Uber rides are subsidized. Uber loses money on each ride. The self-driving R&D is what will presumably save Uber. Their biggest expense (the drivers) will go away.
That's not unit cost. Companies spend money on advertising when they're new because it pays dividends for decades. It's not inherently loss-making, it's just investment that hasn't returned its full yield yet.
It's an investment that the company can't afford to make at the moment. An existing, efficient, and self-sustaining player can be drowned out by a few VCs subsidizing costs and making it impossible to compete for a few years.
The American VC system is disgusting. It allows a few wealthy individuals to choose winners not because they are the best solution, but just because through nefarious tactics they are the last ones standing.
> It's an investment that the company can't afford to make at the moment.
This is nonsense logic and the very reason not to use cash-based accounting for anything serious.
They raised capital, therefore they have the money. Basically all companies start off "losing money" because most investments don't instantaneously produce their full return. How would anybody ever open a factory or a restaurant if they had to be profitable before spending any money on anything that generates profit? You can't use the profit from making widgets to build your first widget factory because you need a widget factory to make widgets.
> They raised capital, therefore they have the money.
Right, and as a result of this, the companies that have capital can always beat out the ones that don't. Who gets to decide which companies get capital? VCs. So that means that it's not the market that decides who wins and loses, it's VCs. Does that sound like the intention of capitalism to you?
Having a better or more efficient idea is meaningless in today's economy. All that matters is how big your warchest is, and how many rich investors you have in your pocket.
> Right, and as a result of this, the companies that have capital can always beat out the ones that don't.
If your idea requires capital to execute and you don't have any then you can't execute it. How do you propose to change that?
> Who gets to decide which companies get capital? VCs. So that means that it's not the market that decides who wins and loses, it's VCs.
Who gets to decide which companies get capital? Venture capitalists. In other words, people with capital are the ones who decide which companies get capital. This is almost tautologically true.
But that is the market. The VCs fund the companies they think have the most promise. If you have a good idea but not capital then you convince some people with capital to fund you so you can execute it. That's what VC is.
What are you proposing as an alternative? One where raising capital is impossible and so you were either born with it or you're stuck working hand to mouth at a McJob forever because your idea takes more funding to execute that you can save in a lifetime as a wage slave?
