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Holly's Blog: Uber floats as naive optimism sinks

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Emotion not maths

First up, the Uber story reminds us that the stock market has nothing to do with maths, reason or sums. A loss-making taxi firm with no taxis will be valued at around £63 billion. Enter hope, ambition and greed stage left, not maths. The £63 billion valuation will be little more than the ‘barrow boy’ methodology of pricing – charge the most you think you can without it backfiring horribly. Then once you’ve worked out the answer, get some spotty graduates to work up the numbers around it in a complicated-looking plan.

So if you don’t understand the numbers, take heart. No-one does and the lunatics are indeed running the asylum.

 

A modern money morality play

There is something a bit dark about the Uber story.

On the one hand it’s a success story. We are told that it was founded in 2009 by an engineer frustrated by a $800 cab fare on New Year’s Eve. I too run a start-up and I love start-ups. The mission. The adrenalin. Those cashflow-induced sleepless nights. The endless hours. The 3am wakefulness, worrying because every buck stops with you. It’s a gamble and a challenge – and those who make it deserve it.

But on the other hand, with great power comes great responsibility. People. Uber has been riddled with sexual harassment claims, has fought its drivers about basic workplace rights and generally overseen what the former Attorney General described as a ‘bro’ culture. It’s toxic.

 

The week we forgot the ‘G’

In 2019, the buzzword in investment management circles is ESG. Environmental, Social and Governance criteria for choosing which shares to own and which companies to back. These three letters are on Board agendas as firms see this as a way to win back trust, look pioneering, gain elusive female and millennial customers, and keep large pension firm customers happy.

But if embraced, ESG is not optional. It’s not part-time. It’s not sharing some videos with polar bears and wind farms online whilst at the dirtier coal face it’s business as usual. It’s a promise and a commitment to avoid dodgy companies which carries consequences and comes at a cost. And I fail to see how Uber could pass any screening on the G front (with a healthy question mark on the S bit too).

There has been a resounding silence on the Uber float from investment managers this week, which I think is a shame. We need some leaders to make a stand and not just follow the herd.

 

Hypocritical Holly?

I’m not lecturing anyone here from a superior lefty high horse. If someone offered me a tranche of Uber shares this morning at the list price of $45 would I take them? I like to think not, but I might be weak and greedy and jump on the speculative bandwagon of hype, aiming to ditch them fairly quickly.

But the times are a-changing. In an era where Gregg’s vegan sausage rolls caused the firm to lift profit guidance for 2019, ESG is no longer a whimsical nice-to-have but a core component of any successful firm. But this week the momentum of ESG fervour has gone eerily quiet as firms balance shiny, public, environmentally-friendly halos with the pressures to make some quick, filthy, private lucre.

As investors and consumers we will make the choice about what matters to us. I just hope that when the Uber founders and main shareholders are going home tonight, after the celebrations and revelry, they at least remember to give their drivers a tip.

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