The following editorial appeared in the Providence Journal (Rhode Island). Guest editorials do not necessarily represent the views of Messenger Post Media.

Founded in San Francisco by computer programmer Garrett Camp and online entrepreneur Travis Kalanick in 2009, UberCab seemed a brilliant idea to use technology to cut transportation costs. (The name was changed to Uber in 2011 after complaints from San Francisco taxi operators.)

People use Uber’s website and mobile apps to set up rides. Drivers are employed as independent contractors. They must have a valid driver’s license, go through background checks and meet requirements related to, among other things, age, health and model of vehicle.

People have seemed to take to it. As of 2018, Uber had operating revenue of $11.27 billion. It can be found in 63 countries and over 785 metropolitan areas. There are approximately 110 million users worldwide, served by over 22,000 employees — half of whom are employed outside the U.S. It has a 69% market share in the U.S. for passenger transport, and a 25% market share for food delivery.

But for all its success, Uber has had major issues to deal with, including losing vast amounts of money so far.

It has been at war with the taxi industry for years. There have been several reports of an unethical culture operating within this organization. The use of dynamic pricing at peak hours has increased the cost of rides for unsuspecting passengers. Attempts to build a self-driving vehicle have stalled. Several drivers have produced faulty background information, used their phones while driving, hidden some of their earnings from the IRS, and been accused of sexual harassment.

The biggest problems have occurred since Uber went public this May.

The company’s shares went down 11% after its initial public offering, the biggest first-day dollar loss in America’s IPO history. It lost $1 billion in the first quarter of 2019, in its first earnings report as a public company. The second quarter was worse: it lost $5.2 billion, of which $3.9 billion was “stock-based compensation expenses” related to employee equity.

This led to the resignation of COO Barney Harsford and CMO Rebecca Messina one month after the IPO was issued. The marketing department was reduced by a third, and a hiring freeze for engineers was instituted. More than 800 employees have been fired since the company went public, including about 8% of its product and engineering teams.

Employee perks are disappearing, too. “Starbucks showed up in coffee dispensers, and craft coffee from Stumptown, a roaster based in Portland, Ore., went away,” The Washington Post reported on Sept. 30. Meanwhile, “office supplies like giant sticky notes dried up, and the company no longer hands out ‘Uberversary’ balloons.”

To break even, Uber would have to raise fares fairly dramatically, which might lead to a sharp drop in users.

One reason all of this is in flux is that no one can see the future clearly. Uber is looking for the day when human costs can be reduced through the introduction of driverless cars. But such cars are still far from perfected, especially in city settings. Uber at the moment does not seem to have a clear road to profitability or a unique ability to deliver services that others could not duplicate.

We’ll see. One of the glories of capitalism is that investors can test clever ideas in the real world to determine their value to consumers.