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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Legendary Phones of a Period Sony Ericsson W800 and K750
Sony, which was the biggest name in the technology world for a while, showed what the future will bring with the phones produced in partnership with Ericsson just before the arrival of smartphones. Legends of that period were W800 and K750.
Sony had the most valuable brands in the technology world before smartphones. These brands included brands that were portable to everyone’s mind at that time, such as the Walkman, which brought portable music into our lives, and the first digital camera, Cyber-shot.
Sony and Ericsson, which entered the mobile phone market as a partner with him, worked to put Sony brands into mobile phones. The first fruit of these works was the Sony Ericsson W800.
The Sony Ericsson W800 was a music phone. At that time, smartphones were just developing. People were traveling by bringing digital cameras, MP3 players and phones with them. Our burden was digitally heavy.
The W800, in white-orange color and with a huge Walkman on its side, carried the well-known brand of another device from Sony to the phones. The device had 512 MB of memory, but it was possible to increase this memory by 2GB by inserting a card.
The main competitor of the phone in the world markets at that time was the Motorola ROKR E1, which can use iTunes. Although ROKR E1 stands out with its 2.5 mm input and support for songs up to 500 songs from iTunes, W800 also had software called Disc2Phone. Thanks to this software, songs in albums could be transferred to the phone. In addition, the number of songs that can be accommodated on the card inserted phones was much higher.
Sony Ericsson’s phone from music to photo: K750
Technically, there was not a huge difference between the W800 and the K750. The difference lies in the branding and marketing of phones. The slightly larger K750 stood out as being a camera phone.
The same 2 MP camera was used on this phone. The company used a skidded camera guard on this model. As soon as the protection was opened, the camera application of the phone was starting. Later, the series was named over Cyber-shot.
So why did Sony-Ericsson release two identical phones almost identically? In fact, there is a very simple explanation for this situation: To address different customers. At that time, Walkmans and mp3s were very fashionable and Sony Ericsson aimed to incorporate customers in this market as well. Cyber-shot also attracted people interested in photography.
Sony Ericsson described Walkman phones as the product of the year in 2005. The two phones had sold 15 million units in total. Still, people are wondering how much impact a single super phone would have had on both phones at that time.