Tuesday, December 04, 2018


My take on Uber has always been that its business model was finding a path to obtaining local monopolies, but that such a path did not exist. Not because I think it's impossible to make a profitable taxi-with-a-good-app business, but because Uber blew all kinds of money in an attempt to get those monopolies.

Uber is a taxi company with an app attached. It bears almost no resemblance to internet superstars it claims to emulate. The app is not technically daunting and and does not create a competitive barrier, as witnessed by the fact that many other players have copied it.

You need a patent that no one can rip off, or government fiat, or some sort of strong network effect to create a monopoly, along with an unwillingness of local governments to regulate the hell out of you if you happen to achieve it. Uber never had any of those things. It did manage to get absurd amounts of investor money, which it has been happily burning through.

When the dust settles hopefully people remember that however imperfect regulation was in practice in some cities, there were good reasons for limiting the supply of taxis/regulating their prices and activities, and the logic of doing that did not go away.