Transcript – Episode 79: The End of Uber with Cory Doctorow
Cory Doctorow: Geometry hates cars. You know, if you multiply—I mean, I don’t have to tell The War on Cars this, but if you multiply, you know, all of the journeys by the space that the car occupies in the road, by the amount of road that you need, by the distance that that pushes people apart because you have to build more roads, you are in a red queen’s race that you cannot win.
Aaron Naparstek: Hey, it’s Aaron Naparstek here. Welcome to The War on Cars. Remember Uber, the taxi-hailing app with global ambition? Uber was going to be the next Google or Apple or Ford Motor Company. It was going to reshape our cities, give us self-driving cars, and touch everyone’s life every day everywhere around the world. Uber made its public offering in May of 2019. The result was the biggest first day dollar loss in the history of the US stock market. While millions of smaller investors lost their shirts, Uber’s Wall Street underwriters and earliest venture capital backers made piles of money. As for all the hype about Uber being the future of transportation? That vaporized too.
Aaron: Our guest today is Cory Doctorow. He is a prolific novelist, journalist and technology activist, and he has been a sharp observer and critic of Uber from the beginning. Doctorow’s work focuses on themes of individual and communal self-determination in a world where technology monopolies rule, and so much of our cultural, political, economic and social life plays out on digital platforms over which we have very little control. I had a great conversation with Cory about Uber and what he sees as its fundamental flaws, its inevitable demise and its likely legacy. But before we get to that, a quick word from our sponsor.
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Aaron: Cory Doctorow, welcome to The War on Cars. Thanks so much for joining us.
Cory Doctorow: Thank you very much. It’s my pleasure to serve here in the trenches with you in this long, grueling war.
Aaron: It really is. Are we winning? I’m not …
Cory Doctorow: I think arguably we’re losing, unfortunately. But reality has a well known anti-car bias, and so over time, I think our victory is assured.
Aaron: So I reached out to you for this interview because you wrote an essay in the form of a Twitter thread, which is, of course, how all the good essays are written these days. You called it “End of the Line for Uber,” and your piece starts, “Uber is a bezzle. Every bezzle ends. Uber’s time is up.” So I think we need to start at the start. What is a bezzle?
Cory Doctorow: So bezzle is a term, I believe, coined by Galbraith, John Kenneth Galbraith. And it describes the moment in a shell game, in a con game where the con artist has your money, but you don’t know it yet. And it’s this kind of moment of suspension where everything is about to change for everyone, right? The con artist ceases to be your friend and goes on the lam. You go from feeling like you’re getting a great deal to realizing that you’re being ripped off. It is, you know, a moment, a great dramatic moment, and also a thing that regularly occurs because, you know, cons eventually end, right? There must have been a moment like this in the Madoff con where people said, “Wait.”
Cory Doctorow: And, you know, there’s also this defensive mechanism, which is the sense that if you’ve been doing it for a long time, then you surely should be able to do it forever. And that, you know, if it turns out that it was all built on shaky foundations and it wasn’t gonna last forever and it couldn’t last forever, there’s this kind of defensive moment where you’re like, “No, no, no, I’m sure reality is wrong because this thing is very good. And so I just want the good thing to go on. And so could you please adjust the reality?”
Aaron: So the bezzle probably usually ends when people want their money back. What is tipping this Uber bezzle over the edge, do you think?
Cory Doctorow: Uber always had this kind of shifting web of stories about how they would become profitable and also how they would become sustainable, how it would work in the world. So they were like, “Well, we are gonna subsidize people’s rides a lot. We’re gonna lose like 40 to 50 cents on the dollar for several years. And we’re gonna also pay a lot of big bonuses to lure people into driving. We’ll have these kind of teaser rates where we’ll get people into the cars to drive, and then we’re gonna do a lot of stuff around the edges, and eventually like, we’re gonna figure out how to make up our losses with volume, essentially.” The old Dot Com joke: we lose $3 on every bag of pet food we sell, but we’re hoping to make it up in volume.
Cory Doctorow: So, you know, there were lots of ways that Uber said it could adjust its cost structure. The first one was that they were going to make us a self-driving car and that that was inevitable, it was just around the corner. They had a research division. There was a race to see who could build the first one. Someday there would be self-driving cars everywhere and their HR expense would just disappear. They’d be a robot company not, you know, a union-busting company. That was where they had one of their first problems, right? Which is that robots don’t exist, right? There aren’t self-driving cars. We’re not near a self-driving car, right? There’s just no path to the kind of full autonomous vehicle stuff. And, you know, wherever you’ve heard it, it just turns out to be rubbish, right? Like, there was this automation panic at one point where they said, you know, the most popular job in America is truck driver, and you could easily replace heavy rigs, 16-wheelers with a dedicated lane and some, you know, auto follow stuff and LIDAR and whatever. It’s like, well, this proposal for self-driving trucks that follow each other on a dedicated lane across America is a shitty train.
Aaron: [laughs] Right.
Cory Doctorow: You just invented a shitty train, right? So clearly that wasn’t gonna happen. And Uber, you know, had its own version of this, and they spent billions of dollars and years and years claiming that they were seriously making a push for a self-driven car. And I—half of me thinks they were making the push and half of me thinks that it was just this kind of energetic hustle.
Aaron: So you really think that, like, the self-driving car pitch might have just been completely a scam?
Cory Doctorow: I don’t claim to have any special insight as to how sincere they were in their stupid idea, but I am confident that it was a stupid idea. And one of the ways I know is that they had to pay someone else $400 million to take their self-driving car division off of their hands. And at the time, they’d spent, I think, $4 billion on it, and it could go less than a mile without a fatal crash. So, you know, that’s the first part, right? Is they weren’t gonna have self-driving cars. And so that wasn’t gonna solve the problem.
Cory Doctorow: Now there’s another problem, which is that if you could manage self-driving cars, geometry hates cars. You know, if you multiply—I mean, I don’t have to tell The War on Cars this, but if you multiply, you know, all of the journeys by the space that the car occupies in the road by the amount of road that you need by the distance that that pushes people apart because you have to build more roads, you are in a red queen’s race that you cannot win.
Cory Doctorow: I used to work for Disney Imagineering in Glendale and commute down to Disneyland in Anaheim. And they have been widening Highway 5 down in Orange County since the first time I visited when I was 18 years old. I turned 50 this year. It’s something like 29 lanes wide, and it’s still a Hieronymus Bosch painting most of the day, right? And so, you know, geometry hates cars. But assuming that you could defeat geometry with the power of entrepreneurship and gumption and good old American stick-to-it-iveness, there’s another problem, which is that Uber spent a lot of money on both regulatory adventures and huge subsidies that they paid in order to create the market, in order to train people to become riders, in order to eliminate competition through predatory pricing. So all the cab companies went out of business. They basically created an Uber-shaped hole in every city. And the question is: why wouldn’t someone else also put self-driving cars on the road and just show up on day one to the same investors and go, like, “You can keep giving Uber money to buy all these self-driving cars, but they’re $50 billion in the hole right now. Or you could give the money to us. We’ll do exactly what Uber’s gonna do, but we’re not in the hole.
Cory Doctorow: So Uber was always going to be a failure, right? But Uber had a huge advantage, which was that it was a front for the House of Saud. Now, SoftBank is the executing arm of this. They have $80 billion from the House of Saud, and they have done all kinds of crazy things with it like WeWork, where they have these accounting—to call them tricks is to, like, do violence to the noble trick. They have these, like, accounting risible lies where they go, like, “Oh yeah, there’s the, like, generally accepted accounting practices, GAAP. There’s EBITDA, there are all these ways to measure the health of a company, but we’ve got another measure where we measure, like, the intangibles. Like, we know that on paper, this company is only worth, like, $100 million, but when you count in the vibes, the vibes are, like, super valuable.”
Cory Doctorow: So their S-1, you know, which is the prospectus they give to investors—this is how the Saudis got out, this is how SoftBank got out—is they went public, right? As did all the executives who were doing things like starting self-driving car divisions that failed, but who got giant whacks of stock as compensation to lure them there and keep them there to do this essential business. Whether it was essential because they thought it would work or essential because they thought it would drive an IPO is like, you know, anyone’s guess, but it was clearly essential to the future of the company one way or the other. And, you know, the IPO S-1 says “Our path to profitability involves capturing the majority of our total addressable market, and their total addressable market was every ride that anyone takes in a vehicle, right? Every train, every tram, every bus, every private car, every taxi in the world.
Aaron: Right. So our market is all transportation in the world, everywhere.
Cory Doctorow: Uber will take a piece of it. But the Uber problem is now becoming very clear. So they had a lot of cash, and even with the funny accounting, it’s pretty clear that that cash is almost gone. You know, like, in the last year, it’s gone from like $20 billion to $6 billion. And like, you know, they’re bleeding out, like, over a billion a year. The reason this was all significant is it was the same quarter that they had triumphantly announced that they’d turned their first profit and were on the path to profitability, and that investors should definitely pile in and, like, make the last round of suckers whole. And, you know, they were headed for, like, the thousand-year reign of Uber.
Cory Doctorow: And what actually happened was there are a ton of countries where you got kicked out of and you had to sell your business to another grifty rideshare company whose books are even more cooked than yours, and you did it with a stock swap. And so now you’re sitting on a bunch of shares of, like, DiDi, which was the Chinese one. That Didi is valuing with a valuation formula that’s even more laughable and tissue thin than yours. And on that basis, you are claiming a profit, right? These one-time balance sheet adjustments that actually aren’t worth what you claim they are and certainly aren’t gonna recur, right? Like, Uber is saying, “Oh, well we’re finally making a profit because we were forced to sell off divisions and we’ve got the cash from it,” is like, “I’m finally curing my starvation by eating my own arms.” So that’s kind of the crux of it here.
Aaron: So when you’re running a bezzle, the question becomes: how do you continue to rope in the new suckers? How do you bring in the new investors? And in your own writing, you’ve pointed to the work of a transportation analyst named Hubert Horan, who has written dozens of articles since 2016, really deep dives dissecting Uber’s public claims and financial statements.
Cory Doctorow: So Horan released two pieces, and I was writing about both of them. And the second one, this one where he kind of digs into their narrative manufacturing, which is, like, arguably the thing they’re best at making, is narratives. And he pointed to this glowing New York Times profile of the new CEO that pointed out that he was, like, not the kind of guy who would run a rape-y frat boy boardroom. He’s not gonna do grayballing where they figure out who’s a regulator and don’t send cars for them, so the regulators can’t see what the cars are like. He’s not gonna do any of that stuff that Uber had done before. But what she didn’t say—and, like, it’s just this kind of long, loving profile where he’s like …
Aaron: Right. Like, our CEO isn’t like the sociopath who used to be the CEO.
Cory Doctorow: Right. He’s, like, hugging his children and, like, his wife and he are talking about their favorite Broadway shows and, like, you know, just making him seem like a lovely chap. But what she never points out is that, like, Uber’s problems were on the one hand, that they were a rampantly criminal enterprise run by a rape-y frat bro who is a chronic liar, right? And on the other hand, they were cooking their books and going out of business. And, you know, like, maybe they’re not gonna have as many, like, harassment suits to contend with now that, you know, they’ve got like some adult supervision. But this guy is lying about his financials, right? Like, he is a crooked con man.
Cory Doctorow: So this was the first thing. And then the second thing is the laundered scholarship. So there’s a lot of poor quality scholarship that Uber was involved with or directly financed. It gets cited in the Wall Street Journal, which again, like, this is supposed to be the reality-based community. Like, not the editorial page of the Wall Street Journal, which is all like, “Everything is fine and nothing is wrong, and it’ll all be fine.” But the actual thing where it’s like, “Here’s where you should put your money so that you don’t lose all your money” tends to be pretty firmly reality based, and they’re like—the opener to this article citing this research was “Uber’s business has been proven,” which is a hell of a thing to say about a business that is losing money on every dollar it gets.
Cory Doctorow: Right? That is not a proven—like, yeah, people like a business that costs less to use than it costs to provide. I would like to have very good $80 bourbon at $3 a bottle. And if you offered it for sale, I’d buy it by the case. You know, it wouldn’t help you. So this research was like, “Oh well, Uber helped communities of color because they were underserved by taxis and transit.” And, you know, that may even be somewhat true. There are certainly some people who are credible who say that it’s true.
Cory Doctorow: But when Uber goes away, then what? Right? Like, we just have a lost decade of transit advocacy.
Cory Doctorow: Which is the only thing that is actually gonna fix things in communities of color that are underserved by transit infrastructure. Not this shell game. Not this bezzle. So that was the other piece there.
Aaron: How do you think Uber killed a decade of transit advocacy?
Cory Doctorow: Well, because it created the pretense that we would solve our transit problems with some mixture of gig work, surge pricing, so this kind of—like, they were trying to basically take supply-demand curve like a Laffer curve and turn it into drivers and, like, just sort of like map it into drivers and cars, so that we would do it with, like, this kind of—we would create perfect frictionless markets that would work perfectly elastic to go with the demand. And then we would never need transit, right? We wouldn’t need taxis, we wouldn’t need transit, we wouldn’t need walkable cities. We certainly don’t need bike lanes. All you need—and, you know, of course, you can’t have a bike lane in a city full of Ubers because that’s where the Uber parks, right? So, you know, like, Ubers and bicycles are foundationally incompatible.
Aaron: Though, when you talk to the Uber policy, guys, and I talked to them a lot in, like, mid-2000 teens, you know, they talked a very good game about, you know, wanting to mesh with a transit-oriented, walkable, bikeable city. They acknowledged that that wasn’t really happening. But is there some version of ride hailing that can work and be beneficial to the city? You know, is there a version of for-profit transportation service that can work and not be so harmful to the city? Or is this idea just fundamentally rotten?
Cory Doctorow: I mean, transportation’s a public good, right? And it has lots of positive externalities that are hard to capture. And that’s like the definition of a thing that you cannot run for a profit effectively. And, you know, transportation’s dividends arise from doing unprofitable things like connecting poor people who live in exurbs and work in cities with efficient links so that they can get to work without having to take extremely long, circuitous transit journeys that deprive them of the opportunity to look after their health, look after their family and so on. And since the benefits of transit are so hard to capture for a private firm, private firms, just like with other logistics schemes, private firms just cherry pick the good stuff, right? And they fail to deliver on the universality that is necessary to call something a “transit system,” as opposed to just a way for rich people to get around.
Cory Doctorow: Uber, you know, the way that they tried to scale was by enticing people out of other forms of transit and into an Uber, right? That was the whole point of pricing an Uber so cheaply that there were times where, like, even if you weren’t, like, paying yourself for the hours that you are missing because you were on a bus, it was still cheaper than, like, getting on a subway or whatever.
Aaron: Right. They weren’t competing with the private car parked at the curbside. That was not their competition. It was transit and it was biking and other taxis.
Cory Doctorow: And I think they did it on purpose, but even if they didn’t, it became clear eventually that that’s what was happening, right? And, you know, again when you see that Uber is like—our only defense is the moat that we plan to build around this business is that we are going to be, like, just synonymous with travel. We’re just gonna—there’ll just be like stickiness because everyone rides us and thinks of us when it comes to travel. They need to be giant, right? They don’t want you to ever not take an Uber because they require so much scale. I mean, it’s there in their S-1. They require so much scale to be a viable business that, you know, if you take an Uber to the subway station, then it’s a huge lost opportunity for them, right? They want you to take an Uber to your final destination. And then when you take the subway and you empty it of people and put each of them in an Uber, the city grinds to a halt.
Cory Doctorow: And, you know, again, none of this was difficult to spot. You know, the fact that you cannot replace mass transit with single-rider vehicles or two-rider vehicles that, like, it just doesn’t work geometrically. None of that was hard to spot. And Uber just kind of like waved around—you know, they jingled a lot of car keys at us. They were like, “But have you thought about self-driving cars? They’re cool. And, you know, how about the helicopters? The helicopters are gonna be great.” And, you know, just all this kind of like window dressing that’s to just keep you from thinking too hard about it. And, you know, again, when you’re on the upswing with Uber, when you’re the beneficiary of billions of dollars in subsidy, then it’s easy to kid yourself that like, “Oh, I must just be missing something here.” And, you know, again, this is one of the things that differentiates transit from travel is the micro case, the individual case for how to run a transit system is completely unlike the macro case for how to run a transit system. I mean, many’s the time I wish that I had a personal helicopter to go to LAX. But, you know, if everybody got to LAX by personal helicopter, it would rain helicopters on Los Angeles 24-7. Just whirling blades and exploding gas tanks everywhere you looked. So clearly, this is not an answer, right? It’s a fantasy, right? And so, you know, it’s fun to fantasize about. I’m a science fiction writer, I like my jetpacks. But it’s not a plan. It’s a con.
Aaron: Do you feel the same way about Lyft, Uber’s competitor, Lyft?
Cory Doctorow: Sure, yeah. They’re just an also-ran. Lyft’s pretense to being the fair trade Uber was always hilarious. I mean, they were slightly less wage theft-y about tips at one point. But Lyft’s major investor is Peter Thiel. This is a man who says that women shouldn’t be allowed to vote. Like, this is—you know, they are not the cuddly alternative to Uber. They’re just another Uber-like.
Aaron: I kind of look at this whole automobile sprawl industrial complex that we have, the carmakers, the suburban sprawl developers, the fossil fuel producers, and to me, it’s all a giant bezzle. It’s all kind of a con, you know, that we get kind of tricked into believing that we need to have our own single family detached house way out in the ‘burbs, and then we need multiple gigantic, gas-guzzling vehicles to service the house. And then we need all of this arterial roadway and highway to service the far-flung cars and homes. And it’s all wildly inefficient, expensive and destructive to the environment. Is that the real—is the car itself a bezzle?
Cory Doctorow: Yeah, I mean, I think what you’re describing is like, that’s the kelp forest, and Uber is just like one of the tropical fish that lives in it, you know? There is a whole ecosystem of this stuff, you know, the pretense that we can keep burning fossil fuels, as you say, and the way that we array our cities and the effect on public health and the traffic fatalities and all of this stuff, right? I mean, it’s really clear that it’s not sustainable. And the way that we make it work is by incurring all kinds of different debt. So we have a carbon debt, we have a policy debt, we have a public health debt. You know, all the people who have chronic illnesses because of the emissions from cars and from roads and whatever.
Aaron: Even just being sedentary. Like never walking anywhere.
Cory Doctorow: Right. Yeah, we have a heat island debt from roads that change the Earth’s albedo. Like, we have all of these different debts, and they will eventually default, right? And we keep rolling them over, but we’re gonna hit a wall. Like, we’re just gonna eventually run out of our ability. Like, that’s why it’s a bezzle, right? Because the bezzle, the con artist who’s running the show eventually has to admit that you can’t drive a car in a city that’s been burned down. Eventually, you just have to kind of confront it and do something about it.
Cory Doctorow: You know, one of the novels I wrote during the lockdown is a book, a Green New Deal utopian novel called The Lost Cause. It’s about truth and reconciliation with white nationalist militias.
Cory Doctorow: After a Green New Deal transition. And, you know, there, the difference between this utopia and a climate dystopia is not what’s going on in the world. The world is on fire in my book, literally and figuratively. There are floods, there are fires, there’s zoonotic plagues. There’s hundreds of millions of refugees on the move. There’s famines. There’s all of the things that we know will arrive as a result of climate change. And the difference between that and a dystopia is that everyone admits that they’re there and is actually orienting themselves towards doing something about them. They’re, like, embarking on a 200-year program to move every coastal city 20 kilometers inland, right?
Cory Doctorow: You know, so it’s the difference between being in a bus that’s barreling towards a cliff, that even if the driver manages to yank the wheel, it’s gonna roll three times and maim half the people on the bus, and being on a bus that’s barreling towards the cliff and the driver isn’t gonna yank the wheel and you’re all gonna die.
Cory Doctorow: And I think that, like, you know, actually taking the wheel, even if you end up in a situation that’s less than ideal, that taking the wheel is always gonna be preferable to barreling over the cliff. And, you know, that’s the bezzle we’re in right now. We are in this moment where we’re pretending that we can build our cities this way, pretending that we can run our transit this way, that we can source our energy this way. And it would be great if we didn’t have to take all of the pain that we’re gonna have to take to reorient our productive capacity and our lifestyles around remediating climate change. But that’s not gonna happen, right?
Cory Doctorow: We are gonna have to make really radical shifts. And, you know, they won’t all be bad. Like, the other thing about this utopia novel is they’re living in a utopia. Like, they’re actually like—one of the things that they do is when the renewable energy isn’t available, they all just take a day off, right?
Aaron: [laughs] Right.
Cory Doctorow: So, like, you know, and they have amazing networked computers that are like Facebook but not predatory and awful, that don’t commodify your relationships but improve your relationships so that they can find other people to take the day off with and do fun stuff. And they live a life of great leisure and pleasure, and a life in which the existential terror that we have is mitigated by this sense of agency and doing something about it. And that’s what I mean by a lost decade, because we spent a decade just pretending that there was no way to yank the wheel and instead saying, “Maybe this bus can fly,” right? “We’re gonna get to the cliff edge and we’re just gonna fly because Elon Musk has a flying bus and Uber’s got a flying bus. Everyone’s working on flying bus technology. Haven’t you heard? It’s gonna happen right after self-driving cars, long before we hit the edge of the cliff.”
Aaron: How does it end? What do you expect? I mean, even just your sci-fi novelist self, how does the bezzle end?
Cory Doctorow: Well, I mean, whenever these things end they sometimes end with a rupture. You just become a liability on the public purse, right? Because we’ve got to figure it out. There are some times where it goes through, like, an orderly restructuring, goes through a bankruptcy. It might even get life support, right? I mean, part of Uber’s gambit is clearly like—or maybe its Plan B is too big to fail. And so it might become too big to fail. You might see some cities assuming it, especially like smaller cities that gave up on bus service in favor of an Uber subsidy. In the meantime, it’s gonna destroy a bunch of people’s lives, right? Like, it really will. There’s a lot of drivers who depend on it. And then, you know, we’ll have its lasting legacy, which is the formalization of misclassification of workers through Prop 22, which is going to the Supreme Court here in California. It may or may not survive. And a ballot initiative that they just dumped $100-million into in Massachusetts to basically Prop 22 Massachusetts. And so you’ll have this enduring legacy of formalized, precarious work that deprives workers of the right to organize and the right to be recognized as workers. So, you know, that’s the long-term legacy. We’re gonna have to dig ourselves out of that hole for a long time, you know?
Aaron: Well, Cory Doctorow, thank you so much for taking the time to speak with us. I really enjoyed it.
Cory Doctorow: My pleasure. Lovely to chat with you, too.
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Aaron: A shout out to our top Patreon sponsors: Charley Gee of Human Powered Law in Portland, Oregon, and the law office of Vaccaro and White here in New York City. Also, Virginia Baker and James Doyle. Thank you so much. You guys are the Joint Chiefs of The War on Cars. And of course, thanks to our longtime sponsor Cleverhood. For 20 percent off on the best rain gear for biking and walking go to Cleverhood.com/waroncars. When you check out, use coupon code “onelesscar.” That’s good through the end of February. This episode was produced and edited by me, Aaron Naparstek. Thanks again to Cory Doctorow for taking the time to chat. On behalf of my co-hosts, Doug Gordon and Sarah Goodyear, this is The War on Cars.
Cory Doctorow: All of the people who say we’re near a self-driving car because some minor subset of the self-driving car problem has improved in some way over the last couple of years are like people who say, “We have bred this horse to be so fast that it’s only a matter of time until it’s a railroad engine.”