> If Uber operated like most AI startups its business model would be to buy new cars every 6 months, sign agreements with every automaker to buy every car they make for the next 5 years, and sell rides for a fraction of what all this costs them. All while providing a service only moderately better than the boring taxi service that costs the same price and that taxi service just released an app to hail rides. It would then claim it’s worth 100x the valuation of the taxi service.

Uber and Lyft literally "sell rides for a fraction of what all this costs them" upto early 2025. I don't know how old you are but I started to use them back in 2012. I was one of their early users when you could sit next to the driver. From then upto 2025, Uber and Lyft used to literally cost me less than what just gas would cost me to drive the same distance.

This is true too: "It would then claim it’s worth 100x the valuation of the taxi service" - there was literally a website (might be up even now) that literally made this argument and why Uber was doomed to fail anytime now.

Your first two points are also true for Uber Lease - a product that was rolled out for drivers - they could choose to lease specific models and Uber in turn signed agreements with specific automakers. An exact parallel for these points, esp. the circular financing is hard to make because they are not even the same product but I imagine one would agree, on the whole, we are in the conception stage of LLMs and this industry is brand new and figuring things out.

This same pattern had happened when PCs were becoming mainstream. That was 40 years ago so memory of it might be faint or lost. Also VCs weren't really a huge deal back then either but the fundamentals were the same.

We are all overreacting over a nascent industry, upset that it's increasing prices for everyone and pushing humans out of jobs. This is understandable but the conclusion is wrong. We are letting emotions drive decisions.

You make some valid points, but the bigger fact remains that Uber survived because its model was not capital intensive. Yes it burned cash for a while but on one-off costs like setting up new markets. Had it signed contracts to be buying new cars every 6 months in the way AI startups have committed to future expenses it would have gone bankrupt.