“There were several 'rounds' of WeWork investment where Softbank was buying more shares at higher valuations,” Stoller points out. “WeWork ostensibly became more valuable because Son said it was more valuable, and bought shares for higher prices. And since there was no public market for these shares, the pricing of the shares was totally arbitrary. WeWork then used this cash to underprice competitors in the co-working space market, hoping to be able to profit later once it had a strong market position in real estate subletting or ancillary businesses."
We do not have companies like Uber and WeWork because they’re efficient or innovative or even because we want to, we have them because they are being subsidized by venture capital. And here’s what we have to show for it: an underclass of gig workers, increased traffic congestion and urban pollution, the global suppression of labor standards, hollowed-out public transportation and taxi businesses across the world, and the instability that will come when Uber and WeWork collapse as SoftBank and other investors get tired of losing money from these creatively unprofitable businesses.So What?It’s easy to take a look at these numbers, and what is happening, broadly speaking, and allow your eyes to glaze over. Some dude who walks barefoot down the streets of New York City becomes a billionaire; some of his investors make a lot of money, some other billionaires lose a few billion. We laugh or decide not to pay attention. The billionaires keep doing what they want and keep finding other companies to pump up.But the side effects of venture capital’s quest for not just big companies but the biggest companies may haunt us even on the off chance that regulators and politicians decide to try to reign them in. It has created, for example, a world where our individually and socially created data is owned by large corporations like Google or Facebook; perhaps if you’re lucky you’ll be compensated for with a paltry dividend paid out to you. It has created a world where we are inundated with goods and services that are free or subsidized in the short-term (i.e. search, social networks, meal plan boxes, delivery services, video streaming, ride-hailing, etc.) but that we are at some point going to pay for with our data or our jobs or our autonomy or our attention or, eventually, with our money because, once a monopoly is achieved, the price can be increased.The tech bubble is not simply a market problem. We have allowed venture capital to concentrate power in ways that dictate how our cities work, how our technology is developed, how labor operates, and how we relate to each other. A digital economy where large technology platforms and start-ups turn our public sphere into a series of fiefs rationing out goods and services is not a natural development—it’s not even a progressive one.If there is a takeaway, it is that this tech bubble is worse than the last precisely because it has incubated for so long. It has naturalized the privatization of our lives as technology’s teleology when really that is a political project being advanced for the benefit and profit of a narrow group of elites at the expense of the public. Getting out of the bubble requires us asking some basic questions that sound revolutionary only because of how much bullshit we’ve absorbed. Do we actually need computers and sensors embedded in every surface? Are there social and political problems that simply cannot or should not be solved within the market? And how are we going to go about rebuilding society if our answers lead us in that direction?"The goal of Son, and increasingly most large financiers in private equity and venture capital, is to find big markets and then dump capital into one player in such a market who can underprice until he becomes the dominant remaining actor. In this manner, financiers can help kill all competition, with the idea of profiting later on via the surviving monopoly."