Uber IPO warnings for SMBs

Uber driver

Uber had a IPO on Thursday 9 May 2019. The initial UBER stock price was 45 USD and it dropped to 37 USD by Monday. By many this is considered catastrophic.

How is this relevant for SMBs?

Tech stock depression can create a global financial crash – negative for SMBs
Global Dot Com crash was caused by overvaluing tech stocks. Financial crashes are initiated by investor’s realization that they are substantially overpaying. Uber stock price drop caused concerns that tech stocks are highly overpriced. If Uber IPO is an initiator of a new financial crash, this will slow down sales for next two or more years.

Uber is for long term investors – positive for SMBs
Silicon Valley created an illusion that businesses must make a lot of money quickly and then disappear. Uber is saying, on the contrary, to protect its unprofitable business model, that their stock is a long term investment. This is the strategy of a typical SMB which needs many years and decades to develop the market, technology, and talent. The long term growth perspective might be cool again.

Freelance culture is being questioned – positive for SMBs
Uber has implemented freelancing to global taxi driving. While freelancing has grown in some industries such as business services, it is highly questionable when applied to lower paying jobs. Freelancing does not support development of teamwork and complex skills which is needed for growth of most SMBs. If Uber fails this can be considered as a setback for the freelance culture and a benefit for SMB way of work. Working in the same team for a decade might also be cool again.

I hope Uber stock price has no global influence, but history has shown us that tech stocks can create substantial disruption.

Written by: Nikola Tosic
Publishing date: 14 May 2019