It looks like anyone who put money into the taxi app Uber back in June, when the company already had a whopping $17bn (£11bn) valuation, got a bargain.
Here we are just six months later and Uber has raised more money, this time with a valuation of something like $40bn.
Even though sane observers were scratching their heads like it was March 2000 and the dot-com crash all over gain, the punters lined up and the company raised $1.2bn, as confirmed by the chief executive Travis Kalanick in a blog post. That’s how things are done nowadays.
All of this for a business that simplifies driving, hailing and paying for a taxi. The lunatics have taken over the asylum. Again. Which is presumably what people said about Google’s valuation, Amazon’s valuation and Facebook’s valuation – all of which have proved to have been worth it. The “new economic paradigm” of hyper-fast growth that we heard so much about in the late 1990s actually arrived a while ago without many people noticing.
Those businesses were, are still, transformational, which is what these investors think Uber will be – a world where the only people who need to own a car are Uber drivers. It’s not going to happen, even if the apps are very good and the company’s growth has been explosive. People like to own cars.
It isn’t just the lunatic valuation – which I am sure makes perfect sense to some very clever people – that makes Uber a compelling story. It’s a company that has shown little or no regard for any established business norms, or what we might loftily call business ethics, or for plain old decent behaviour. Uber doesn’t care.
In pictures: European taxi drivers in protest against Uber app
In pictures: European taxi drivers in protest against Uber app
Taxi drivers in protest at Victoria Street in London
Black cab and licensed taxi drivers protest at Trafalgar Square in London. Unions and groups representing taxi drivers are warning that the move is leading to unlicensed drivers being contacted via the new technology, with no checks on whether they are legitimate
Black cab and licensed taxi drivers protest at Trafalgar Square, London over the introduction of a phone app called Uber which allows customers to book and track vehicles
Traffic gets worst as taxi drivers protest at Trafalgar Square in London
A taxi proceeds demonstrators holding a banner during a strike action in protest of unliscensed taxi-type-services in Barcelona
Taxi drivers hold a banner during a strike action in protest of unliscensed taxi-type-services in Barcelona. Banner reads, "Out with illegal apps"
Taxi drivers carry a banner during a strike action in protest of unliscensed taxi-type-services in central Madrid
Taxi drivers in London, Paris, Madrid and other European capitals plan to bring chaos to the streets in protest against unlicensed mobile car-hailing services such as Uber which have shaken up the industry
A senior executive was recorded idly fantasising out about smearing a journalist who happened to write something negative about Uber. Kalanick “apologised” via Twitter. The company has also been accused of paying people to book rides with the rival service Lyft, only to then cancel them at the last minute just to screw up Lyft’s drivers – who presumably are real people with real lives. Another unconvincing denial has followed.
Meanwhile several of Uber’s drivers have been arrested for allegedly subjecting passengers to sexual assault. The list grows, almost as fast as the business.
In his blog post, Mr Kalanick said that Uber would become more “humble” and create a million new jobs, which will be believed when seen. Its claims of being able to pay drivers $90,000 a year look a highly optimistic, “best case” scenario.
It’s hard to think of a company that has generated so much bad publicity in such a short time. Pity there isn’t much of a real market for bad publicity; I am sure Uber could come up with an app for that. The business appears intent on living up to its name, trampling on anyone and anything in its way – and don’t doubt for one second that Londoners can wave goodbye to their iconic fleet of black cabs if Uber gets its way.
Ironically, the company is supposed to be part of the “sharing economy” – an idea about ordinary people making a bit of extra cash by sharing their stuff. But in reality this is about corporations getting very rich through ordinary people sharing their stuff.
It’s usually exciting to see companies grow fast, raising impressive sums of money from established investors in the process. This time it’s not so exciting.
Uber’s sole aim seems to be to monopolise a market and destroy an established industry as fast as possible and as ruthlessly as possible. I’m not usually one to cheer failure, but maybe I can be forgiven this time for hoping that Uber is the next MySpace.
The death of an American dream is on display at Sears
Is there any better symbol of the last 50 or 60 years of the American economy than Sears? The department store chain synonymous with the post-war growth of the American middle class has now shrunk to the point where extinction is a distinct possibility. Stores and restaurants that cater for the wealthy or the poor are doing pretty well. Everything in between, where Sears and its subsidiary Kmart sit, is a total bust.
Thursday’s third-quarter results from Sears made grim reading, as expected. A loss of $548m for the quarter was in line with optimistic forecasts, which is about the only good thing that can be said for it. The company could run out of cash next year.
The share price has been propped up over the past month by the expectation that it will spin off some of its property into a real estate investment trust, but the underlying retail business is moribund. Desperately selling off the family silver is never a good sign.
Sears has suffered in line with the economy. However, it has also been a fascinating case of ideas that sound good in theory turning out to be disasters in practice.
Eddie Lampert, a successful New York hedge fund manager, bought Sears in 2005 for $40bn – a lot of money to pay for a business that was in decline. He had vision, though, inspired by the objectivist economic “thinking” of Ayn Rand. Following this philosophy, Lampert believed that Sears could be turned round if he made store managers more competitive with each other. Objectivism made managers compete for assets on the basis, apparently, of how they negotiated for them – not whether they needed them.
As a result, Sears has alienated much of its customer base, its stores look pretty uninviting and Lampert turned a struggling business into one in its death throes. If there were an award for worst chief executive of the decade, Lampert would definitely be in the running.
It’s a shame – Sears was once a great company. But unfavourable economics, changing retail trends and half-baked management theories look like killing it. It’s hard to see it surviving despite quarterly revenue in excess of $7bn.
It’s closing stores as fast as it can and confirmed another 235 closures on Thursday.
The muzak playing on Sears in-store speakers may include “It’s Beginning to Look a Lot Like Christmas”. They should be playing “It’s beginning to feel a lot like Woolworth’s”.Reuse content