The Man Who Called Bullshit on Uber, by Noah Lanard

You can’t take a low margin business like taxis and turn it into a gold mine with a high tech app. From Noah Lanard at motherjones.com:

Hubert Horan has been on a lonely quest to show why the company’s business model is fundamentally flawed.

Mother Jones illustration; Getty

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In December 2016, Forbes put Uber co-founder Travis Kalanick on its cover. “Super Uber,” a headline declared. “The most valuable startup ever isn’t content to be the Uber of Uber. How the $68 billion juggernaut is about to change the way everything moves.”

The story opened with Kalanick pacing about a conference room. He was not just some “bro” or “douche.” As “jam sessions” like this one revealed, he had a “special sauce.” This was Uber’s actual genius: A PR machine that could transform six men listening to a boss in gray chinos into something almost mystical.

Two weeks before, Hubert Horan, a little-known expert on the airline industry, wrote a blog post for an equally little-known website, called Naked Capitalism, that went in a different direction. Horan’s thesis was that Uber was a tremendously unprofitable, inefficient, and not particularly innovative company that would make money only if it bought its way to an unregulated monopoly.

Kalanick on the cover of Forbes in 2016.

Forbes

Compared to the Forbes piece and many others like it, Horan’s article was a fiduciary root canal. (“There is no simple relationship between EBITAR contribution and GAAP profitability,” reads part of one sentence.) The goal was to show that Uber was hugely unprofitable and how, in the event that it did succeed, profit would come from hurting consumers and overall economic welfare by cornering the taxi market.

Horan, who started consulting in the airline industry after getting his MBA at Yale in 1980, has now written 26 more installments of his Uber series. When combined as PDFs, the posts run 193 pages. They reveal him to be much more a Cassandra than a crank. Uber has lost in the neighborhood of $28 billion since it launched in 2009. Its rides now cost far more than cabs in many major cities, its workers are as exploited as ever, and taxi drivers face massive debts, partly as a result of its business practices. Consumers, meanwhile, are shocked to learn what the rides investors have been subsidizing actually cost.

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