“Technology presumes there's just one right way to do things and there never is.” - Robert M. Pirsig
Uber CEO stepped down from the infamous company he created, after making headlines for years as legal fights with governments and companies piled up. The company is likely to continue to survive for a few years thanks to its huge cash reserves, but probably won’t make it anyway. Its business model is unsustainable (Uber is just an app that has been already replicated by numerous competitors) and its self driving car push is unlikely to beat the carmakers giants and the other tech companies.
In other words, the company is doomed. But investors have a lot to loose: they invested billions into this money hole in the hope of making multiples on their investments. The infighting leading to the exit of Mr Kalanick appears to be linked to the wrestling around the future of the company: the investors are looking to exit through an IPO, the least preferred option of Mr Kalanick.
It’s quite a downfall for Uber. It was once revered as the future of work and even coined a new term to describe a new type of economy: the uberisation of work. According to this new model, platforms would connect directly people with other people to offer their services, and the platform would charge a commission on the transaction for its role as a broker. The idea is compelling: people can monetize ‘unused capacity’ such as empty apartments or free time, while buyers increase their choices from which to chose from.
Yet the uberisation of everything raises several concerns, starting with legal requirements: Airbnb effectively acts as an hotel provider without having to pay for the required safety equipment or staff. Uber acts as a taxi provider and only recently started to offer pensions, sick leaves and minimum wage. In any case, many of these companies do not pay taxes equivalent to their effective economic contribution, while undermining established businesses, resulting in overall less tax revenues for the states.
Many will argue that this money goes to citizen directly, instead of going through state redistribution. However, since this results into less revenues for the state, this will translates into lower basic services (transportation facilities, education, defense) or higher state indebtedness. In addition, the workers from the hospitality or taxi industry may see their work condition degrade as they are effectively forced out of their jobs or required to adjust to the levels of these new competitors. The uberisation of jobs effectively acts as a destroyer of social cohesion by increasing inequalities and job precarity.
These tech companies have introduced competition in established industries, challenging the monopoly of a few players that could abuse their market power (i.e. cab drivers refusing to take on clients). This will pressure these companies to adapt to offer better services, but they need time to transform their structures, especially as they face unfair competition (Uber classifying its drivers as self employed until recently). Those who are benefiting the most from the uberisation usually work and live in stable environments, taking advantage from the precarity of others.
The coming downfall of Uber is a good thing. It would be great if it could shake out the admiration for the tech companies to face the cold reality of their businesses.
Science, General knowledge & Environment
Thin ice: Vanishing ice only exacerbates a bad, climate change-fueled situation – The ice covering large swath of land and ocean is melting as the world is warming up, accelerating global warming by exposing darker surfaces, and creating the danger of a self feeding mechanism.
The smarter the home, the more online risks you face – Connected objects create in-house networks that are full of weaknesses, and it won’t take long before someone exploits them and basically holds you hostage in your own house. And yet the bigger problems will come when public infrastructure will be taken down (ie: WannaCry apparently hit hospitals using connected objects, not something you want to have during critical surgery).
Why the Wall Street Journal Is Wrong About the US Oil Export Boom – US oil exports rose thanks to production outage in Nigeria. This is interpreted as a victory, even though numbers show a different story. The rest of the year will probably see oil prices remain between the OPEC floor and the US shale ceiling anyway.
The Wheels Come Off Uber – Uber has seen a steady stream of exits from C-level executives, culminating in its CEO stepping down. Yet the media coverage continues to imply that the company is viable, even after having burned billions of dollars without showing any signs of profitability. Uber is very likely to go bankrupt but it will take time for investors to acknowledge this fact, though some articles started to address this issue: Uber Spinning Out of Control: Employees Eyeing Exits as Press (Finally) Starts to Question Business Model.
History & Geopolitics
Syrian Archives Add New Details to Henry Kissinger’s Disastrous Middle East Record – We’re still mixed regarding Kissinger’s record: his books are very interesting and insightful but the man did wreak havoc in many parts of the world with a ruthless and destructive approach to foreign policy.
How a crippling shortage of analysts let the London Bridge attackers through – The change from HUMINT to SIGINT was widespread in the West and results in creating massive database of data that cannot be analyzed, drowning the analysts into irrelevant details and a lesser understanding of the enemy.
The Special Ops Fallacy – Throwing Elite Resources at “Winless Wars” – US Special Operation Forces have been increasingly used throughout the world (operating in 138 countries in 2016) but can only show very limited strategic results. The idea that these forces can bring a rapid end to a conflict is essentially wrong since it ignores local political, tribal and religious realities to concentrate on destroying the enemy forces, which only increases the number of opponents.
Picture of the week: Portugal forest fire
About Carlito Riego
"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi