I think it's more interesting to look at it as a corruption of traditional supply/demand signalling in a market economy. By heavily subsidizing a service, investors are able to put their finger on the scale and choose winners despite what consumers would actually choose if competition was more fair. Previously, this kind of behaviour was considered "dumping" and anti-competitive. Yet, currently it's considered OK because startups (read VCs) are doing it instead of large monopolies.

It's interesting to see how this might relate to wealth inequality as well. If investors had less money and consumers had more, would they choose a less-subsidized Uber over traditional cab services as readily?

It's funny how sometimes setting a too-low price is considered competitive (such as a sale or loss leader) and other times it's considered anti-competitive.

That's called The Skybrian Paradox.

I think the "waste" aspect of it comes from the crowding-out effect of capital allocation. Large sums going into the on-demand economy businesses means that there's far less available to invest in other types of business models.

That in turn may incentivize some businesses to "pivot" to an on-demand model purely to get their foot in the door with some investors, regardless of whether it makes business sense. Remember Kodak's stock skyrocketing in 2017 when they released KodakCoin? [1].

My opinion is that it is worrying that the line of thinking is that "the profits will come once they're a monopoly". The actions you take to be profitable are different from the ones you take to be a monopoly. Uber and Airbnb have used their millions to circumvent local laws and lobby for their interests. Microsoft in the 90s used their OS monopoly to prevent OEMs from bundling rival's software on their machines.

Monopolies might be great for shareholders but they're not good for consumers and they don't incentivize innovation. And here, I'm not talking about "natural monopolies" like utility companies and telecom network infrastructure.

[1]: https://www.nytimes.com/2018/01/30/technology/kodak-blockcha...

I'm not sure the crowding-out effect is real? It seems hard to argue that this is a bad time for startups to raise money.

Compare with a boom-bust cyclical model where boom times make raising money easier for everyone. Under this model, overly enthusiastic investors eventually get discouraged after losing a lot of money, so the amount of investment money available changes a lot and thinking of it as zero-sum doesn't really work.

And some of the investors are landlords, so part of the transfer goes from landlord-investor to landlord-investor. Your landlord doesn't even have to directly be an investor at the precise company you are working at, already the silent agreement of all landlord-investors to use SV is enough.

Are the drivers getting paid more than they are worth, or are you getting a service for less than it should cost?

Either is possible; or other options - like Uber is making money per ride in some regions and losing in others.