Assessing Uber's Corporate Identity in the Battle Over Driver Classification
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Why Did “We” Not Work?
LANGEVOORT.PRINTER.UPDATED (DO NOT DELETE) 7/18/2021 5:50 PM Corporate Adolescence: Why Did “We” Not Work? * Donald C. Langevoort and Hillary A. Sale In academic and public commentary, entrepreneurial finance is usually portrayed as a quintessential American success story, an institutional structure whereby expert venture capitalists with strong reputational incentives channel much-needed equity to deserving entrepreneurs, then subject them to intense monitoring to assure they stay on the path to hoped- for success in the form of an initial public offering or public company acquisition.1 Thus, it is jarring that in recent years there have been so many troubles, from gross embarrassments to allegations of outright criminality, at companies like Uber, Theranos, and our subject here, WeWork. These dramas are often portrayed in terms of the predictable sins of youthfulness: reckless, disruptive, risk-taking behaviors that come from the volatile interaction of a charismatic young leader and a cult(ure) of STEM-smart followers who buy into the dream.2 * The authors thank Craig Lewis, Sharon Nellis, and Elizabeth Pollman for their helpful comments and Olivia Brown, Samantha Glazer, Hollie Chenault, Claire Creighton, Jing Xu, and Michael Marcus for their research, insights, and good humor. 1. E.g., Bernard S. Black & Ronald J. Gilson, Venture Capital and the Structure of Capital Markets, 47 J. FIN. ECON. 243 (1998). 2. See generally JOHN CARREYROU, BAD BLOOD: SECRETS AND LIES IN A SILICON VALLEY STARTUP (2018) (discussing the Theranos scandal -
Private Company Fraud
Private Company Fraud Verity Winship∗ Fewer companies are going public in the United States, but public companies are still the focus of securities law and enforcement. A major exception is that anti-fraud provisions apply to all companies, public or private. Theranos is a prominent example. The Securities and Exchange Commission (“SEC”) sued this private company for securities fraud. This Article examines one societal cost of the decline of public companies: the loss of information needed to detect and punish fraud. It analyzes the SEC’s securities fraud enforcements against private companies and assesses the information costs of moving to an anti-fraud-only regime. It concludes by identifying ways to incentivize information disclosure in the newly private universe of corporations, including a proposal to expand whistleblower protection for employees of private companies. TABLE OF CONTENTS INTRODUCTION ................................................................................... 665 I. THE SHRINKING PUBLIC MARKET .............................................. 670 A. Defining the Private Company ........................................... 671 B. Public Company Decline .................................................... 673 C. Reasons to Regulate Private Companies ............................. 677 II. SEC ENFORCEMENT AGAINST PRIVATE COMPANIES ................. 680 A. Scope of Anti-Fraud Provisions .......................................... 681 B. Private Company Enforcement and the Silicon Valley Initiative ........................................................................... -
Hubert Horan: Can Uber Ever Deliver?
https://www.nakedcapitalism.com/2018/08/hubert-horan-can-uber-ever-deliver-part-sixteen- morningstars-horrendously-bad-uber-analysis-preview-ubers-ipo-propsectus.html Hubert Horan: Can Uber Ever Deliver? Part Sixteen: Is Morningstar’s Horrendously Bad Uber Analysis a Preview of Uber’s IPO Propsectus? Posted on August 13, 2018 by Yves Smith By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants Overview Morningstar released a research report three weeks ago predicting that Uber would become profitable in 2020 and could achieve an IPO value of $110 billion. Understanding the problems with Morningstar’s report is important because it illustrates the exact process and challenges Uber will face when it tries to sell its shares to investors next year Morningstar’s analysis is horrendously bad. Its profit forecast depends on plugging $4.5 billion in arbitrary and indefensible P&L gains into its forecast spreadsheet. Its valuation estimate depends on the equally indefensible claim that 39% five-year CAGR demand growth will occur independently of pricing, industry profitability or economic conditions. It provides absolutely no evidence substantiating its various claims about Uber efficiency improvements, fails to explain the source of these efficiencies, let alone demonstrate how they could drive powerful P&L gains, or explain why they didn’t generate profits until Uber’s 11th year of operations. They omit major factors relevant to a legitimate valuation analysis, such as pre-2017 P&L results, cash flows, and the costs and returns from current investments in future businesses such as driverless cars.