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Uber loses billions, but its IPO will make fortunes for a tiny few. I was so naive

New York Times file photo

In 2010, I received email from an ecstatic employee at a startup called UberCab. “What our tiny company is doing for San Francisco right now is huge,” he wrote. The employee’s joy was contagious. Back then, I was naive and prone to spinning out elaborate visions of tech-abetted progress. The more I learned about UberCab’s bold idea, the more deeply I swooned.

Car ownership is a financial and environmental blight. Cars are one of the most expensive products we buy, but they barely get any use. Most spend almost all day parked. UberCab — which shortened its name to Uber — was using technology to push a radical new urban vision, and it quickly became a poster child for Silicon Valley’s messianic vision. Allowing strangers to “share” their cars sounded crazy, but if it took off, Uber might reduce the need for car ownership and increase the utilization of each car. It could make transportation cheaper and far more environmentally friendly, and it might create sustainable jobs for many drivers.

Dumbly, I once bought into this vision. Here was a company that could credibly claim to be changing the world. It might unpave paradise and tear down the parking lots.

Boy, was I a dope. Nearly a decade later, as Uber begins pitching its business to Wall Street in advance of an initial public offering that could value the company at $100 billion, I’m sickened and saddened by my naiveté.

In the years since, Uber skirted laws and cut corners to trample over regulators and competitors. It accelerated the startup industry’s misogynistic and reckless hustle culture. And it pushed a frightening new picture of labor — one in which everyone is a contractor, toiling without protection, our hours and our lives ruled by uncaring algorithms in the cloud.

Uber — and to a lesser extent, its competitor Lyft — has indeed turned out to be a poster child for Silicon Valley’s messianic vision, but not in a way that should make anyone in this industry proud. Uber’s is likely to be the biggest tech IPO since Facebook’s. It will turn a handful of people into millionaires and billionaires. But the gains for everyone else — drivers, the environment, the world — remain in doubt. There’s a lesson here: If Uber is really the best that Silicon Valley can do, America desperately needs to find a better way to fund groundbreaking new ideas.

Today’s Uber is more responsible than yesterday’s: Travis Kalanick was ousted as chief executive in 2017, and Dara Khosrowshahi, its new chief, has led a thorough rehabilitation. Yet Uber’s early insiders paid no real price for their sins. Kalanick’s stake will be worth nearly $9 billion. Tech giants — including Apple, Google and Jeff Bezos, who all acquired significant stakes in Uber — will make a killing. Saudi Arabian petromonarchs will too.

Not Uber’s drivers. Recent studies show that Uber drivers make poverty wages — about $10 an hour after their vehicle expenses are deducted from their pay. Drivers’ fortunes might only worsen after the company goes public. Uber lost nearly $2 billion in 2018, and the best long-term hope for Uber’s business is that drivers disappear altogether, replaced by cars that drive themselves. In rushed pursuit of that profitable vision, one of Uber’s self-driving cars killed a pedestrian last year.

The environmental gains have also yet to materialize. Though ride-hailing services have prompted some people to go car-free, vehicle ownership has gone up in cities where Uber and Lyft are popular. Car services might also be prompting wealthier people to ditch public transit, thus reducing political support for it.

It didn’t have to be this way. A different, better Uber could have employed drivers and paid them a living wage. A better Uber might have found a way to work with municipalities on improving transit rather than treating city governments as enemies to be tricked and trampled.

But because of where it came from and how it was cheered on, Uber felt little cultural pressure to divvy up its gains more equitably. The worse Uber behaved, the more money investors poured into it.

And who can blame Uber? The company’s IPO should be regarded as a moral stain on Silicon Valley. But that won’t happen. Soon the opening bell will ring and a few new billionaires will roam the earth. All will be forgotten and forgiven — and Silicon Valley will move on to the next big idea to be squandered.

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