@bgedelman: Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down

Jacob’s golden ladder
Get’s slippery at the top
And many a happy-go-lucky saint
Has made that long long drop

From Step by Step, written by Jesse Winchester

Many have forgotten that Travis Kalanick was a founder of Scour, the illegal peer-to-peer file sharing service that declared bankruptcy in 2000.  According to the LA Times,

“[Scour’s bankruptcy] filing puts the company’s daunting legal and financial troubles on hold and gives company officials time to develop a plan of reorganization that ultimately must be approved both by its creditors and the court. The company has more than $100 million in debt, and estimated its assets at between $1 million and $10 million, according to the filing in federal Bankruptcy Court in Los Angeles.”

With this ignominious destiny in mind, read Professor Ben Edelman’s analysis of Uber’s (and Lyft’s) fatally flawed business model and think about how you could substitute “Scour” for “Uber” right up to the bankruptcy part—for now.  If the Dot Bomb crash taught Silicon Valley anything, it should have been how Dot Bomb fall down go boom.

From many passengers’ perspective, Uber is a godsend — lower fares than taxis, clean vehicles, courteous drivers, easy electronic payments. Yet the company’s mounting scandals reveal something seriously amiss, culminating in last week’s stern report from former U.S. Attorney General Eric Holder.

Some people attribute the company’s missteps to the personal failings of founder-CEO Travis Kalanick. These have certainly contributed to the company’s problems, and his resignation is probably appropriate. Kalanick and other top executives signal by example what is and is not acceptable behavior, and they are clearly responsible for the company’s ethically and legally questionable decisions and practices.

But I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.

Read the post on Harvard Business Review