Last Sunday afternoon at 2 pm, the Windmill Library in Las Vegas offered a free musical performance and verbal retrospective in remembrance of Liberace, the late flamboyant showman-pianist, who died 32 years ago.
I suspect most of us who attended expected perhaps only a few dozen locals might show up. After all, Liberace disappeared from the Las Vegas stage a very long time ago. An outdated museum dedicated to his life shuttered in 2010. So, I wondered with some justification — who remembers Liberace?
Remarkably, “Liberace Lives!” — a celebration of the master showman’s life and music — attracted more than 500 attendees! About 50 people or so had to be turned away at the door at the performance center. Come to learn, an identical performance held at another library during the previous day also drew a packed house and an overflow crowd.
What magic spell is still cast by this campy entertainer who never sang, didn’t compose any significant music, couldn’t dance, never used a light show or had an orchestra and whose entire stage show pretty much consisted of a pudgy aging man with a bouffant hair dew dressed in some absurd costume straight out of the Renaissance while sitting at a piano for what would seem to be an excruciating 90 minutes?
That’s the great mystery I shall attempt to solve in today’s article.
Indeed, the timing is perfect. Today, Liberace would have been 100-years-old. He was born Wladziu Valentino Liberace in West Allis, WI on May 16, 1919. The son of Polish and Italian immigrants, Liberace was known as “Lee” to his friends, and “Walter” to his family. But later, the performer became better known to millions by the singular name, Liberace, the first American entertainer to establish a popular trend later copied by Madonna, Prince, Pink, and countless icons.
The remembrance held at the library taught me many remarkable things about Liberace. So, I thought I’d share them now with you. Here are a dozen facts you probably didn’t know about Liberace:
 During the mid-1950s, Liberace was the highest-paid entertainer in the United States, and perhaps the entire world. He had a successful nationally-television variety show. He also earned a whopping $50,000 a week at the Riviera for one Las Vegas’ first extended residencies. That’s equal to about a million dollars per month in today’s money.
 A decade later, Liberace moved his act over to the more spacious The International showroom (later the Las Vegas Hilton, now the Westgate). Every one of his shows sold out. For a time, his opening act was a young female singer named Barbra Streisand.
 Liberace was vilified by critics for his piano playing style and unapologetic showmanship. He was often accused of being way too glitzy with little musical substance. Critics noted that he didn’t compose any original music. Liberace’s counterargument was he brought classical music and old American standards to millions of new listeners. He’s often credited with demystifying the greatest classical compositions for much broader audiences. He was one of the first stage performers to completely obliterate siloed musical tastes. In fact, Liberace included nearly every genre of music in his Las Vegas stage show.
 Liberace had hundreds of fan clubs throughout the world, 200 at one point during the height of his popularity. Later in his career, his most loyal fans consisted of older women, with whom he had established the oddest of connections.
 Liberace stories are the stuff of legend. While rehearsing one afternoon for his temporary residency at The New Frontier around 1953, an unknown man observed the virtuoso from the wings offstage. Liberace wasn’t at all pleased with the lighting and asked the tall man to help with repositioning a few spotlights. The man silently complied with the pianist’s request. That man turned out to be Howard Hughes.
 Before morphing into a legend, Elvis Presley was mostly known as a teen idol during the 1950s. While playing a few shows in Las Vegas, during one night off Elvis attended Liberace’s performance at the Riviera. He saw the pianist wearing a glittery jacket that was so flashy it completely dominated the showroom. Elvis was so impressed with the spectacle that he too began wearing sequined jackets in his act and later adopted the flashy jumpsuits that Liberace pioneered as a Las Vegas performer, years earlier.
 Liberace’s stage show became increasingly over the top nearly to the point of self-parody and camp. He overtly displayed his wealth, fawned over royalty and other celebrities, and even wore heavy fur coats while onstage, despite the bright lights and oppressive Las Vegas heat. He drove into the showroom while chauffered in the back of a mirrored Rolls Royce (driven by his live-in lover, the boyish Scott Thorson). Liberace doddered across the stage adorned in a full white mink stole with a tail more than 20 feet long. As he paraded near the front row of worshippers, Liberace’s stock stage line was “go ahead, have a feel, there’s enough fur there for all of you.”
 Liberace is credited with the famous line, “I laughed all the way to the bank.” When critics ripped his act and he was asked for a reaction, Liberace frequently slung the revengeful reply. Later, during an appearance on The Tonight Show in an interview with Johnny Carson, Liberace really stuck it to his critics. He snapped: “I don’t cry all the way to the bank anymore – I bought the bank!”
 Liberace won a multi-billion dollar defamation suit against a British tabloid after the magazine claimed the pianist was gay in the 50s. Incredibly, Liberace denied the claim and ultimately won his lawsuit, despite the obvious fact the allegation was true. While Liberace couldn’t “come out” given the restrictive times and repressive norms of the day, and certainly would never have enjoyed vast success had his homosexuality been widely known, his adoring fans never seemed to care. Nonetheless, to this day, Liberace remains controversial among gay activists. He never acknowledged being gay, despite actor Rock Hudson being the far braver as the first Hollywood legend to announce his sexuality months prior to dying of AIDS. Liberace died in a similar vein, 18 months after Hudson, but still denied being gay until his last dying breath.
 In life and even in death, Liberace was the ultimate contradiction. He was a flamboyant showman, who lived just as extravagantly while offstage. Yet, he was devoutly religious and remained a practicing Catholic throughout his entire life. Liberace was very conservative politically.
 After Liberace’s death, his wealth funded thousands of college scholarships for students interested in pursuing careers in music. His estate bestowed millions, much of the money going to students in the performing arts at UNLV. His generous endowment continues to support students and musical programs.
 Liberace’s stage shows often concluded with the most unusual fanfare possible. He didn’t simply disappear backstage and then leave, as is normal custom. Rather, after performing his final song, he invited his audience up onto the stage to touch his clothes, sit at his grand piano, and even try on his flashy jewelry. He posed for tens of thousands of photos with his fans, often with handshakes, hugs, and kisses.
Liberace remains a Las Vegas legend. He’s a musical icon. He’s well worth remembering today, on the centennial of his birth.
— Then, don’t you ever lecture me again on MORALITY.
— Then, don’t you ever lecture me again on your so-called “CHRISTIAN VALUES.”
— Then, don’t you ever lecture me again on TAKING PERSONAL RESPONSIBILITY FOR ACTIONS.
— Then, don’t you ever lecture me again about GOVERNMENT SPENDING or FEDERAL DEFICITS.
— Then, don’t you ever lecture me again on PAYING YOUR OWN BILLS.
— Then, don’t you ever lecture me again on ADHERING TO THE U.S. CONSTITUTION.
— Then, don’t you ever lecture me again on following THE RULE OF LAW.
— Then, don’t you ever lecture me again about CIVILITY.
— Then, don’t you ever lecture me again about CRONYISM, NEPOTISM, or CORRUPTION.
— Then, don’t you ever lecture me again on PROTECTING THE COUNTRY FROM FOREIGN INTERFERENCE.
— Then, don’t you ever lecture me again on anything to do with RUSSIA.
— Then, don’t you ever lecture me again about CARING FOR THE POOR AND THE ELDERLY.
— — Then, don’t you ever lecture me again about RESPECTING FAMILIES OF THE WAR DEAD.
— Then, don’t you ever lecture me again about CARING FOR THE ENVIRONMENT or PROTECTING ANIMALS.
— Then, don’t you ever lecture me again about HONESTY.
— Then, don’t you ever lecture me again about TELLING THE TRUTH.
From your deafening silence, your constant deflection, your incessant what-about-ism, and your self-imposed bubble of blind ignorance, you have made a clear choice, an appalling demonstration of precisely where you stand on all the important issues of the day, and it’s not flattering.
The bottom line is — you will NEVER lecture me again on anything.
Remember his name, because he merits being treasured. Ponder his significance because he enhanced everything to which his name was attached. Revere his memory because he was a mentor to many, who freely gave guidance for no other reason than simply being kind.
If you knew Gary, you were lucky. If you didn’t, then please read on and learn more about this remarkable man I knew, respected, and loved.
He was a father. He was a husband. He was a friend. He was a veteran. He was a patriot. He was a son of the earth.
He wasn’t just a good man. He was a great man. He was a teacher. He was an intellect. He led by example. He was a man who exemplified the very essence of compassion, honesty, and decency. He was the greater good. He was the angel of our better nature.
Gary Edward Thompson was born in Danbury, Connecticut on December 4th, 1945. He died in Las Vegas, Nevada on April 14, 2019. In between, he lived 74 extraordinary years. His life touched countless others. He made a difference.
Gary spent most of his childhood in Connecticut. He graduated from the prestigious New York Military Academy. He enlisted in the United States Air Force. He served overseas during the Cold War and was stationed in Pakistan during a tense period in global geopolitics.
After serving his country proudly abroad, Gary returned home and worked in New York City for several years as a marketing executive. He became a widely-respected Wall Street reporter and was assigned to writing daily copy for the Dow Jones Report.
Gary then moved to Las Vegas and launched a new career. He took a job as a reporter covering city hall and was promoted to managing editor of the Las Vegas Sun. Next, he worked at Harrah’s Entertainment as a publicist. He worked his way to the pinnacle of the casino industry, becoming the spokesperson for Caesar’s Entertainment, the world’s largest gambling enterprise.
Gary also worked as an executive for the World Series of Poker — not because he needed the extra workload, nor the immense responsibilities that went along with an additional full-time job. He worked for the WSOP — and did so from 2004 through 2008, the period now regarded as “the poker boom” — simply because he loved the game and respected its players. He was there during the critical transition between past and present when the WSOP grew from a smoky backroom corral into an internationally-televised spectacle.
That’s how I came to know Gary so well, and where our story now begins.
Thirty-one years ago, two legends-in-the-making battled it out for poker’s richest prize and instant immortality. Johnny Chan beat Erik Seidel heads-up and won the 1988 World Series of Poker. The final hand later became canonized in the popular movie Rounders and to this day remains one of the most famous confrontations in poker history.
Remember the riveting instant when Chan masterfully captured his prey and yet was forced to disguise the victory within his grasp? See the photograph above which shows Chan just moments before winning his second of two world championship titles. Look at the man positioned over Chan’s left shoulder reporting on the event. That’s Gary Thompson.
Yes, that’s Gary Thompson — standing on his feet at crusty old Binion’s Horseshoe, during the pre-historic era when no one from the mainstream press ever came to cover anything related to poker. Reporting on poker events just wasn’t done back then. Not before Gary Thompson arrived in Las Vegas, saw the potential, trekked down to the Horseshoe personally, and made it into a front-page news story. Some two decades after recognizing the magnetic attraction that was the World Series of Poker, he became one who would run it and make major decisions that would come to define what it’s become today.
Sometime in the future, the real story of the WSOP shall be written. What went on behind the scenes. In back hallways and on cell phones late at night. On those pages, should they tell the whole truth, Gary will be tagged as the perpetual outlier, the ultimate voice of reason, the grand visionary, and the player’s champion.
I was there. I saw it. I witnessed everything. I remember.
Poker players who revere the WSOP owe a special debt of gratitude to Gary for all the things he did that almost no one saw. In the face of excruciating pressure, outright opposition, and often indifference from the highest level, he (often alone) was the voice who stood up to the mega-corporation, the short-sighted bottom-liners, the managerial MBAs, and all the suited squeezers who wouldn’t know mixed games from a mixed salad and never gave a rat’s ass about the players or any of poker’s great traditions. Gary was there duking out in the back offices and boardrooms, bickering and bargaining and bantering at every meeting, every step of the way — pleading, cajoling, maneuvering — desperately trying to protect and preserve all that the WSOP represented that corporate culture wanted to milk out and pulverize the last nickel and drop.
He didn’t win every battle. In fact, he lost many. But he argued passionately and always came down on the side of the greater good of the game.
Yet, Gary’s name will never be associated with poker championships, although he was the players champion. He stood up for them. He defended them. He understood those who came to the WSOP each and every year weren’t just ripe customers to be plucked for a day but might be loyalists for life, provided they were treated right and not ripped-off. Among everyone I ever worked with at Binion’s-Harrah’s-Caesars over 20 long years at the WSOP, no one was more protective of the players and traditions than Gary Thompson.
Public relations and marketing basically boil down to mastering the art of bullshitting.
There, I said it.
Maybe it was because Gary waded through so much of it himself, working on Wall Street and recognizing a lie when he heard it. Maybe it was covering the dirty underbelly of Las Vegas politics for so long. Perhaps those experiences had something to do with Gary always despising bullshitters and vowing never to become one himself.
So, when Gary ultimately flipped to the opposite side of the cat and mouse media game, he never distracted, diverted, nor double-talked those who sought his perspective. He never once bullshitted. That’s why every media personality who interviewed Gary knew they were getting the straight story directly from the source. That made Gary the “go to” guy in Las Vegas. Because he returned phone calls. He told the truth.
Most readers have no idea how difficult it is to maintain trust and personal integrity while working for a conglomerate as colossal as Caesars Entertainment, particularly during the tense period when the $27 billion company was inexplicably floundering in bankruptcy. Gary manned the front lines and dealt with the press on a daily basis. He was the company’s firewall.
That didn’t mean things always went smoothly.
About ten years ago, I read an explosive story on the front page of the Las Vegas Review-Journal. The article was about the Department of Justice laying down the hammer on online poker, which pretty much pulled the plug on the game’s growth inside the United States. Gary was quoted (accurately) with a blistering rebuke of the D.O.J.’s overreach. He blasted the feds. I remember sitting there and reading that article, fist-pumping air, and screaming out, “You tell ’em, Gary!”
That was Gary Thompson, ignoring the guard rails, cutting through the bullshit, and telling it like it was. It was pure Gary at his best.
Later, I found out Gary was almost fired for that impromptu comment. Caesar’s Entertainment and the stuffed suits were annoyed that its own spokesperson was picking swinging an ax at the federal government. But Gary survived because he was so damned good at his job and everyone who knew him respected his word as the gold standard. That’s trust. That’s integrity. That’s power.
I must have had 50 dinners and at least 500 drinks with Gary, and that’s a conservative estimate.
His beverage of choice was always Vodka Martini. Shaken not stirred.
He dressed immaculately.
He spoke calmly but could always command a conversation. When Gary spoke, everyone stopped and listened. He had the ear of everyone — CEO’s, Mayors, television people, everyone. Once, I saw him pick up the phone and book a friend of mine as a guest on National Public Radio — on the spot. He got things done.
Most of all, Gary loved to laugh and made the most of every opportunity to do so. If pressed to recall the serene sound of Gary’s soothing voice, it most certainly is accompanied by his laughter. Even when Gary was mad, and he did get angry at times, you could always tell he was looking for the bright side and seeking a way for everyone to shine. His positive spirit was utterly infectious.
I was lucky to call him my boss. He was the kind of person you worked for and didn’t want to disappoint. There are rare individuals in this world who command such authority just by their example, that to fall short of their expectations is the ultimate defeat and despair. Letting down Gary on any task was the ultimate in shame. I don’t know if I ever let down Gary, but I certainly tried to meet and match everything that was expected. I think everyone who ever worked for or with Gary would say the same thing. He was that exceptional leader who could motivate others to exceed their capabilities.
Sometime around 2006, Gary and I had one of our dinners at Piero’s, a local Las Vegas institution. Everyone in the restaurant knew Gary. It was like dining with a rock star. I think (former) Mayor Oscar Goodman was there that night. Gary could have run for any office in the city and probably been elected in a landslide.
During our many conversations, he confessed things privately to me. I don’t think he would mind me sharing some these memories, now. Gary absolutely adored his daughter, Kelly. He talked about her with great love and admiration. He also would get choked up each time he would talk about his late wife, who had died years earlier. Gary carried some guilt about her death, rightly or wrongly burdened with memories that didn’t tell her how much he loved her enough while she was living. He carried that burden long after she was gone. I think Gary lost a piece of himself when she passed away. Gary could be the life of the party without every trying to call attention to himself.
But when Gary met Gina, he became complete once again. They were married and devoted their lives to each other. Gary and Gina were the perfect power couple and even better dinner companions — witty, funny, insightful, and kind. Marieta and I dined out with the Thompson’s many times, including wine dinners. If I were to describe those dinners and our conversations, the word I would use would be passionate. Gary and Gina were always filled with passion. About everything.
Gary and I shared so many common interests and similarities. But our political views were dramatically different. Gary was a libertarian and a Republican. He had bumper stickers of the National Rifle Association on his Acura that I threatened to tear off. We argued about politics all the time. Yet never once did our discussions become heated, nor uncomfortable. I think there was a mutual respect that was so deep it transcended our differences. I wish other people who can’t get along could have spent more time witnessing the way Gary carried himself in daily conversation. There’s a lesson there for everyone.
About six years ago (if memory serves), Gary learned he had terminal cancer. He immediately began treatment and lost his hair. Never one to seek out any sympathy, Gary instead focused on the time he had still remaining. He vowed to make Gina happy. That was all that mattered to him. Gina and his daughter Kelly — they were everything to Gary.
And so, Gary traveled. And played golf. And laughed. Despite the diagnosis, Gary laughed a lot. He never gave up. He never quit smiling and laughing.
I’m a terrible golfer.
Yet somehow, I always got paired with the laughing chain smoker and 70-year-old cancer patient, even when we were senselessly playing for money against much younger and stronger competition.
Talk about a handicap. Thing was, the handicap was me.
Gary tried to give me golf lessons. Many times. That didn’t work. I still sucked. He once trashed my old set of golf clubs right out on the middle of the course and gave me his own brand new set of wood and irons. Seriously, he picked up my bag and tossed it in the trash between holes. Then, he gave me a $500 set of new clubs, which I still have as a prized possession.
Gary’s expensive didn’t help either. It wasn’t the clubs. It was the golfer swinging them.
The only time I ever won money on the golf course was back a few years ago when Gary and I were at Angel Park in Summerlin playing against a couple of guys who could whack the ball 300 yards down the fairway. We were playing “best ball.” That meant each player got to play the ball of the best shot. Of course, we played Gary’s shot 90 percent of the time because I was so awful and he was so consistent.
We got down to the final hole at Angel Park, the 18th green. The purse had a big carryover. I had to sink a 30-yard putt, for us to win the match. It was a shot I couldn’t make 1 out of 500 times. Gary coached me. He told me to exhale and just where to strike the ball and how hard to hit it. I took my club, actually Gary’s putter, and slapped the ball which ran downhill and to the right and dropped straight into the hole. Pluck! We cheered. We hugged. Our opponents threw their clubs up in the air. I felt like I had just won The Masters.
Here are two golf stories I wrote about previously, including an account of that round with Gary.
When Gary was diagnosed with cancer, he knew his days were numbered. For most who are facing their own mortality, seeing the end of the road serves as a rude wake-up call. It’s a cruel reminder to re-align one’s priorities. For Gary, knowing he had a limited time to live wasn’t a jolting life adjustment at all. It was merely a continuation of who he was and always had been. It was a fitting final chapter and an epitaph.
Gary had always wanted to see Africa and experience the final frontiers of the wilderness. So, during the last year of his life, still healthy and with energy enough to make the long and demanding trip, he ventured to the great continent of Africa where he saw the wild beasts up close and marveled in all that was natural. For the man who’d spent much of his life working among the skyscrapers of New York and the neon glow of Las Vegas, standing out on the open plains with African bushmen and being among the animals was his final fateful act of revelation and liberation.
If the life of the dead is placed in the memory of the living, then we all share an obligation to remember him and revere the life he lived and try to meet the lofty aspirations he set by his conduct and the man he was.
I loved Gary Thompson.
I will miss him.
We will all miss him and the greater good he was.
Here is a direct link to the Gary Edward Thompson memorial page and more information about services scheduled for April 27th. CLICK HERE
Note: I believe the facts of Gary’s life to be accurate in this hasty remembrance. I have no notes nor any obituary for reference. It was written from memory. If readers notice any errors, please e-mail me privately at — email@example.com — and I will make any corrections. Thank you.
Buyer Beware: Why Lyft’s Current Business Model is Unsustainable and the Stock is Probably a Losing Long-Term Investment
A few hours from now, the rideshare company Lyft will go public. Shares of stock will be offered on the NASDAQ. A few people are about to become insanely rich overnight.
Lyft began operating in 2012. In the seven years since, the high-tech startup has grown into the second-largest rideshare transport company. Uber, which ranks first, enjoyed a four-year head start on their rival.
However, some analysts now believe Lyft’s long-term prospects are brighter given the number of cities where the company operates (300) and growth projections within those markets. Certainly, Lyft will be an attractive investment for initial speculation in what’s been a booming American economy. The timing of Lyft’s public launch couldn’t be better than now.
However, Lyft is beset with many questions and potential problems. What are my credentials to make this statement? Well, admittedly, I know nothing about the company’s ownership, its management team, its technology, or anything whatsoever to do with its finances. What I do know is its current business model is badly flawed and hence, unsustainable. Lyft can’t continue to operate as it’s now doing and expect to generate much of any profit for investors. In other words, don’t expect dividends to be paid soon. In fact, profits may never come.
We’ve seen this false hype before — high-tech stocks and even great ideas that seemed they couldn’t miss, go from boom to bust. Anyone remember the late 1990s? Apparently not.
Lyft is expected to sell 32.5 million shares at around $72 each in the initial public offering phase (IPO), taking place on Friday, March 30, 2019. The company will instantly be valued at $25 billion, a remarkable degree of investor confidence for such a young company that has yet to produce a profit in any of its seven years of operations, to date.
Read that again — yet to produce a profit.
Sure, Lyft (and Uber) have set the stage for what seems like a transformative enterprise that could change how millions of people get around in urban centers. Most of us have used the service and do find it appealing. The convenience of simply pulling out a smartphone on any city street, typing in an address, and getting a car direct to your doorstep within minutes is an attractive feature. Moreover, ridesharing doesn’t require the handling of cash since all transactions are done by credit card (which is already on file when the consumer signs up for an online account). Finally, ridesharing fares cost significantly less than taxis and other means of private transportation. And therein lies the problem.
Lyft and Uber have been competing in a heated rivalry, especially over the last year or so, which has really been great for riders, but bad for both companies and especially their drivers, which are not employees but independent contractors. The battle to inflate market share has kept fares ridiculously low in some cities, which has resulted in drivers’ pay being cut. Lyft has been able to weather financial losses until now, and the infusion of IPO capital surely will give the company a huge boost. However, there’s simply no way to generate profits in the long-term based on any of the current numbers.
Why not? :et me explain.
Presently, Lyft is losing money. To make a profit, the company must either:
Reduce labor costs
Ramp up technology (which will reduce labor costs)
Sorry, riders — but paying $8.45 for a six-mile ride cannot continue. That fare isn’t feeding all the mouths that need to be fed when it comes to operating a motor vehicle, maintenance, fuel, labor, customer service, management, marketing, insurance, and other associated costs. Making up the current deficit and then generating a profit for shareholders will require implementation of one or more of the options above. There’s a reason the taxi costs $12 while the Lyft ride costs $9. It’s because the trip is somewhere between $9 and $12 in cost, and Lyft is undercutting the competition.
If prices increase to a level that offsets costs and generates profit, ridesharing won’t be nearly as attractive to consumers. Right now, many people are turning to ridesharing because it’s cheaper than a taxi. That won’t be the case if fares go up by a substantial margin, which is probably inevitable given the costs of driving in urban markets.
If labor costs are cut, which means driver’s pay is slashed, rideshare companies won’t be able to attract new talent, nor keep those the drivers they have. Uber and Lyft have been in a war to the bottom to see which company can pay its independent contractors less, presumably in an attempt to make their balance sheets look good. With high turnover, rideshare companies are now bombarding social media channels desperately trying to attract new drivers, even offering so-called incentives to sign up. Check your Facebook feed after visiting the Lyft page sometime and see what pops up.
Ridesharing is still a relatively new phenomenon and many drivers may be fooled into thinking it pays more than what’s actually accrued after time, investment, fuel costs, and wear and tear on personal vehicles — not to mention the inherent risks that go along with working odd hours driving on the streets (crime, traffic tickets, auto accidents, and so forth). As the word spreads that many Lyft drivers make barely above minimum wage, it will be increasingly difficult to find the gullible. Furthermore, the low rate of pay (which based on my personal experience varies between $8-14 per hour, and that’s — before taxes and zero benefits) will inevitably discourage better drivers and attract people of lesser quality. Seriously, who can live in cities like New York, Washington, San Francisco, or Los Angeles on $11-an-hour?
Poverty-level wages, essential to profits, will attract marginal people — both in quality and character. Increasingly, expect to see problems (like Uber sexual assaults, which have risen significantly). There’s simply no way to attract a viable workforce paying $11 an hour with no benefits. It’s a lettuce picking job behind the wheel.
Investors may be attracted to the company’s high-tech prospects, which could be on the horizon. The most revolutionary component of ridesharing of the future is autonomous vehicles. If Lyft (and Uber) can convert cars into a driverless experience, that eliminates significant labor cost. Inner-city transportation would never be the same again.
But let’s not get ahead of ourselves, just yet. While the technology does exist and the rideshare giants undoubtedly would chomp at the bit to convert to driverless cars if given an option, nevertheless, significant legal and practical objections do remain. How many cities and states will allow hundreds or perhaps thousands of cars to be driverless and how long would this process take? Additionally, what happens when a driverless car kills someone, as happened last year in Phoenix? Accidents are part of the equation and are bound to occur (even if they aren’t caused by technical malfunctions). Will city and state governments allow this controversial new technology on the streets? Perhaps the biggest hurdle of all — what about consumer confidence and traditional habits? Will riders get into a car that doesn’t have a living person as the driver? Sure, high-tech might make driverless cars statistically safer and perhaps these concerns shall be overcome. But I’m not convinced that either Lyft or Uber will be able to convert to a driverless vehicle fleet, not anytime soon. Any investor would be a fool to think this is the game changer that will suddenly make rideshare companies profitable.
Hence, rider fares must increase (jeopardizing profit), labor costs must be reduced (jeopardizing profit), or high-tech must become the lifesaver for Lyft and Uber (probably the only viable option). Then, add the uncertainty of gas prices now at a historic low (when adjusted for inflation), rising automobile acquisition and repair costs, and other economic uncertainties, and it’s impossible to imagine a better climate for ridesharing companies that right now nor how things will improve. If Lyft and Uber can’t make a profit in these extraordinary conditions, how will they make money when the inevitable slowdown or downturn occurs?
This isn’t to say Lyft and Uber are doomed to fail. To the contrary. Ridesharing is here to stay. It’s great for consumers. But it won’t be nearly the bargain later on when operating costs and shareholder expectations create pressure to raise fares. A ride from the airport can’t be delivered at $12 when the actual cost is higher. It’s unsustainable.
No doubt, Lyft is going public at the ideal time for their owners. Uber will likely be following suit, soon. Unfortunately, those who invest in all likelihood have never driven for the company, seen the day-to-day operations, nor done the math. I have.
Those who buy shares in these companies early and then hold rideshare stocks could end up in a riderless investment, with no idea when to bail out. Short-term, Lyft could be an attractive investment. But as reality sets in, no one knows where the profits will come from.