WeCities

[Bloomberg] [Fully Charged]( From [Bloomberg](   [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  Hi, it’s Josh. Was it a coincidence when WeWork disclosed a [loss of $690 million]( over the first six months of this year on the same week that Uber was [reportedly cutting back on purchases of celebratory balloons]( to save money? Yes, of course it was. Still, the events are a reminder that two of the most prominent companies remaking urban life—or at least, that slice of urban life experienced by well-paid young people—have yet to answer some basic questions about their business models. As the Atlantic’s Derek Thompson pointed out on Twitter, people who ride Uber back and forth from a job at a WeWork, and then go home and order food on DoorDash are interacting with companies [projected to lose $13 billion]( this year. And that doesn’t even factor in the money being hemorrhaged by the scooter company they use during their lunch breaks. In the short term, customers of these companies don't have to worry much about the losses. Your WeWork desk will still be there next week. But it’s easy to imagine 2019 as a high water mark for the tech-enabled conveniences that this generation of startups enable. We urbanites have been the beneficiaries of a specific strategy by investors in startups, who were willing to foot part of our bills to get us hooked. We’ve had more than our share of below-cost taxi rides, hand-delivered burritos and co-working spaces with free kombucha on tap. We may never have it so easy again. Uber Technologies Inc. and Lyft Inc. are now publicly held corporations. WeWork will soon join them, and DoorDash Inc. and Postmates Inc. probably won’t be far behind. This marks the end of the beginning. For almost a decade, venture capitalists and other investors in private stocks have been willing to swallow large losses to get a select group of companies to such a massive size that their customers can’t imagine living without them. The finish line is typically the initial public offering, and many have cashed out. Soon—in theory—these companies will have to satisfy shareholders with consistent quarterly profits. Judging from Uber’s and Lyft’s frequently falling stock prices, they don’t seem to be convincing many people yet. So changes are in the offing. But where the hypothetical profits come from is an open question. There’s not much more to be squeezed from the workforce of the ride-hailing and delivery companies. The businesses already avoid paying benefits or unemployment insurance. There’s widespread discontent among their workers, and various jurisdictions are considering rules that would make it even more expensive for the companies to operate. Uber and Lyft fares recently [went up](, and they could go further, but that would reduce the services’ reach. The ride-hailing companies, which have aspirations to be, in effect, mass transit providers, are likely hesitant to do this. Unfortunately for those companies and their investors, the competition tends to be unprofitable by design. “Public transportation is highly scalable and doesn’t make any money on purpose,” says Clara Brenner, managing director of the Urban Innovation Fund, an investment firm focused on early-stage urban tech companies. “The expectation that this will turn out differently has not been proven out.” WeWork similarly provides a pleasant service paired with an unproven business proposition. It signs long-term leases on office space and then rents it to short-term clients at a markup. Even today, this doesn’t come close to turning a profit, and if demand falls off in a slowing economy, the company could be left with even less revenue and the same costs. A global recession was highlighted as a risk in the IPO prospectus filed Wednesday by the parent company, We Co. (Weirdly, it was also listed as a point of corporate optimism under the heading, “Expected Resilience in a Downturn.”) The basic principle of business, that you must eventually break even to keep things running, means the golden age of city living can’t last forever. Uber, WeWork and the rest have changed urban life in lasting ways. But sooner or later, the party will end. Enjoy the balloons while they last. —[Joshua Brustein](mailto:jbrustein@bloomberg.net)  And here’s what you need to know in global technology news Amazon is trying to play nice with leading consumer labels, by labeling them "[top brands](."  Tesla is having a rocky time of things in Germany, where BMW and Mercedes have [trained customers to be finicky](.  Apple is headed to court in Europe, in a [fight over taxes](.  The New York Times looks back at Gamergate, a movement that ended up being about [a lot more than ethics in video game journalism](.  Hackers aren't the only ones exposing your sensitive personal information online. Sometimes [your dogs are doing it too](.   Sponsored Content by Siemens Siemens in the U.S. Siemens technology is at work everywhere in industry and infrastructure across the nation. 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