Why Uber Keeps Raising Billions

Travis Kalanick, Uber’s chief. Uber is on its way to amassing $15 billion in real cash since starting in 2009. Its valuation on paper is $68 billion. Credit Marlene Awaad/Bloomberg

This is interesting, and a chase of pace. Apparently Uber is sitting on a pile of cash and borrowing more. I don’t know enough here to even have an opinion, but it tends to fascinate me. Here, read the whole thing.™:

It feels like almost every other week there is a new headline about Uber raising more money. “Uber Closes $1.6 Billion in Financing.’’ “Uber Turns to Saudi Arabia for $3.5 Billion Cash Infusion.’’ Last week, we got this one: “Uber to Raise Up to $2 Billion in Leveraged-Loan Market.’’

If you add up all the money Uber has raised since it started in 2009 — the idea was born when its founders became annoyed that they could not get a cab in Paris — the ride-hailing app company is on its way to amassing a colossal $15 billion. That’s real cash, not some funny-money, paper-based valuation. (That figure is $68 billion.) It has done all this while still managing to remain a private company, and its chief executive,Travis Kalanick, has insisted that a public offering is not coming soon. “I’m going to make sure it happens as late as possible,” he has repeatedly said.

Consider this: When Amazon went public in 1997, it raised $54 million and was valued at $438 million.

So what exactly is Uber doing with all that money? And what does it say about Uber — and the financial markets — that the company has turned most recently to selling the equivalent of junk bonds?

Yes, Uber has to finance an all-out war to gain market share in China and India. But there is more to it than that: Uber’s money-grab is seemingly part of an unspoken strategy to mark its territory.

Every time Uber raises another $1 billion, venture capital investors and others may find it less attractive to back one of Uber’s many rivals: Didi Chuxing, Lyft, Gett, Halo, Juno. In other words, Uber’s fund-raising efforts have seemingly become part of the contest: It’s not just a rivalry over customers and drivers; it’s a war of attrition, a mad scramble to starve the competition of cash.

At the moment, Uber’s success has had the opposite effect: It has spawned a long list of rivals, big and little guys who say, “We can do it too.” But over time, as the smaller competitors run out of cash — after heavily subsidizing riders in an effort to steal business from Uber — venture capitalists should be less inclined to put up even more cash to go up against Fortress Uber.

via Why Uber Keeps Raising Billions – The New York Times

Like I said could be. But at the very end, the author makes a silly mistake. He forgets, if he ever knew, that there are no monopolies in nature (or free markets), somebody will always compete, usually better. The only way a monopoly exists is when it enforced by strong arm tactics, either of the players or the government.

Just ask the US carmakers, back in the 50s and 60s they could sell us any piece of overpriced junk they wanted to, no matter how shoddily manufactured. What happened? Volkswagen and Toyota. The Brits were at least as bad, so we’ll finish with Jeremy Clarkson on how they killed their auto industry.

We got a little luckier, we made it worthwhile for foreign makers to build plants here, and they did, in states that had never (for the most part) built cars or been unionized, and that’s why so many cars with funny names actually are American made, sometimes with American parts. And those workers have gained a reputation as the best in the world. Something that no one who ever dealt with the UAW ever said.

 

Why the Roman empire worked – and the EU empire doesn’t

Roman_Empire_Trajan_117ADI found this very interesting:

The principle of countries working harmoniously together is wholly admirable. Why, then, has the European Union become such a disaster area? The success of the Roman empire may offer a clue.

Romans won that empire almost entirely by military might. But they could not have maintained it that way: for some 500 years, a mere 300,000 legionaries patrolled this area of approximately two million square miles and about 60 million inhabitants. So what was their secret?

The key is pleasingly paradoxical: the Romans never consciouslyplanned an empire at all. Once they had started down that road, they saw the material advantages it could bring, but there was no blueprint for it. Success was a result of hard-won experience.

via Why the Roman empire worked – and the EU empire doesn’t

This, of course, is the period of history we were taught to call the Pax Romana. It’s essentially the longest period of peace that Europe has known. But while the Concert of Vienna held, and the British controlled the seas, there was the Pax Britannia, and after the exhaustion of the wars of the twentieth century, the Pax Americana.

And that has held from 1945 until today, and make no mistake, it was NATO, led by the US and the UK, that held the ring, allowing Europe to mostly waste its inheritance on spending the windfall of the Marshall Plan without having to worry about defending itself.

The EU for all its pretensions had very little to do with it, the ring was held by GI Joe and Tommy Atkins, and the US Dollar, as it is to this day. The EU was envisioned as a common market, to allow the Europeans to use resources where they could do the most good. In many ways, American influence spread as the Roman Empire did, we rarely interfered with anything in our client states and let them follow whatever chimeras they chose, as long as they didn’t get into a war about it. It’s worked pretty well, and if the bureaucrats in Brussels didn’t get too big for their britches, it still would be.

But they did, with the worst outcomes possible for their populations, because Brussels is all about the power of the elites, and while talking a good game, nothing about improvement for the citizenry, or should we say, peasants. See that’s one other thing, there are no successful democratic traditions in Europe, only in the Anglosphere. Europe goes through the motions, as long as we are watching, but when we get distracted, their old aristocratic habit comes back to the fore, with all its memory of divine right to tell everybody else what is best for them. In their zeal for the status quo, as opposed to the future, well, does anybody really think that if it was 1901 they wouldn’t regulate motor cars into oblivion for the benefit of hay farmers, and buggy whip manufacturers?

And so, as Europe stagnates and comes under unceasing pressure from other people migrating in to get the free stuff, it threatens to collapse, which explains the panicked efforts to keep the fifth largest economy in the world (the UK) more or less in it. It also explains why so many Britons are so anxious to unchain themselves from an anchor that will drag them underwater.

I think they should remember what happened when they unchained themselves from Europe last time. When Henry VIII, turned his back on Europe. What happened? The world as you and I know it. It all stems from that.

Will the EU likely collapse sooner if the UK leaves? I think so. Is that necessarily a bad thing? I’m not sure that it is, perhaps if they went back to their nation states, the Europeans, who don’t fit any of the conditions necessary for a cohesive national identity, only for an empire based on force, might figure out a better way. After all, they have an example to follow, they don’t have to invent it, as the British and Americans did. And always remember two things:

The problem with socialism is that you eventually run out of other people’s money.

from Maggie Thatcher, and the folk wisdom of common sense,

Things that can’t continue, won’t.

Is Personal Responsibility Obsolete?

acb46207-5148-4082-9535-ebb6505f90d7Over the last few days, Thomas Sowell has published a two-part series on Is Personal Responsibility Obsolete. As would be expected it is very good. It starts like this.

Among the many disturbing signs of our times are conservatives and libertarians of high intelligence and high principles who are advocating government programs that relieve people of the necessity of working to provide their own livelihoods.

Generations ago, both religious people and socialists were agreed on the proposition that “he who does not work, neither shall he eat.” Both would come to the aid of those unable to work. But the idea that people who simply choose not to work should be supported by money taken from those who are working was rejected across the ideological spectrum.

How we got to the present situation is a long story, but the painful fact is that we are here now. Among the leading minds of our times, including Charles Murray today and the late and great Milton Friedman earlier, there have been proposals for ways of subsidizing the poor without the suffocating distortions of the government’s welfare state bureaucracy.

Professor Friedman’s plan for a negative income tax to help the poor has already been put into practice. But, contrary to his intention to have this replace the welfare state bureaucracy, it has been simply tacked on to all the many other government programs, instead of replacing them.

It is not inevitable that the same thing will happen to Charles Murray’s plan, but I would bet the rent money that there would be the same end result.

Just what specific problem is so dire as to cause some conservatives and libertarians to propose that the government come to the rescue by giving every adult money to live on without working?

Poverty? “Poverty” today means whatever government statisticians in Washington say it means — no more and no less. Most Americans living below the official poverty line today have central air-conditioning, cable television for multiple TV sets, own at least one motor vehicle, and have many other amenities that most of the human race never had for most of its existence.

Most Americans did not have central air-conditioning or cable television as recently as the 1980s. A scholar who spent years studying Latin America has called the poverty line in America the upper middle class in Mexico.

via Is Personal Responsibility Obsolete? – Thomas Sowell

In the second part, he uses the examples of Spain and Saudi Arabia as examples of what usually happens to societies, which in one way or another, usually windfalls, find themselves in situations in which their people no longer have to work, or produce anything. It actually pretty analogous to the winner of one of the big lottery payouts, and has similar results. It seems that societies, as well as people, need the structure of productive work (defined very broadly) to lead successful lives.

The second part is here, Is Personal Responsibility Obsolete?: Part II

I think he’s right, but even if you don’t, it’s a thoughtful look at where our societies are careening to out of control.

Mike Rowe “Don’t follow your Passion, Live it”

There are only a few guys or girls that you see on TV that I really like. Leading that group is Mike Rowe. Why? because he tells us all the common sense things that many of us know. But there is a difference when I say it or Mike does. I suspect a fair number of you have seen this video from Prager University, but let’s watch it again together.

 

He’s right you know, the world doesn’t really need another gender studies major, but we do need people to keep the lights on and the toilets working, and you know, they get paid pretty damned well, if they’re good at it. I’m a fair example, I think, when I was in school, I had a pair of passions, first to fly Air Force bombers, and secondly to be an engineer. Well, I had hay fever and the Air Force (with good cause, once I understood it) didn’t want me anywhere near the cockpit of a B-52. You’ll understand if you’ve ever flown with a head cold. As for the engineering, well my brother in law was dead on when he said, he can do the work, but he’ll never make it through school. Maybe if I’d had better math teachers, but well, I didn’t.

But you know, I got my journeyman card as a power lineman on my 18th birthday, and by the time I was twenty-five, I was a master electrician. As an aside, it worked out for the best, I would’ve gone crazy stuck in an office when I was in my twenties, even my thirties. And I’ve made a pretty good living all these years, some better and some worse, of course. And I’ve turned into a near engineer as well. I’m one of those guys that can figure out how to do almost anything.

But Mike also did an interview lately that doesn’t have the 300K + views that the video above does. In it, he tells how he got to where he is today. I think it, although a bit longer, is even more powerful. Here it is. See if you don’t agree

And you know, that’s important. Look at everything around you in our civilized world, and think about this, most of what you (and I) take for granted, every day, was beyond the dreams of King George III, or Thomas Jefferson, or even the Pope. We have it because people, mostly without degrees, figured out how to do each and every step to get us here. I’d call that a pretty damned noble calling, especially when at oh dark thirty in the middle of a Nebraska blizzard, I don’t have to use a whale oil lantern to find the outhouse.

But somebody has to keep all this stuff working, and they get paid (usually well) to do it. Do you have what it takes to make it in my world?

Not many do.

How The West Got Healthy And Prosperous

2000-years-of-global-temperatureAn excellent article here, and he outlines very well why so many of seeing Global warming, Global cooling, Climate change, especially the Anthropomorphic thesis, and not only unproven science but as a modern manifestation of Luddism bordering onto a quasi-religion. Yes, it’s that bad, and yes, the reason you had breakfast this morning is energy, and the most vital of that comes from fossil fuel.

Vital ingredients included the scientific method and fossil fuels – truths we forget at our peril

Driessenprofile2By Paul Driessen ~

Several years ago, physician, statistician, sword swallower and vibrant lecturer Hans Rosling produced a fascinating 4-minute video that presented 120,000 data points and showcased how mostly western nations became healthy and prosperous in just 200 years – after countless millennia of malnutrition, disease,  wretched poverty and early death.

More recently, professor of history and economics Deidre McCloskey provided some clues as to why and how this happened. In a Wall Street Journal article outlining “how the West (and the rest) got rich,” she notes that it wasn’t just Karl Marx’s “exploited workers” or Adam Smith’s “virtuously saved capital, nor was it only Hernando DeSoto and Douglas North’s essential property rights and other legal institutions.

130214102629energy_resource-228x300Perhaps the most vital ingredient was that over those two centuries “ideas started having sex,” as author Matt Ridley described the process in The Rational Optimist. It enabled innovators to make discoveries and devise technological wonders, often through coincidentalConnections that historian James Burke found among seemingly unrelated earlier inventions, to bring us television, computers and other marvels.

Why did ideas suddenly start having sex? McCloskey asks. One reason was the printing press, which enabled more people to read and share ideas. However, she cites two other principal developments: liberty and equality. Liberated people are ingenious, she observes – free to pursue happiness, and ideas; free to try and fail, and try again; free to pursue their own self-interests, and thereby better mankind.

Equality of social dignity and before the law emboldened people to invest, invent and take risks. Once accidents of parentage, titles, inherited wealth or formal education no longer controlled destinies or opportunities, the innate inspiration, perspiration and perseverance of a Franklin, Bell, Edison, Wright, Kettering, Steinmetz, Ford, Benz, Borlaug and countless others could be unleashed.

“Supposedly inferior races and classes and ethnicities proved not to be so,” McCloskey says. “Ordinary men and women didn’t need to be directed from above and, when honored and left alone, became immensely creative.” That’s an important message in the splendid British television series Downton Abbey, as well: when societal restrictions are relaxed, many can rise to new callings and heights.

Many other factors played key roles in this incredible progress. Two are especially important.

The scientific methodbegins with an hypothesis about how some component of the natural world works, and a calculation or forecast of what would happen if the concept is correct. Scientists then subject the hypothesis and prediction to experiment. If confirmed by data and observations, we have a new theory or law of nature; if not, the hypothesis is wrong.

This process brought wondrous advances – often through long, laborious tinkering and testing, and often amid heated, acrimonious debate about which hypothesis was correct (the miasma or germ theory of disease), which system was better (direct or alternating current), and countless other investigations.

Abundant, reliable, affordable energy – the vast majority of it fossil fuels – made all this and much more possible. It carried us from human and animal muscle, wood, dung and water wheels, to densely packed energy that could reliably power factories, laboratories, schools, hospitals, homes and offices. Those fuels also run equipment that removes harmful pollutants from our air and water, and they ended our unsustainable reliance on whale oil, saving those magnificent mammals from extinction.

Today, coal, oil and natural gas still provide 80% of America’s and the world’s energy, for transportation, communication, refrigeration, heat, lights, manufacturing, entertainment and every other component of modern life. Together, the scientific method and industrial-grade energy enable our Ultimate Resource – the human mind – to create more new ideas, institutions and technologies that make life for poor people in wealthier countries better, healthier, fuller and longer than even royalty enjoyed a mere century ago.

Medical research discovered why people died from wounds; the true causes of malaria, smallpox, cholera and other diseases; antibiotics, vaccinations, insecticides and pharmaceuticals to combat disease and improve our overall well-being; anesthesia and surgical techniques that permit life-saving operations and organ transplants; sanitation (toilets, soap, trash removal) and water purification; and countless other advances that raised the average American’s life expectancy from 46 in 1900 to 76 today for men and 81 for women.

Internal combustion engines replaced horses for plows and transportation, and rid city streets of manure, urine and carcasses, while creating new problems that later generations toiled to address. Today we can travel the world in hours and ship produce, clothing and other products to the globe’s farthest corners.

Mechanized agriculture – coupled with modern fertilizers, hybrid and GMO seeds, drip irrigation and other advances – produce bumper crops that feed billions, using less land, water and insecticides.

Houses and other buildings are built better and stronger, to keep out the cold and heat and disease-carrying insects, better survive hurricanes and earthquakes, and connect their inhabitants with entertainment and information centers from all over the planet, and beyond.

Modern mining techniques and technologies find, extract and process the incredible variety of metals and other raw materials required to make the mechanized equipment and factories required to produce the energy we need and grow or make everything we eat, wear or use.

If energy is the Master Resource that makes all of this possible, electricity is the king of modern energy. Imagine your life without electricity – generated by coal, natural gas, nuclear, hydro, wind or solar facilities, or batteries. Imagine life before electricity, or before the internet and cell phones put the fullness of human knowledge and entertainment instantly in the palm of your hand.

At least one more factor helped to unleash this sudden surge of invention, progress, health and prosperity. A relatively new legal entity, the corporation, organized, harnessed and directed people, money and other resources toward common purposes. A growing private sector – free enterprises and entrepreneurs – put corporate and other ideas, labor and investors’ money on the line, assisted by evolving financial and investment systems and practices, while legal and government institutions provided the ethical and regulatory frameworks within which these entities are expected to operate.

Numerous “invisible hands” worked together across continents and oceans, often without even knowing their counterparts exist, to bring us products as simple as a pencil or as complex as a cell phone.

So we are left with a profound question. Amid all this health, prosperity and longevity for so many – why do so many still struggle on the edge of survival? Why do two billion still have minimal electricity and another 1.3 people still have none at all? Why do two billion still exist on $3 per day? Why do a half-million still die every year from malaria? five million more from respiratory and intestinal diseases?

The formula for health and prosperity is no secret. It is readily available on your cell phone. Indeed, says Leon Louw, the real “economic miracle” today is not found in South Korea, Singapore or Botswana – but in North Korea, Venezuela and most of Africa.

What should fascinate us is the miracle of poverty – the way inept, corrupt, greedy, centrally planned, hyper-regulated governments have prevented prosperity from happening. What should outrage us is that callous UN bodies, NGOs and activists have imposed their eco-imperialist agendas, and prevented countries from acquiring the property rights and technologies that made so many nations healthy and rich.

What should concern us is that many forces are conspiring to roll back the free enterprise, free speech, scientific method, and reliable, affordable energy that make modern living standards possible. Having them now does not guarantee them tomorrow. Failure to safeguard these essential foundations could take us on the path to joining the ranks of the “miracles of poverty” and FRCs: Formerly Rich Countries.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (CFACT). He is also the author of Cracking Big Green and Eco-Imperialism: Green Power – Black Death.

Read more excellent articles at CFACThttp://www.cfact.org/

Reprinted with permission from: How The West Got Healthy And Prosperous | PA Pundits – International

Stop Doing Low-Value Work

AAEAAQAAAAAAAAbSAAAAJGE3YjEwMjU0LWRlNDItNGY3Yi05ZDA1LTFjYjg1NDkxMjdiMQThis is from the Harvard Business Review, and it’s very true. I’m a small business guy, which means I’m a generalist, it also means that as much as possible, I lean on technology to take care of all the details, it works surprisingly well. Here’s some from Priscilla Claman’s article.

In the past, time management experts would recommend that you divide up your work into A tasks, B tasks, and C tasks. The concept was to do the A tasks first, then the B tasks, then the C tasks, when you can get to them. If priorities changed, you just changed the order of your As, Bs, and Cs. Doing all aspects of a job seemed possible then, if you just followed some basic time management rules.

That kind of thinking ended during the recession of 2007-2009. Between January 2008 and February 2010, 8.8 million jobs were lost. Although the jobs went away, much of the work didn’t. Teachers ended up with more children in a classroom; customer service representatives ended up with more phone calls; and managers ended up with more people to manage as teams were consolidated. No matter the job, everyone ended up with a lot more work. And although there have been real gains in productivity since then, the days of A, B, and C tasks are over. Overwhelmed is the new normal.

Therefore, it’s actually a matter of professional life or death to get rid of your low-value work – tasks that mean little or nothing to customers or colleagues. Take an active approach. Design a new, do-able job for yourself. Here’s when to do it:

via Stop Doing Low-Value Work

All true, but as usual, designed for corporate life, and for those of us in small business, it looks a bit different. Mostly we don’t do all those reports she speaks of, we’ve never had time, or the manpower, for that. And to be honest, when the management team is 5-10 people, neither have we had the need. One of the things about small business life is that we don’t have the underfoot for lily-gilding overhead, usually we don’t have the taste either.

In many ways, that’s why the regulatory burden falls so heavily on us. We have neither the people nor the taste to do endless forms, that don’t fit our system, and contribute nothing to our operations. From our chair, they are simply a waste of time. None of us, for example, have any desire to get our people hurt, but multi-thousand pages of OSHA regulation will never, in our mind, be as good, as supervisors with a modicum of common sense. Same in almost all areas.

In fact, that is why I’ve never been afraid to compete with the ‘big boys’, I’m so much more maneuverable, that they don’t have a chance. Sadly, that’s not as true anymore, their cronies in the government have saddled us all with so much nonsense paperwork, required by law, that we’re bogging down. True for us, true for the small banks, I think, true for almost all small business.

We’re still having lots of good ideas out here, in the office, and the field, but they’re getting set aside, we can’t find people willing to work 16/7/365 and do it productively.

In fact, we’re not either. The Sad part is, I don’t see anyone on the horizon that is likely to make any difference to this imposed cost, none at all.

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