended, had been allowed to be weaponized,” Huffington said in her statement. “That’s completely unacceptable.”

Some excerpts from the email...

RECOMMENDATIONS

We recommend that Uber focus on four prevailing themes with regard to taking the folowing remedial measures: tone at the top, trust, transformation, and accountability.

A. Review and Reallocate the Responsibilities of Travis Kalanick. The Board should evaluate the extent to which some of the responsibilities that Mr. Kalanick has historically possessed should be shared or given outright to other members of senior management. The search for a Chief Operating Officer should address this concern to some extent.

B. Institute and Enforce Clear Guidelines on Alcohol Consumption and the Use of Controlled Substances. Uber should take steps to provide clear guidelines about acceptable and unacceptable uses of alcohol and strictly prohibit the use of controlled substances, including prolubiting consumption of alcohol during core work hours and prohibiting consumption of non-prescription controlled substances during core work hours, at work events, or at other work-sponsored events. With respect to alcohol consumption at after-hours work events and at other work-sponsored events, Uber should consider limiting the budget available to managers for alcohol purchases, restrict reimbursement for alcohol-related events, and include training for managers on appropriate events for retreats and out-of-work events. Uber should also encourage responsible drinking, which can include limiting the amount of alcohol that is available in the office, de-emphasizing alcohol as a component of work events, and otherwise taking appropriate action to discipline and address inappropriate employee conduct fueled by alcohol consumption. Uber should support work events in which alcohol is not a strong component to ensure that employees who do not partake in consumption of alcohol still have opportunities to engage in networking and team building activities.

C. Prohibit Romantic or Intimate Relationships Between Individuals in a Reporting Relationship. Uber should developspecificand clearguidance concerningappropriate workplace relationships, including makingclear that any type of romantic or intimate relationship between individuals in a reporting relationship (either direct or indirect) is prohibited. If employees in a reporting relationship find themselves in a romantic or intimate relationship, they must be relationship find themselves in a romantic or intimate relationship, they must be required to immediately report it so that appropriate action can be taken, including making sure that the individuals are not in any type of reporting relationship (direct or indirecegoing forward. Although it is not realistic to prohibit all romantic and intimate relationships in the workplace. it should be emphasized more generally that with respect to such relationships, Uber will not tolerate any form of harassment, discrimination, or retaliation.

Of course this is just the latest in a string of PR disasters for the "unicorn" of "unicorns". As noted recently, here is a snapshot of some of the most notable scandals that have emerged, involving the world"s most valuable private company:

1. Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it"s at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.


2. Uber"s newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here"s more on the difficult position of former employers in this case.


3. A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. "I need leadership help," Kalanick said in an apology he issued shortly after.


4. Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she"s hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who"s leading the investigation.


5. Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars" registrations were revoked in December because it refused to get the permit.


6. Charlie Miller, one of the two famous car hackers who joined Uber"s Advanced Technology Center in August 2015, announced he"s leaving the company.


7. The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.


8. Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company"s problematic culture isn"t limited to the men who work there.


9. Ed Baker, Uber"s head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.


10. A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.


11. California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.


12. A new report says Uber used a secret program dubbed "Hell" to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.


13. Waymo sued Uber in civil court, claiming that Uber was using trade secrets stolen from Google to develop Uber’s self-driving vehicles.


14. Uber fires Anthony Levandowski, a star engineer brought in to lead the company’s self-driving automobile efforts who was accused of stealing trade secrets when he left a job at Google.


15. Uber said Tuesday that it had made a mistake in the way it calculated its commissions, at a cost of tens of millions of dollars to its New York drivers, and the company vowed to correct the practice and make the drivers whole for the lost earnings.


16. Uber fires over 20 staff following the release of a report about sexual harrassment in the workplace.


17. Reports emerge that Uber CEO Travis Kalanick fired off a bizarre email in 2013 to hundreds of employees where he listed the conditions under which they could have sex with each other at a company outing in Miami


18. Uber’s chief business officer, Emil Michael, resigned from the company.

This list is by no means comprehensive.

And then there is the biggest problem of all: Uber"s chronic cash burn.

Uber lost $708 million in the first quarter, despite another rise in revenues. Last year, Uber managed to burn through almost as much cash as NASA’s $4.8 billion budget last quarter. Previously, Bloomberg reported that Uber has burned through at least $8 billion in its lifetime through the end of 2016. While the company had $7 billion of cash on hand as of March 31, along with an untapped $2.3 billion credit facility, inevitably questions will emerge if and when the world"s most previous "unicorn" will ever turn a profit. The company was most recently valued at $68 billion, although in light of the recent turmoil in the C-suite that number will likely be revised significantlly lower.

Chicago Cab Industry Collapsing As Medallion Foreclosures Soar

Chicago mayor Rahm Emmanuel has a lot on his plate these days between soaring murder rates, failing pension systems and the worst domestic migration trends in the country as residents see the tax-hike writing on the wall and are moving out of the "Windy City" by the 1,000s.  Now, it seems he can add a failing taxi industry and millions in additional annual tax revenue losses to his list of woes.

As the USA Today points out, the cab industry in Chicago is quickly hurdling toward extinction as nearly 50% of the city"s fleet sat idle in March 2017 and medallion foreclosures in 2017 have already exceeded 2016.

About 42% of Chicago’s taxi fleet was not operating in the month of March, and cabbies have seen their revenue slide for their long-beleaguered industry by nearly 40% over the last three years as riders are increasingly ditching cabs for ride-hailing apps Uber, Lyft and Via, according to a study released Monday by the Chicago cab drivers union.

More than 2,900 of Chicago’s nearly 7,000 licensed taxis were inactive in March 2017 — meaning they had not picked up a fare in a month, according to the Cab Drivers United/AFSCME Local 2500 report. The average monthly income per active medallion — the permit that gives cabbies the exclusive right to pick up passengers who hail them on the street — has dipped from $5,276 in January 2014 to $3,206 this year.

The number of riders in Chicago hailing cabs has also plummeted during that same period from 2.3 million monthly riders to about 1.1 million.

More than 350 foreclosure notices or foreclosure lawsuits have been initiated against medallion owners already this year, compared to 266 last year and 59 in 2015. Since October, lenders have filed lawsuits against at least 107 medallion owners who have fallen behind on loan payments, according to the union’s count.

Meanwhile, the value of Chicago medallions have crashed by 90% in less than four years after peaking at over $350,000 each back in 2013.

The value of Chicago medallions hit a median sales peak of $357,000 in late 2013, just before Uber arrived on the scene in Chicago. In April, one medallion sold for just $35,000, according to city data.

About 39% of Chicago’s medallions are owned by individuals or groups with four or few fewer medallions, while the majority of medallions are owned by companies that maintain large fleets of taxis and lease the permits and vehicles to licensed operators.

"It feels like the city is just watching us collapse," Aikins said. "Right now, there are a few people, the elderly and some others who refuse to take Uber because they are uncomfortable with it, that keep us going. But how many of those people are out there to sustain us?"

Not surprisingly, the cabbie union has done what unions do best by calling on local government officials to prop up the dying industry through tax incentives, measures which should buy them at least another month or two of operation.

The union is calling on the city take several actions to provide relief for the city’s struggling taxi industry, including changing rules so taxi drivers aren’t required to replace their vehicles as often, waive an annual $1,176 per taxi ground transportation tax fee, and eliminating a city medallion license renewal fee that costs owners $1,000 every two years.

“When they opened up ground transportation and taxi market to thousands of for-hire vehicles like Uber, Lyft and now Via . . . taxi driver income has been decimated and owner-operators are unable to keep up with loan payments for their medallions plus their high-operating costs,” said Tracey Abman , associate director at AFSCME. “As a result of that, hundreds of taxi owner-operators are facing foreclosures on their medallions and thousands more foreclosures are likely unless the city takes substantial action to reduce the financial burden on small taxi owners.”

Of course,Chicago cabbies aren’t alone in feeling the pinch.  In New York, ridership in the city’s iconic yellow cabs has fallen about 30% over the last three years. Last year, San Francisco’s Yellow Cab — the city’s largest taxi company — filed for Chapter 11 bankruptcy protection.  Los Angeles taxi ridership fell 43%, and revenue was down 24%, between 2013 and 2016.

Shocking that it is so hard to compete in an industry in which Uber is willing to burn billions of dollars per year to provide your service for a fraction of your operating costs.

Self-Driving Vehicles And The Failure To Understand Capitalism

Authored by Mike Shedlock via MishTalk.com,

Despite accelerating progress towards fully autonomous cars and trucks, many people still do not accept the obvious fact it’s going to happen soon.

For example, in response to Death Spiral for Car Ownership? End of Fuel-Powered Cars by 2024? one reader suggested it will not happen because of capitalism.

Failure to Understand Capitalism

People who believe in this utopia do not understand capitalism. We own cars because consumers chose what they wanted and backed that up with their hard earned cash.

It is already far cheaper to ride the bus or carpool. Few choose that because sharing has its downsides. Fleets of driverless cars are really just a more modular bus service. Some will use this, but most will prefer ownership.

As Backwards

The above line of thinking is ass backwards.

Capitalism is precisely why driverless is coming. Corporations are betting their money and resources. The government is not resisting. The trucking industry will save hundreds of millions of dollars. People who believe driverless is not coming are the ones who do not understand capitalism!

Fully autonomous vehicles are not some pie in the sky prediction by Al Gore. Real companies (hundreds of them) all working on driverless. A bet against them is a foolish bet against capitalism.

Comparing current carpooling with what’s going to happen is like comparing ancient stone huts to modern houses. Carpooling requires a number of people to get together, on the same route, for rides at the same time every day.

On-demand scheduling, point-to-point, is needed, and in the works. I rather doubt that fuel-based cars disappear by 2024, but widespread (not total) disappearance of privately owned vehicles by 2030 seems reasonable.

Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars

The New York Times reports Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars.

As the race to bring self-driving vehicles to the public intensifies, two of Silicon Valley’s most prominent players are teaming up.

Waymo, the self-driving car unit that operates under Google’s parent company, has signed a deal with the ride-hailing start-up Lyft, according to two people familiar with the agreement who spoke on the condition of anonymity because they were not authorized to speak publicly. The deal calls for the companies to work together to bring autonomous vehicle technology into the mainstream through pilot projects and product development efforts, these people said.

The deal was confirmed by Lyft and Waymo.

“Waymo holds today’s best self-driving technology, and collaborating with them will accelerate our shared vision of improving lives with the world’s best transportation,” a Lyft spokeswoman said in a statement.

The partnership highlights the fluid nature of relationships in the self-driving-car sector. From technology companies to automakers to firms that manufacture components, dozens of players are angling for a slice of an autonomous vehicle market that many believe will ultimately be a multibillion-dollar industry. To gain an edge and outmuscle rivals, many of these players are forming alliances — and sometimes shifting them.

The companies have left hints as to what the partnership could entail. Lyft, for instance, has long said it wants to match its network of passengers and drivers with partners in the transportation industry. Last year, it struck a deal with General Motors, a major Lyft investor, to help with that goal. Under that agreement, the companies plan to test autonomous Chevrolet Bolt vehicles using Lyft’s network with the general public in the next few years.

Waymo has pursued its own partnerships. It is working with Fiat Chrysler on a fleet of minivans and is in talks with Honda about a possible deal that would put Waymo technology in Honda test vehicles. Waymo also recently introduced a pilot program in Phoenix in which consumers can apply to hail self-driving Chrysler minivans and Lexuses for free rides around the city.

Capitalism at its Finest

Competition is intense. Corporations are investing hundreds of billions of dollars of their own money on technology. Deals, mergers, alliances, and lawsuits (Google vs Uber) are all in play, on a massive scale.

This is capitalism at its finest.

Some point to how few autonomous cars are on the roads. It all starts somewhere. In 1900, in New York City, there was not a car on the road. By 1920, there was not a horse in sight.

Others say they will never accept the technology. Perhaps they will when their insurance costs go through the roof. Regardless, the technology is perfect for people who live in major urban areas. Busses are not flexible enough, and taxis are neither fast enough or cheap enough.

Waymo, Lyft, Uber (if it survives), and other players will easily solve the on-demand nature. The result will be widespread acceptance.

Long-haul trucks will be first of course. Those drivers will vanish soon. A death spiral for car ownership will follow. The only thing in question is the timeline.

Disruption will be massive. Insurance companies and service stations are in for radical changes. For discussion, please consider Second-Order Consequences of Self-Driving Vehicles.

The Foolishness And Hypocrisy Of #DeleteUber

Submitted by Michael Shedlock via MishTalk.com,

#DeleteUber is a social media protest against Uber. The protest surged following a New York City taxi impromptu strike at JFK airport following the Trump order banning air travel from seven nations.

Let’s dissect the stupidity and hypocrisy of the #DeleteUber movement because there is plenty of it going around.

MarketWatch explains: Consumers lash out at Uber and turn to Lyft after Uber’s immigration response.

Uber Technologies Inc. was in critics’ crosshairs while Lyft Inc. was winning support after the companies’ very different responses to President Donald Trump’s immigration order.

The backlash came as New York taxi drivers went on strike Saturday and joined a protest at New York’s John F. Kennedy International Airport against Trump’s order blocking entry to the U.S. by immigrants from select largely Muslim countries, while a tweet from Uber indicated the company had suspended surge pricing, causing some to view the company as seeking to undermine the strike.

Lyft largely stayed out of Saturday’s confrontation but sent an email to users Sunday saying that the company would be donating $1 million over the next four years to the American Civil Liberties Union.

The New York Taxi Workers Alliance, with a membership of 19,000 people, had called on all drivers, including those with Uber and Lyft, not to pick up passengers from JFK and to instead join the protest. The group said its membership is largely Muslim and made up of immigrants, and that it was “in defense of the oppressed,” as well as its own drivers, that it was speaking out against the ban.

Uber’s Action

In response to huge numbers of people trapped at the airport unable to leave, Uber issued this tweet.

Surge pricing has been turned off at #JFK Airport. This may result in longer wait times. Please be patient.

— Uber NYC (@Uber_NYC) January 29, 2017

Uber refused to implement surge pricing. For that, one misguided fool who cannot think replied.

congrats to @Uber_NYC on breaking a strike to profit off of refugees being consigned to Hell. eat shit and die https://t.co/19gbpIc9m9

— HUNTER S. FAILSON (@Bro_Pair) January 29, 2017

Stop and think about this for a second. If Uber’s intent was to break the strike, it would have allowed higher prices thereby encouraging more driver to travel farther to pick up riders.

In fact, that is precisely what Uber should have done. Nonetheless, Hunter Failson @Bro_Pair continued with mindless rants.

Hollywood Chimes In

Where’s there’s liberal stupidity, one can expect Hollywood to join in. This was no exception.

Please consider Celebrities #DeleteUber following company’s response to immigration ban protests.

Uber’s competitors got a lift from celebrities protesting the car service over the company’s response to President Donald Trump’s immigration ban.

A #DeleteUber hashtag popped up on social media this weekend, and stars like Janelle Monáe, Taraji P. Henson, Jesse Tyler Ferguson, and George Takei joined in. “Canceling Uber like…bye” Monáe wrote on Instagram. Hellboy star Ron Perlman said “so long” to Uber, while Henson had some choice words for the company.

Lovely

Just imagine @TherealTaraji, or any number of other actors, actresses, or singers had been at JFK needing to get to a performance.

Would they have been so supportive of a strike that left them stranded? Of course most of them would have had a private limo, not a taxi, but how would they have acted if the limo decided to honor the strike and they missed a performance?

Small Price Theory Again

Here we go again with yet another “small price to pay example”.

Disrupting thousands of innocent travelers is apparently a “small price to pay”, as long as it is not the liberal elite paying the price.

That’s the blatant hypocrisy of it all.

#PraiseUber

Once again, I do not approve of Trump’s no-notice ban. And Trump has been forced to back away from it.

But Uber did nothing wrong. Nor did the stranded passengers at JFK.

Previously Uber has been accused of price gouging. This time it went out of its way to not price gouge, and it attracted the ire of another set of complete fools.

Uber will eventually put taxi drivers out of work. It will be a welcome moment because prices will decline.

Small Price Theory

1. Judge Blocks Deportation; Green Card Ban Reversed; Protests Gather: Small Price Theory


2. “Small Price to Pay”


3. Liberals, Not Trump, to Blame for Backlash

I have taken Uber several times and received fast, excellent service several times. Blaming Uber for not price gouging is beyond ridiculous.

Here Are The Latest Updates On Trump's Refugee Ban

Less than 48 hours after announcing his executive order on refugees, global opposition to Trump intensified on Sunday as world leaders, US (mostly tech) companies and civil rights groups condemned the move to temporarily limit entry from predominantly Muslim countries.

Here are the latest updates in the ongoing saga as of noon on Sunday:

• Global government lash out at order. Governments from London and Berlin to Jakarta and Tehran spoke out against Trump"s order. A spokesman for the U.K."s Theresa May, who visited Trump on Friday and hadn"t commented during the day yesterday, told the AP May does "not agree" with the order. Canada PM Trudeau, in a tweet, said on Saturday Canada would welcome those fleeing “persecution, terror and war. Canadians will welcome you, regardless of your faith.” Scotland"s Nicola Sturgeon endorsed Trudea"s tweet. A similar message was sent by Dutch Prime Minister Mark Rutte, who said refugees deserve a safe haven regardless of their background or religion. Danish Foreign Minister Anders Samuelsen said the decision was unfair.  Germany pledged to play a bigger role on the international stage.


• US tech companies "do not support:" Netflix Inc.’s chief executive officer said the changes were “un-American”; Alphabet Inc.’s Google advised staff who may be impacted by the order to return to the U.S. immediately; commeting on the order, Apple"s Tim Cook said "It is not a policy we support"


• Lyft donates $1 million to ACLU. In an email from Lyft to users, the company noted that the executive order is “antithetical to both Lyft’s and our nation’s core values. We stand firmly against these actions, and will not be silent on issues that threaten the values of our community.” The release went on to note that the company pledged to donate “$1,000,000 over the next four years to the ACLU to defend our constitution.”


• Uber slammed. Lyft’s response to the protests contrasted to that of its rival, Uber. While Uber’s CEO Travis Kalanick pledged to compensate drivers stranded overseas due to the executive order, he did not specifically condemn the executive order.  The company was criticized for the tone-deaf response from its CEO, prompting a new hashtag on Twitter: #DeleteUber.


• Trump refuses to relent. Despite the global criticism, Trump was steadfast as of Sunday morning, tweeting twice on the topic, first saying that "our country needs strong borders and extreme vetting, NOW. Look what is happening all over Europe and, indeed, the world - a horrible mess!"  following it up with "Christians in the Middle-East have been executed in large numbers. We cannot allow this horror to continue!"

Our country needs strong borders and extreme vetting, NOW. Look what is happening all over Europe and, indeed, the world - a horrible mess!

— Donald J. Trump (@realDonaldTrump) January 29, 2017

Christians in the Middle-East have been executed in large numbers. We cannot allow this horror to continue!

— Donald J. Trump (@realDonaldTrump) January 29, 2017

• Federal Judge issues nationwide stay, partially blocking the Trump immigration order. A Brooklyn judge temporarily blocked Trump’s administration late Saturday from enforcing portions of his order, however neither ruling strikes down the executive order, which will now be subject to court hearings.


• Another ruling: A Boston judge ruled to release two Iranian professors from Logan International Airport, according to the Boston Globe. The decision also stated that travelers could not be removed OR detained for 7 days.


• White House comments on judge"s ruling: "Nothing in the Brooklyn judge"s order in anyway impedes or prevents the implementation of the president"s executive order which remains in full, complete and total effect," White House adviser Stephen Miller told reporters.


• White House Chief of Staff Reince Priebus "we apologize for nothing": Priebus told "Meet the Press" the situation yesterday "wasn"t chaos." He appeared to contradict an official clarification by the White House, when he said on Sunday green-card holders won"t be impacted by the order going forward, but could face additional screening at CBP "discretion." Other countries could be added to order.


• DHS continues to enforce the travel ban. Despite the ruling, the DHS vowed early on Sunday to continue implementing the order, stating it will "enforce all of the president’s executive orders in a manner that ensures the safety and security of the American people." It added that "President Trump"s Executive Orders remain in place — prohibited travel will remain prohibited, and the U.S. government retains its right to revoke visas at any time if required for national security or public safety."


• The initial statistics: A DHS official told CNN that there were 109 travelers barred from entry to the U.S. when Trump signed the order. It was unclear how many were deported vs. detained.


• Opening for democrats: As Axios points out, after spending nearly two months back on their heels. Sen. Cory Booker of New Jersey showed up at Dulles airport, then tweeted last night: “I am driving North now from Virginia. I will check in on things at Newark airport tomorrow." Virginia Gov. Terry McAuliffe held a press conference on a concourse at Dulles, calling the order “antithetical to the values that make America great. It will not make our country safer." @HillaryClinton tweeted: “I stand with the people gathered across the country tonight defending our values & our Constitution. This is not who we are."


• Republicans revolt: As Axios also notes so far 10 GOPers have announced opposition to or questioned Trump"s executive order. These include Sen. John McCain; Rep. Carlos Curbelo; Rep. Ileana Ros-Lehtinen; Rep. Charlie Dent; Rep. Brian Fitzpatrick; Rep. Justin Amash; Rep. Barbara Comstock; Sen. Susan Collins; Sen. Jeff Flake; Sen. Ben Sasse.

Uber's Massive Cash Burn Problem: 2016 Loss Set To Hit A Record $3 Billion

With a valuation of $68 billion as of December 2016 - more than GM and Twitter combined - Uber is, according to the WSJ"s Unicorn Database, the most valuable private company in the world.

And yet, despite its eye-popping valuation courtesy of a growth curve which until recently was truly unprecedented (at least until the company"s sudden withdrawals from China), Uber has a big problem: an unprecedented cash burn, which if not getting worse with every passing quarter, is certainly not getting better.

Back in August, Bloomberg reported that Uber"s first half loss was roughly $1.4 billion ($580MM in Q1 and well over $800MM in Q2) on just over $2 billion in revenue ($960MM in Q1 and $1.1BN in Q2): it was burning approximately $1.6 dollars in costs and overhead (mostly in the form of an ongoing attempt to price the competition out of business by subsidizing drivers using VC cash).

This follows a loss of $2 billion in 2015, and had, as of Q2, lost at least $4 billion in the history of the company. Of this, however, Uber reportedly lost at least $2 billion in China as a result of a failed attempt to penetrate the local market which it abandoned later in the summer, which while sapping growth potential in China, also supposedly stem losses associated with the Chinese market.

Furthermore, the H1 loss came at a time when its fortunes in the US were said to be changing, and the company vowed it was turning a profit in Q1, only to revert back to its money losing ways in Q2 and onward.

As Bloomberg said at the time, "It"s hard to find much of a precedent for Uber"s losses. Webvan and Kozmo.com—two now-defunct phantoms of the original dot-com boom—lost just over $1 billion combined in their short lifetimes. Amazon.com Inc. is famous for losing money while increasing its market value, but its biggest loss ever totaled $1.4 billion in 2000. Uber exceeded that number in 2015 and is on pace to do it again this year."

Fast forward three months, when overnight Bloomberg reported that Uber"s cash burn problems continued, and in the third quarter, Uber lost another $800 million, bringing its total loss for the first nine months of the year to "significantly more" than $2.2 billion. The good (and bad) news is that even as its cash burn grew, so did Uber"s revenue which rose even leaving the world"s most populous country, and is said to have generated about $3.76 billion in net revenue in the first nine months of 2016, or about $1.7 billion in Q3 revenue and, according to Bloomberg, is on track to exceed $5.5 billion this year. The problem - if only from a cash burn basis - is that when 2016 closes in ten days, Uber is also expected to have burned a record $3 billion.

Another problem, one which comes as less of a surprise, is that growth in Uber"s bookings - the total combined value of the fares that riders pay - is slowing down: these came in at $5.4 billion in the third quarter, an increase from $5 billion in the second quarter and $3.8 billion in the first. The slowdown in Uber"s bookings growth can at least partially be explained by the company"s decision to leave China. Uber said on Aug. 1 that it came to an agreement with Didi Chuxing to exit China in exchange for 17.5 percent of the Chinese company. As part of the deal, Didi invested $1 billion in Uber. Uber"s third-quarter financials don"t include the business in China, which were part of the previous quarterly results.

But the biggest problem is that despite the growth in revenues, Uber"s losses continue to gross in a proportional manner, suggesting that the company has little if any control over its bottom line: as noted above, in Q1 the loss was about $580 million and by Q2 it significantly exceeded $800 million, including China. That number is likely far higher.

Even in the U.S., Uber"s home market, the company continues to lose money. After turning a slight profit in the in the first quarter of this year, Uber lost $100 million in the U.S. in the second quarter. The loss increased in the third quarter, the person said. Lyft, Uber"s largest U.S. competitor, has promised investors that it will keep its losses below $150 million a quarter.

What does all of the above mean? During Uber"s Q2 presentation with investors, the company"s head of finance, Gautam Gupta said that subsidies for Uber"s drivers are responsible for the majority of the company"s losses globally. Which means that Uber continues to cut prices in an aggressive attempt to gain market share. While for now this plan has worked, and Uber has become a dominant player in most venues in which it operates (except, perhaps, the most important one of all China), this strategy only works as long as Uber has has to, literally, burn to capture market share (something which in the end backfired dramatically on Saudi Arabia in a similar experiment over the past two years), and as long as its investors are willing to keep writing equity checks to the company at ever higher valuations - a down round for Uber would be the beginning of the end.

For now, however, the company"s main competition - established taxi and transportation companies - are proving resilient, and despite the aggressive cost pressures from Uber, few have been bankrupted, and while the price of a Yellow Cab medallion has plunged from $1.3 million in 2014 to just $250,000 recently, New York City is still not only dominated by taxis, Uber still has a long way to go before it can get even close to catching up to its competition in terms of volume.

Meanwhile, Uber"s success will go on only as long as the company has blow billions in hopes it puts its competitors in bankruptcy before its cash runs out. Alas, a few more years like 2015, in which the company burned a whopping $3 billion despite a rising top-line, and Uber"s prospects are suddenly starting to look rather shaky. Meanwhile, the winner in this massive "deflationary" battle to the bottom is the consumer, for whom transportation prices have rarely been lower. So dear Venture Capitalists, please continue to fund Uber and subsidize deflation for consumers in at least this part of the economy: it"s clear that between the Fed and Trumpflation, there aren"t many such deflationary hiding spots left.