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An American Superhero or Simply an Uber Villain?
August 11, 2016|e-commerceLife

An American Superhero or Simply an Uber Villain?

An American Superhero or Simply an Uber Villain?

Uber, the American transit liberation service formed in 2009 by Travis Kalanick and Garrett Camp, is widely considered to be the darling of many investment portfolios on Sandhill Road. Uber is viewed as a raging success of Silicon Valley disruption, something all entrepreneurs should aspire to.


I personally have my doubts. There are many things regarding the company’s business model, safety and most importantly, for those who have invested in the company, its longevity, and the sustainability looks to me to be destined to go the way of the dodo, or in this case the more apt analogy, maybe Napster.


Do I have anything good to say, I hear you ask?


Of course, as a businessman, I understand that any innovation will be destructive and often cause losses of jobs, and even change industry practices. Again, this is akin to the Napster analogy I mentioned earlier which will become blatantly clear in this piece later on.


I recently came back from Budapest where other taxi drivers unceremoniously kicked Uber out of the city because of revolt. What I thought would be useful would be to go through both examples, in London and New York, as to the procedures and qualifications a taxi driver has to obtain before they can operate, as well as a financial impact.


Let’s begin in my own capital city of London. To date, there are 24,000 Black cabs (that is, the term Black relates to the colour of the carriage), each one of them having disabled access, something that others may not appreciate as much as I do, nevertheless the fact. In order to operate a black cab, drivers are forced to do “the knowledge” – an arduous system, that has potential drivers driving around London on mopeds, memorising over 400 different routes used by customers. Incredibly, this process is so engulfing it can take on average 3 to 4 years to finish. Once completed, drivers have a thorough police background-check and only when they have passed this test are able to operate as a driver. There are many other levels of qualifications, that drivers are held to, for example, if the driver is complained about to the central office more than once, he or she can lose their license to operate. Cab drivers are held to a higher standard than the average driver. This process is equivalent to an undergraduate degree and medical research supports that this actually expands the driver’s visual awareness and geographic centres of the brain.


As far as I can tell, Uber allows anybody to use his or her own vehicle, once an apparently flimsy background check is done. The driver is simply given the software to his/her phone and then they can become a driver. Just stop for one second to think? We are actively encouraging strangers, who are unqualified and not vetted, to drive us around. What does this mean for safety? Heaven forbid that an Uber driver would commit a felony, or even worse a physical attack on a passenger (after death, the most horrifying would be a sexual assault). Currently, there are little to no responsibilities taken by the company for such matters.


Ladies and gentlemen, quite simply every time you enter a car with an Uber driver, you are rolling the dice and taking chances because you have no protection or recourse. Is your son or daughter not worth more protection? Is this not why we buy insurance and pay our taxes?


In New York, there is a more clear reflection of the financial impact, for those who do not know the Yellow Cab synonymous with the Manhattan skyline are only allowed to operate with a Medallion. These Medallions are restricted and the number and quality of drivers are controlled whilst also maintaining a viable business for those who could afford them.


Medallion Stock Price


As we can see from the staggering chart about the Medallion valuation, there has been a disastrous impact on the valuation of yellow cab medallions as our friends have expanded from city to city with impunity. Can this be justified from a company that takes little or no responsibility for its own actions and in fact, tries innovative ways to distance itself from its drivers on a daily basis?


I could go on about this, but I won’t talk about the ridiculously pathetic Uber accessibility program that is borderline false advertising, at least in my current city of San Francisco.


There is one last thing that interests me the most.


Uber recently announced a Chinese merger with Didi, a merger that leaves a $35 billion company with the current shareholders getting around a 20% stake in the new entity.


It was reported by Bloomberg that Uber is burning through around $1 billion dollars a year to maintain its current position. So I have one question to Travis and Garrett, why are you sacrificing the biggest population on the planet if your business model is working? Especially when two months ago all parties ruled out any merger. Is Uber running out of Capital or do we truly believe that they are going to spend time expanding into other markets? Really? It sounds to me a lot like a CEO who gets pushed out of their job, but then the press release reads, “They want to spend more time with their children”.


My personal view is that the clock is ticking, and I imagine the next step will be to push for an IPO (initial public offering). This is where the business is floated on the Stock Exchange and hence, would create massive fortunes for Travis and Garrett. This would be a completely logical step if only they weren’t risking people’s lives every day to make their fortune.


I am the most avid capitalist and totally believe in innovation. Since the day I was born, it has enabled me to free the shackles of my physical disability to live a normal life. However, sometimes innovation can be destined for destruction, not in the sense that they make things better, but instead, they just change the rules or in this case simply ignore them. Now we have come full circle and I will end this note with a vote of caution. When Sean Parker founded Napster, it revolutionised the music sharing capabilities of the world, but also single-handedly nearly destroyed the music industry itself. Mr. Parker was at one time the most litigated man on the planet and ended up making no money from Napster. I am not about to cry for Sean, as he did very well with his influence over Facebook, but I wonder whether Travis and Garrett had a similar dilemma? They have created a monster that they can no longer control and are being ousted by city after city across the globe.


Their only hope is that people and investors believe in their model long enough for them to reach the nirvana of the New York Stock Exchange.


As always, please feel free to leave your comments. Some people will agree with me, others will not, I look forward to hearing from you all.


Kieran Prior


Game of Thrones or Game of Drones – Will Amazon Survive the Winter?
July 18, 2016|e-commerceInvesting

Game of Thrones or Game of Drones – Will Amazon Survive the Winter?

Game of Thrones or Game of Drones – Will Amazon Survive the Winter? has just come through its second annual Prime Day, the day where they as a company reward Amazon prime members with significant discounts.  For all intents and purposes it was a roaring success (even though the stock ended down on the day).


Jeff Bezos has become a modern day magician, building a house of cards or turning water into wine, either analogy works.


It all comes down to the short term, Q2Q driven environment we live in!  Many of you reading this letter are unaware that in its 17 year history with it’s $300 billion market cap, yes I said $300 billion, has never made a dollar in overall profit.  “What?”  I hear those tech disciples scream “but what about AWS?”  Amazon Web Services, yes this division does make money.


Unfortunately, every other department does not and as such Amazon Web services is supplementing the rest of the company until becomes part of an oligopoly manufactured by Mr. Bezos himself.  For every next day delivery, for every drone delivery within the next hour, they are losing millions of investors’ dollars.  To what end you might ask? Well, to be honest it’s an age-old story, kill or be killed, is basically gambling that they can dominate the market share so much that they can influence pricing to the point where every department can make money.


The reality is that every mom and pop store in this country does not stand a chance unless we change the way we think about capitalism.


The American corporate culture has become centered around a 90-day horizon where people literally live or die by making their revenue number.  Innovation and long-term planning have seemingly been put to the wayside by this level of short-term thinking.  Every C-suite in the country is guilty of thinking this way, why?  This is because their compensation is based on short-term success.  Why plan for the next 10 years, when a chief executive can make $50 million in the next three years simply by him hitting their numbers quarter after quarter?


As a professional trader, it seems bizarre to me that appears to be bucking the trend.  The question remains when, rather than whether time and the lack of profit will catch up on Mr. Bezos.


We are in a dreadful downward spiral – from 1955 – 2014 a staggering 88% of the Fortune 500 companies no longer exist.  Let me be the first to say that innovation by its very nature is destructive but to this extent really does this look like a long-term plan for the American economy.  It doesn’t to me.  A striking example of this is the company LinkedIn who had a staggering 44% fall in their market cap this summer.  Why?  Because their membership numbers had stalled in the previous quarter, thus putting them in a weak position and now they are owned by our friends Microsoft.  Wow!  Is the American economy building companies or just playing cards?

The good news is I think I have an answer. Platform companies such as Facebook and Google have revolutionized the way revenue structure works allowing these two goliaths to plan for the future.


I am Kieran Prior and I’m about to embark upon a journey of change, one that will change e-commerce environment forever, without prescribing how things should be done.  Instead simply providing the tools for culture to meet commerce.  Allowing job creation and human innovation to sculpt and etch the way to an open commerce ecosystem.


I will write more in my next letter about what I call the PriArc Hub.


Kieran Prior

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Hi I'm Kieran
I'm a proud husband, football fan and Dog Dad to @finchy_the_frenchie
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