Source: YouTube

Uber is known to be persistent in looking for funding and they ask private investors instead of going public. According to the cofounder of Magellan Financial Group, Hamish Douglass, this practice is somewhat akin to the infamous Ponzi scheme.

In an interview last Wednesday, Douglass said that he is sure of the dramatic losses that are just awaiting the investors of Uber. This is because automated driving technology is starting to permeate the market.

“I think of Uber as among the stupidest companies in all of history,” said Douglass. “There’s such a huge chance that the company will declare bankruptcy after a decade. As a matter of fact, I think there’s a 99% chance that the company will fail.”

Pointing to the owner-driver model of Uber which is high cost, Douglass said that the capital-raising style of the company is similar to that of a Ponzi scheme. He also said that the San Francisco-based company has a ‘valueless’ user base.

Source: RT

“Uber does not have any advantage over everyone else regarding the autonomous driving technology. In fact, the company tried to steal it from Google. As a result, they ended up ruining their reputation as the case is now in court. From what I see, this entire side of Uber’s business is slowly falling apart. It’s always losing money,” exclaimed Douglass. “All Uber does is it keeps on increasing its private market valuation. What’s more, people always say that they will put their money in, hoping that as soon as they raise, they will be at a much higher price.”

The court case that Douglass is referring to involves the allegations by Waymo. Waymo is Google’s self-driving car project and is the company from which Uber allegedly stole a couple of trade secrets in order to develop its very own self-driving vehicles.

Source: Stuff

“There are smart investors from across the globe that like showing off their techniques in getting access to Uber. However, I think that there is a 99% chance that the business will collapse sooner or later,” further emphasized Douglass.

The scathing comments that Douglass made came the same day the transportation network company announced that it underpaid drivers by several million dollars. Uber admitted that it gave the wrong calculations with the earnings of New York drivers.

In recent months, investors are starting to grow uneasy as the tech company battles allegations regarding the evasion of regulators. Uber is also managing its own internal investigation into sexism claims and sexual harassment.

Broker reports suggest that the company’s private stock price slumped by 15%.
The criticism of Douglass also came a week after Fred Wilson, a venture capitalist, said that the win-whatever-it-costs strategy of Uber will be its undoing.

According to Wilson, Uber employed a strategy that did not work. Wilson thinks that the company is going to put everybody else out of business as it raises more money comparatively speaking.

Uber, valued from $60 to $70B, is headed by Travis Kalanick. He also runs the financing rounds of the company in a very controlled way.