From the article: [...] [...] [...] [...] [...] [...] [...]
From the article:
In August 2021, the consensus was that Uber was finished.
Critics argued that the company was a ‘bezzle’. It looked like a company, but it was actually a long con. Its putative core business, selling rides, was dressed up with regulatory arbitrage and accounting gimmicks to suggest future profitability, in order to separate credulous investors from their money now. According to the critics, at some point soon the investors would realize they’d been taken, dump their shares, and the whole enterprise would collapse.
All five claims, taken together, congealed into a meme: Uber is a bezzle.1
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The simplest way to say what happened between 2022 and 2025 is not that Uber proved the critics wrong, but that Uber stopped being the same object the critique was describing. The company that achieved profitability in 2023 operates under different constraints, charges different prices, and extracts value differently than the company Horan analyzed in 2016 or Doctorow declared dead in 2021.
Several factors spurred the company to change. The obvious one was the pandemic, which delivered a massive shock to ride-hailing demand, temporarily collapsing trip volumes and forcing the company to confront how expensive its growth-at-any-price strategy was. Less obviously, when the pandemic went away, so too did the cheap capital that had been a feature of the markets from the 2008 global financial crisis onward. But those macro-environment shifts only provided an impetus; they weren’t the changes themselves.
So what were the changes that made Uber profitable?
It did exactly what its investors expected it to do: it charged riders more and paid drivers less.
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The critics had predicted this move, or something like it. What they didn’t predict was that Uber could pull it off without triggering the expected consequences. Horan’s model assumed that raising prices or cutting driver pay would invite one of three responses: riders would defect to cheaper alternatives, drivers would quit for better opportunities, or competitors would undercut Uber’s new margins.
None of these materialized at the scale required to discipline Uber’s pricing.
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The critics’ second major bet—that regulators would eventually force Uber to internalize its true costs—also failed to materialize as predicted, though not for lack of trying.
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On the expense side, Uber made cuts that would have been politically difficult before the pandemic forced the company’s hand. In 2020, it laid off thousands of employees and shed over $1 billion in fixed costs. More importantly, it abandoned the moonshot projects that had consumed capital without generating revenue.
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I’ll give them their due: Uber’s critics correctly identified that early Uber ran on subsidized growth disconnected from operational fundamentals, and correctly predicted that reaching profitability would require raising prices and squeezing drivers. They incorrectly predicted that Uber would prove unable to do this.
I’d never heard this claim, but yeah it’s not great. It was very very obvious Ubers core plan was roughly: Taxis suck. We can massively undercut them by having “independent contractors” who take...
I’d never heard this claim, but yeah it’s not great.
It was very very obvious Ubers core plan was roughly:
Taxis suck.
We can massively undercut them by having “independent contractors” who take on vehicle costs and have weaker contracts than unions.
We can subsidize this further to get market capture.
We can fight tooth and nail in every court needed and straight up ignore the law until it sides with us.
One we have market capture we can jack up the rates TREMENDOUSLY to be just shy of the competition and use algorithmic data to do dynamic pricing.
It’s possible “bezzle” was an out to this plan if it failed, but by that point in time I’d say it was extremely obvious which way the wind was blowing.
A great arbiter of things to come when you see people who claim to hate corporate evil cheering one of the worst companies of the decade because it saves them money. Shows a huge flaw in people where “well taxis are bad so uber must be good” was logical.
That’s also not to say that there isn’t legitimacy to ride sharing and even uber, but dear god I feel like this would have been saying “I don’t think this East India Trading Company is committed to the long run”
I must be missing something because #5 sounds like the end result is lower prices for everyone, not massively jacked up prices. Obviously not the only negative from your list, but that one itself...
I must be missing something because #5 sounds like the end result is lower prices for everyone, not massively jacked up prices. Obviously not the only negative from your list, but that one itself doesn't make sense to me.
What you are missing is it’s just shy of the current competition (if any), not of the past competition. The entire goal is to push traditional taxis out of business so you can charge more for the...
What you are missing is it’s just shy of the current competition (if any), not of the past competition. The entire goal is to push traditional taxis out of business so you can charge more for the same product.
I think point 5 was worded a little bit conservatively. The goal of blitzscaling (what's being described, roughly) is to capture an entire market -- i.e. to have no competitors remaining (or to...
I think point 5 was worded a little bit conservatively. The goal of blitzscaling (what's being described, roughly) is to capture an entire market -- i.e. to have no competitors remaining (or to form an effectively equivalent oligopoly) -- so that you're no longer incentivized to compete on pricing. As long as there are effective barriers to entry (e.g. high capital costs, large amounts of regulation, etc.) no new competitors can get a toe hold, so you're free to increase your profit margin as large as the market will tolerate.
I am not saying Uber is Good Thing or defending them as a company at all, but creating the ride share market has benefited us here in Pittsburgh. Pre-uber, you could call for a taxi, but it just...
I am not saying Uber is Good Thing or defending them as a company at all, but creating the ride share market has benefited us here in Pittsburgh. Pre-uber, you could call for a taxi, but it just ... might not come. You didn't know how long it would take (sometimes an hour) for them to arrive, if they arrived at all. Have I had uber/lyft/ztrip rides no-show? Yes. But more like 1-in-20, and I knew failed right away and got another one in ten minutes.
On the profitability side, when they brought ATG here in 2015, I think they thought autonomous cars were going to solve their profitability problem. Obviously they were widely over-optimistic, but it also created the autonomy market. Before that, we just sat around and wondered who would pay when an autonomous car got into an accident. Uber brought a thought experiment to the streets and generated the interest and investment to start moving it forward.
I don't want to pretend there aren't problems with how it was done (irresponsibly) or the motives (pushing out human drivers). But as I look at reaching an age when I can no longer safely drive in the coming decades, I know there will be options for me that weren't available to earlier generations.
Wasn't Google the first tech company to announce that they were were working on driverless cars? I'm not sure what innovations can be attributed to Uber in that market, since they didn't get to...
Wasn't Google the first tech company to announce that they were were working on driverless cars? I'm not sure what innovations can be attributed to Uber in that market, since they didn't get to the point of offering a service.
Sometime in 2023 when Uber was increasing their prices dramatically to become profitable, I tried calling a taxi again. Some part of me was like “I bet this is the time rideshare companies will...
Sometime in 2023 when Uber was increasing their prices dramatically to become profitable, I tried calling a taxi again. Some part of me was like “I bet this is the time rideshare companies will start to lose riders.” The thirty-ish minute taxi ride cost me more than $110, and the equivalent Uber ride would have still been cheaper. That’s the moment I knew that Uber was bound to succeed; I haven’t taken a taxi since, because I don’t know how much it will cost me beforehand.
I do despise dynamic pricing. The model for consumers would be much better if there was a JIT auction model with multiple providers bidding for a ride, but that would be hard to implement. Although that’s kind of how it works now if one has Uber and Lyft on their phone, I guess.
From the article:
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I’d never heard this claim, but yeah it’s not great.
It was very very obvious Ubers core plan was roughly:
It’s possible “bezzle” was an out to this plan if it failed, but by that point in time I’d say it was extremely obvious which way the wind was blowing.
A great arbiter of things to come when you see people who claim to hate corporate evil cheering one of the worst companies of the decade because it saves them money. Shows a huge flaw in people where “well taxis are bad so uber must be good” was logical.
That’s also not to say that there isn’t legitimacy to ride sharing and even uber, but dear god I feel like this would have been saying “I don’t think this East India Trading Company is committed to the long run”
I must be missing something because #5 sounds like the end result is lower prices for everyone, not massively jacked up prices. Obviously not the only negative from your list, but that one itself doesn't make sense to me.
What you are missing is it’s just shy of the current competition (if any), not of the past competition. The entire goal is to push traditional taxis out of business so you can charge more for the same product.
I think point 5 was worded a little bit conservatively. The goal of blitzscaling (what's being described, roughly) is to capture an entire market -- i.e. to have no competitors remaining (or to form an effectively equivalent oligopoly) -- so that you're no longer incentivized to compete on pricing. As long as there are effective barriers to entry (e.g. high capital costs, large amounts of regulation, etc.) no new competitors can get a toe hold, so you're free to increase your profit margin as large as the market will tolerate.
I am not saying Uber is Good Thing or defending them as a company at all, but creating the ride share market has benefited us here in Pittsburgh. Pre-uber, you could call for a taxi, but it just ... might not come. You didn't know how long it would take (sometimes an hour) for them to arrive, if they arrived at all. Have I had uber/lyft/ztrip rides no-show? Yes. But more like 1-in-20, and I knew failed right away and got another one in ten minutes.
On the profitability side, when they brought ATG here in 2015, I think they thought autonomous cars were going to solve their profitability problem. Obviously they were widely over-optimistic, but it also created the autonomy market. Before that, we just sat around and wondered who would pay when an autonomous car got into an accident. Uber brought a thought experiment to the streets and generated the interest and investment to start moving it forward.
I don't want to pretend there aren't problems with how it was done (irresponsibly) or the motives (pushing out human drivers). But as I look at reaching an age when I can no longer safely drive in the coming decades, I know there will be options for me that weren't available to earlier generations.
Wasn't Google the first tech company to announce that they were were working on driverless cars? I'm not sure what innovations can be attributed to Uber in that market, since they didn't get to the point of offering a service.
Sometime in 2023 when Uber was increasing their prices dramatically to become profitable, I tried calling a taxi again. Some part of me was like “I bet this is the time rideshare companies will start to lose riders.” The thirty-ish minute taxi ride cost me more than $110, and the equivalent Uber ride would have still been cheaper. That’s the moment I knew that Uber was bound to succeed; I haven’t taken a taxi since, because I don’t know how much it will cost me beforehand.
I do despise dynamic pricing. The model for consumers would be much better if there was a JIT auction model with multiple providers bidding for a ride, but that would be hard to implement. Although that’s kind of how it works now if one has Uber and Lyft on their phone, I guess.