Must-Read: Ben Thompson: Reconsidering Uber

Must-Read: There is a serious debate about “Uber, floor wax or desert topping?”–excuse me: “Uber: grift or technological and organizational breakthrough?”: Izabella Kaminska: Mythbusting Uber’s valuation | Why Uber’s capital costs will creep ever higher. Eric Newcomer: Uber Loses at Least $1.2 Billion in First Half of 2016. Hubert Horan: Can Uber Ever Deliver?: Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Ben Thompson: Reconsidering Uber: “Part 2 is far better, and in many respects redeems the series…

…here Horan does get into the unit costs of pre-existing taxi companies and makes the compelling case that Uber has the highest costs in the industry because car depreciation and maintenance will always be higher for individuals than it will be for fleets. The implication–which I suspect is valid more often than Uber would admit–is that whatever advantage Uber has stems from its drivers not properly calculating their costs (and by the time they do some are locked into new car payments “helpfully” arranged by Uber)….

First, I still believe there are supply-side network effects in car-sharing; it follows that venture capital is appropriately used to fund all of the costs excluded from the unit economics calculation above. Second, Uber’s full potential is to replace personal car ownership, at least in some areas; that means the company needs to spend not (just) to kill taxi companies but to overcome the sunk costs of the cars users already have (that most potential users don’t have cars is one of Didi’s big advantages). Third, self-driving cars obviously change the economics of car-sharing completely, and Uber is by far the best-placed to take advantage of those economics…. I’m going to stop there; this update is already far longer than I intended… should probably… be refined into a Weekly Article…. While I spent most of my time pointing out where I disagreed with those Naked Capitalism posts, the reason I addressed them here is that it represents an argument there about Uber’s viability that is worth taking seriously–and it’s especially important for me to take it seriously, given I’ve generally been an Uber bull…