Good morning! This is the tech news you need to know this Monday.
- US Cyber Command on Thursday launched an operation against an Iranian spy group, despite President Donald Trump’s last-minute scrapping of a direct military strike, former intelligence officials said. The Iranian group is believed to have supported the limpet mine attacks against two tanker ships earlier last week, which resulted in the US increasing its military posture against the country.
- Ravelry, an online knitting community with over 8 million members, has banned support of President Donald Trump and his administration. It said that it would ban posts or content supporting Trump, but it would not delete project data, nor would it ban members who support Trump, as long as they don’t talk about it.
- The Chinese tech company Huawei filed a lawsuit against the US Department of Commerce on Friday, Bloomberg reported. The suit relates to telecommunications equipment confiscated by American officials.
- Velodyne Lidar, which sells technology for autonomous vehicles, has hired bankers for an IPO, according to people familiar with the process. The company, which makes a laser technology that helps self-driving cars detect the objects around them, is working with Bank of America Merrill Lynch, Citigroup, Royal Bank of Canada, and William Blair for a potential public float, the people said.
- The US is considering whether to mandate that all 5G telecommunications network equipment be designed and manufactured outside China, the Wall Street Journal reported. As part of an ongoing review, US officials are asking carriers if they could make and develop hardware outside China.
- Microsoft reportedly banned its employees from using Slack for security reasons and encourages them to to use the Microsoft Teams app instead. Microsoft also reportedly prohibits employees from using the grammar-checking app Grammarly and the Kapersky security software.
- A trio of executives from Uber and Lyft wrote an op-ed in the San Francisco Chronicle last week responding to years of pleas from their drivers for a fairer shake. A proposed California law could classify ride-hailing drivers as employees, instead of contractors, based on a three-part employment test.
- SpaceX CEO and founder Elon Musk tweeted Sunday that SpaceX is accelerating the development of Starship, a rocket that is designed to go to Mars. He also said that people can start reserving places to Mars after it returns from orbit around Earth.
- Amazon was granted a patent earlier this month for surveillance drones. The patent describes how the drones could be primarily used for delivery, but could be asked by customers to check up on their properties.
- A CEO who negotiated directly with Jeff Bezos has revealed how Amazon behaves as a strategic investor and buyer. Simon Calver was the chief executive of LoveFilm, the DVD rental service that became the basis of Amazon Prime Video after it was bought by Amazon.
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Uber Stock Suffers Greatly From Company’s Hazy ‘Vision’
Every viable business creates a win-win situation. Employees get a sustainable income. Customers get value. Shareholders get profits. Uber (NYSE:) doesn’t do any of that.
Employees aren’t making sustainable income and they’re not treated like employees. Shareholders aren’t seeing any profits, even at scale. Customers have been seeing value only because their rides are subsidized by shareholders.
Uber went public in May 2019 because it had to. Private equity and venture funding had grown tired of the pretense that it would work. They wanted out. Since then, the stock is down almost 33%.
If you bought UBER stock it’s because I couldn’t convince you not to. I warned you in , in August and . You didn’t listen.
Can you believe me now?
Son’s Lack of Vision
Uber is a product of SoftBank Group (OTCMKTS:) CEO Masayoshi Son. The idea behind his Vision Fund was to disrupt huge industries, using software and , and to have a dominant position in the resulting companies.
The fund has . Paytm, the Indian payments company, looks like a winner. Kabbage, another fintech player, may be a winner. Fanatics may do OK.
But most are like Uber. Slack (NYSE:) has been a loser on public markets. WeWork, as I said over the summer, .
Son went too big, too fast on a lot of these deals. He put in more money than many of these companies could use. He convinced founders like WeWork’s Adam Neumann (and Uber co-founder Travis Kalanick) they could do no wrong. SoftBank’s CEO became like Jeffrey Cordova in The Band Wagon, producing pretentious versions of Faust when he could have been making nice little musicals.
Son, in short, let founders run when he should have used a short leash, and a quick hook.
What Tech Can’t Do
Technology can disintermediate industries. When there’s a high cost in making something happen, technology can drop that cost to zero. It’s in transaction costs that disruptive technology earns its way.
But there isn’t enough money in taxis to make that work, even when the business scales. Uber lost $1.2 billion during the most recent quarter, on adjusted revenue of . That’s a 30% gain in revenue, but the losses were 18% higher than the previous year, when they came in at $986 million.
In order to achieve those third quarter results CEO Dara Khosrowshahi bypassed normal employment checks to , which put them in danger. It also treated the people doing its work like hot garbage. In other words, it squeezed the people on both sides of every transaction, as hard as it could, and still didn’t make any money.
The promise of Uber was it would eliminate the driver. But that was always a canard. The technology was stolen from Alphabet’s (NASDAQ:, NASDAQ:GOOGL) , by a man named Anthony Levandowski. And it still doesn’t work.
The Bottom Line on Uber Stock
Uber is the perfect business analogy for our time.
It claimed to be profiting from the benefits of technology, but it was always about disintermediating law, not industry. Drivers were told they were qualified to be taxi drivers, and doubtless many were. Passengers were told technology could give them safe rides at a bargain price, and doubtless many got them. Investors were told that Uber stock could create a dominant position quickly, then squeeze all sides of the business for big profits.
Which was the greatest fool? I’d argue it was those who invested in the Vision Fund. Son believed his own rhetoric. The Saudis bought his reality distortion field. Son has a second Vision Fund and .
We shall see.
is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time available now at the Amazon Kindle store. Write him at or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.
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