The cost of world domination is worthy when it is worth billions. You have to love a business model that gets its contracted employees to actually go into debt to fund their business plan. That is genius marketing and it explains GM's sudden interest in Lyft.
You get the people who are not employees, no not employees but contracted drivers to go into debt, buy a GM car, with hopefully functioning brakes, air bags and other safety instruments, to drive people for costs less than a conventional taxi but just slightly above a bus. Wow just wow.
I met two ladies at a Starbucks when I was waiting for the bus, I thought I would get a Tea and it was there I overheard the two talking about their odd payments lately they were getting from rides contracted with Amazon. I asked them if they worked at Amazon and they laughed and said everyone does. Perhaps but they are not actual employees. There is well documented history of how Amazon circumvents that in their shipping warehouses. But the role of Amazon in Seattle cannot be denied and this is now a company town so all of us in some level work for Amazon.
The same goes for Microsoft and many of their contracted Tech specialists all while supposedly their being a hiring shortage and high demand for tech workers with intense competition and a median wage that is in the 100K range. Yet I never seem to know or meet said employees, I do know of their existence and they seem utterly unhappy, very transient and usually under 30. Hence the push to STEM in schools to continue to have this never ending source of drones to fly in and out the revolving door to find ways to push product, track people and data mine to sell more shit to.
So those who are not as skilled their jobs are to cater to the aspirant class who are sure that coding is the ticket to being rich bitch and they too will be the next Dead Steve Jobs. And what says rich bitch than a car and driver, a Butler, someone picking up your artisan food, doing your laundry and runny your errands and cleaning your podment. My new favorite is the Air BnB facility located conveniently in the Amazon (well actually South Lake Union) that is a ostensibly modeled after a cell, with a curtain that divides the toilet and shower from the cot that functions as a bed.
And that is what is defined as entrepreneur owning these dumps called "hacker" hotels.
And for many if they cannot actually work there they will scavenge from the corpses that do. The women who will go into debt to buy a car to chauffeur those who don't, won't or are willing to buy a car they will rarely use (and car sales are showing that the aspirant class are not buying cars) or those buying up condos and homes to rent on Air BnB. And that is showing in the home sales that largely seem to be foreign investors or REIT's with few names to validate who actually owns the property. I am seeing it surrounding me on a daily basis with house sales that within days are sold once on market but the owners are not the ones moving in.
And they are all "Amazon" employees when anyone asks. What that means is much like the women who actually drove for Uber and Lyft and they were contracted by Amazon to do so. And the last call she had she made less than the hourly the Starbucks employee did serving our drinks.
This is what world domination is in the 21st century.
Getting the desperate, the poor and the lowly skilled thanks to our crappy underfunded education and the surge of immigrants that the tech sector has their hands in both pots, the idea of H1B1 visas and the reality that migrants are also a great cheap labor source. and in turn their role in the "ed reform" which is less about reform and again more about money - theirs.
They have no interest in funding education. How many STEM jobs are there really? And when you have a never ending pool in which to draw it allows them to actually build, grow and develop a business without having to pay employees pay the requisite taxes and costs once associated with building a legitimate business.
Why have a hotel chain when you have to buy and manage properties and follow local laws, pay the costs, fess, etc when you can circumvent that by having someone else do it for you?
Cheap cab ride? You must have missed Uber’s true cost
When tech giants such as Google and Uber hide their wealth from taxation, they make it harder for us to use technology to improve services
Saturday 30 January 2016
To understand why we see so few genuine alternatives to US technology giants, it’s instructive to compare the fate of a company like Uber – valued at more than $62.5bn (£44bn) – and that of Kutsuplus, an innovative Finnish startup forced to shut down late last year.
Kutsuplus’s aspiration was to be the Uber of public transport: it operated a network of minibuses that would pick up and drop passengers anywhere in Helsinki, with smartphones, algorithms and the cloud deployed to maximise efficiency, cut costs and provide a slick public service. Being a spinoff of a local university that operated on a shoestring budget, Kutsuplus did not have rich venture capitalists behind it. This, perhaps, is what contributed to its demise: the local transport authority found it too expensive, despite impressive year-on-year growth of 60%.
On the other hand, “expensive” is everything that Uber is not.
While you might be tempted to ascribe the low costs of the service to its ingenuity and global scale – is it the Walmart of transport? – its affordability has a more banal provenance: sitting on tons of investor cash, Uber can afford to burn billions in order to knock out any competitors, be they old-school taxi companies or startups like Kutsuplus.
A recent article in The Information, a tech news site, suggests that during the first three quarters of 2015 Uber lost $1.7bn while booking $1.2bn in revenue. The company has so much money that, in at least some North American locations, it has been offering rides at rates so low that they didn’t even cover the combined cost of fuel and vehicle depreciation.
Uber’s game plan is simple: it wants to drive the rates so low as to increase demand – by luring some of the customers who would otherwise have used their own car or public transport. And to do that, it is willing to burn a lot of cash, while rapidly expanding into adjacent industries, from food to package delivery.
An obvious but rarely asked question is: whose cash is Uber burning? With investors like Google, Amazon’s Jeff Bezos and Goldman Sachs behind it, Uber is a perfect example of a company whose global expansion has been facilitated by the inability of governments to tax profits made by hi-tech and financial giants.
To put it bluntly: the reason why Uber has so much cash is because, well, governments no longer do. Instead, this money is parked in the offshore accounts of Silicon Valley and Wall Street firms.
Look at Apple, which has recently announced that it sits on $200bn of potentially taxable overseas cash, or Facebook, which has just posted record profits of $3.69bn for 2015.
Some of these firms do choose to share their largesse with governments – both Apple and Google have agreed to pay tax bills far smaller than what they owe, in Italy and the UK respectively – but such moves aim at legitimising the questionable tax arrangements they have been using rather than paying their fair share.
Compare this with the dire state of affairs in which most governments and city administrations find themselves today.
Starved of tax revenue, they often make things worse by committing themselves to the worst of austerity politics, shrinking the budgets dedicated to infrastructure, innovation, or creating alternatives to the rapacious “platform capitalism” of Silicon Valley.
Under these conditions, it’s no wonder that promising services like Kutsuplus have to shut down: cut from the seemingly endless cash supply of Google and Goldman Sachs, Uber would have gone under as well. It is, perhaps, no coincidence that Finland is one of the more religious advocates of austerity in Europe; having let Nokia go under, the country has now missed another chance.
Let us not be naive: Wall Street and Silicon Valley won’t subsidise transport for ever. While the prospect of using advertising to underwrite the costs of an Uber trip is still very remote, the only way for these firms to recoup their investments is by squeezing even more cash or productivity out of Uber drivers or by eventually – once all their competitors are out – raising the costs of the trip.
Both of these options spell trouble.
Uber is already taking higher percentages from its drivers’ fares (this number is reported to have gone up from 20% to 30%), while also trying to pass on more costs related to background checks and safety education directly to its drivers (through the so-called safe rides fee).
The only choice here is between more precarity for drivers and more precarity for passengers, who will have to accept higher rates, with or without controversial practices like surge pricing (prices go up when demand is high).
Moreover, the company is actively trying to solidify its status as a default platform for transport.
During the recent squabbles in France – where taxi drivers have been rioting to get the government to notice their plight – Uber has offered to open up its platforms to any professional taxi drivers who would like a second job.
Needless to say, such platforms – with properly administered and transparent payment, reputation and pricing systems – ought to have been established by cities a long time ago. This, along with the encouragement and support of startups like Kutsuplus, would have been the right regulatory response to Uber.
Unfortunately, there’s very little policy innovation in this space and the main response to Uber so far has come from other Uber-like companies unhappy with its dominance. Thus, India’s Ola, China’s Didi Kuaidi, US-based Lyft and Malaysia’s GrabTaxi have formed an alliance, allowing customers to book cabs from each other’s apps in countries where they operate.
This falls short of creating a viable support system where innovators like Kutsuplus can flourish; replacing Uber with Lyft won’t solve the problem, as it pursues the same aggressive model.
The broader lesson here is that a country’s technology policy is directly dependent on its economic policy; one cannot flourish without the active support of the other.
Decades of a rather lax attitude on taxation combined with strict adherence to the austerity agenda have eaten up the public resources available for experimenting with different modes of providing services like transport.
This has left tax-shrinking companies and venture capitalists – who view everyday life as an ideal playing ground for predatory entrepreneurship – as the only viable sources of support for such projects. Not surprisingly, so many of them start like Kutsuplus only to end up like Uber: such are the structural constraints of working with investors who expect exorbitant returns on their investments.
Finding and funding projects that would not have such constraints would not in itself be so hard; what will be hard, especially given the current economic climate, is finding the cash to invest in them.
Taxation seems the only way forward – alas, many governments do not have the courage to ask what is due to them; the compromise between Google and HM Treasury is a case in point