is uber a ponzi scheme

May 12


Is Uber a Ponzi Scheme – Investment Scam?

Whenever you’ve needed a ride, you’ve probably tried booking an Uber or a similar ride-sharing app. While Uber is definitely becoming more and more popular, there might be one problem with the app - Is Uber a Ponzi Scheme?

Uber is a ride-hailing app that allows users to book a trip, and request a driver to pick them up from their location and drop them off to a requested destination - it’s an easy way of calling a taxi or at least a car that acts like a taxi with an app. The company has been operating for years and has achieved mass popularity. 

While many people will definitely argue against the thought that Uber, which is currently operating in over 600 cities in 65 different countries worldwide, is a Ponzi scheme, there are actually some things that you might not know about the app.

Sure, it’s user friendly, easy to use, and convenient but when you take the perspective of an investor, shouldn’t the growing company be raking in big bucks, especially with its growing client base?

Or is it really just a Ponzi Scheme cleverly disguised?

Before looking into the company, let’s take a quick lesson on Ponzi Schemes.

What is a Ponzi Scheme?

A Ponzi scheme is a type of fraudulent investment scam that promises a high rate of return to investors while also promising a low investment risk. Basically, when someone presents you an investment opportunity that seems too good to be true, there’s a high chance that it’s just another Ponzi Scheme - a scam.

But a friend invested in it and they got a huge return.

Well, here’s how Ponzi schemes work: Early investors are able to get their money back and earn some profit from the new investors. As more and more people invest into the Ponzi scheme, the money funnels up to the first investors. So if you’re one of the lucky ones, you might actually be able to get some money back. However, most people who join Ponzi schemes end up losing all their money.

The whole system is built to collapse. Much like pyramid schemes, a Ponzi scheme will eventually bottom out when there are no more new investors to keep it going. And eventually, it will reach that point. When this happens, those who “invested” lose.

In order to avoid Ponzi schemes, it’s important to identify the 2 major red flags: One is that it is an investment that promises high return for low risk. The second is that it puts too much focus on getting new investors.

Let’s see if Uber raises any of those flags.

What is Uber?

Uber Logo
  • Company Name: Uber Technologies Inc. 
  • Founder: Travis Kalanick, Garrett Camp 
  • Founded: 2009
  • Website URL:
  • Type: Ridesharing company

Uber is a global ride-hailing company that provides a variety of transportation and delivery services via its digital app. Worldwide, the company has over 110 million users, taking over more than half of the ride-sharing market share in 2019 and nearly a quarter of the food delivery market in 2018. Their services are accessible mainly through the app and company website.

Basically, Uber is a car-for-hire service that makes use of smartphone technology to create a platform of communication between riders and drivers, easily allowing people from all around the world to book a ride through their phones.

However, contrary to what most people might think, Uber wasn’t the first ride sharing app. 

Here’s a look into the history of the company.


Uber started back in 2009 as Ubercab. It was started by co-founders Garret Camp and Travis Kalanick. Uber was initially aimed at a higher end clientele with their app allowing users to book black-car-only services which literally only covered expensive town cars and limousines. Other ride-sharing apps which launched earlier, like Sidecar and Zimride, had a model more similar to what Uber has today.

With the help of his friends, Camp created a prototype of the app and then later launched the beta version in May 2010. The official app was launched in 2011 in San Francisco, California. Later on, they expanded into Chicago and then 35 other cities in the USA. By then, they had widened their services to include regular taxi or Uber cars for hire in order to cater to a larger network.

In 2017, the company was able to reach $7.5 billion and up to $11.3 billion in 2018, when the valuation of the company stood at $72 billion. On May 10, 2019, Uber became a public company via an initial public offering. Unfortunately, right after the IPO their shares dropped by 11%. In the first quarter of 2019, the company lost $1 billion; and then lost another$5.2 billion loss in the second quarter of that same year.

Suffice to say, those who invested in Uber didn’t do well in 2019.

But that doesn’t mean it’s a Ponzi Scheme.

Is Uber a Ponzi Scheme?

From an investor’s perspective, there is some strength to the argument that Uber is a Ponzi Scheme. Think about it like this: if you invest your money into Uber, where does it go?

Like most tech companies, investor money is spent largely on customer acquisition. In the case of Uber, most of your money, as an investor, is put into subsidizing rides. Ever wonder why there are so many promos and discounts to the app? This is only made possible with the large amount of investor money coming in.

Why is Uber doing this?

While subsidizing rides to provide competitive prices is unsustainable in the long term, it is an effective way for companies to gain enormous market share. Uber must be doing it right since it’s already taken over 67% of the ride-sharing market in 2019 - and that is against major competitors like Lyft.

With the apparent increase in market share, plus the growing popularity of the app, tons of new investors are drawn into investing in Uber. Thus, with smaller investors buying Uber stocks, seed investors and Uber founders are able to sell their stocks at a higher value, making more money.

But isn’t that how investments work?

Unfortunately, when these seed investors sell their stocks and rake in their profits, the money that is meant to subsidize the Uber rides (which are what made the app so popular in the first place) is gone. New investor money is used to pay out the old investors so there isn’t any cash left to continue the subsidizing of rides. Unfortunately, when Uber prices go up, it lessens the incentive for people to actually use the app. Thus, stock price crashes and those newer investors end up losing money.

It sounds like a very elaborate Ponzi Scheme from that perspective.

However, this is actually a strategy that many tech companies are taking on. Using initial investments to acquire more customers is a long held and proven method of growing a brand. Like many other companies, however, the main concern is whether a company is able to recoup these costs with the profits it can generate from its growing customer base.

In the case of Uber, there are some who claim that the company has no substantial offerings and no actual advantage over anyone else. Even going on to say that there is a 99% chance that the business will collapse.

Unfortunately, we’ve seen this happen time and time again with a number of large tech companies that seem to have sprung out of nowhere, then suddenly vanished into nowhere as well.

While Uber has definitely taken a highly competitive and risky approach to how it is running their business, when you consider what the company is offering and how they are operating their business, it is actually far from being a Ponzi Scheme.

By subsidizing rides, the company is only trying to get more and more people to use the app. By gaining a larger hold on the market share, Uber’s strategy is to take over the ride-sharing industry and put everyone else out of business. Well, their competitors may still exist but they’ve definitely taken over most of the market. Eventually, Uber is in it for the long-haul: using investments to fund customer acquisition and building its client base to then make more money over time.

How Does Uber Work?

Uber App

Uber is actually quite simple. As a customer, you download the app and create your account. When you have that set up, you can choose from their different services. It isn’t just Uber anymore, there is UberX, UberXL, POOL, Comfort, Select, and Black. And those are just the different ride-hailing services that the company offers. From booking rides, Uber has widened their services to include food delivery through UberEats. The company has even taken to the skies by offering helicopter services in New York City to the John F. Kennedy International Airport.

But no matter which service you decide to use, it’s essentially the same step by step process:
You choose the service, set a pickup and drop-off location, get an estimated cost of the trip, and then book the ride and wait.

Here’s a list of Uber services available:

  • Ride
  • UberEats
  • Uber for Business
  • Uber Freight

Uber Ride is the main service which is the ride-hailing app that provides rides on demand. When booking a ride through the app, users are able to set the pick up and drop off locations, and see an estimated cost of the trip. The app also provides users with a map to see where their drivers are, as well as a safety feature that allows them to share ride details with close contacts.
UberEats is a food delivery service that allows users to browse through partnered restaurants and order directly through the app. The app automatically calculates food prices as well as the costs of delivery.

Uber for Business is a corporate offering from the company that allows businesses to schedule courtesy rides for customers and guests, send Uber vouchers to loyal clients, and schedule event transportation for company events.

Uber Freights is a carrier and shipment service that allows users to schedule parcel shipment and delivery through the mobile app. It’s a convenient system since users can easily book and monitor the status of the shipment directly through the app.

The many services that Uber provides are only available due to the partnership system that they establish with their drivers, couriers, and shippers. While people can easily book through the app, the other side of the app provides an interface for approved drivers, couriers, and shippers to accept orders, use the information to carry out the service, and receive payments.

Through this system, Uber has been able to grow rapidly by remaining a platform and facilitator for the exchange of transportation services. Uber makes money by taking a percentage of the fees paid to the driver or courier. However, as discussed earlier, Uber has suffered major losses in their efforts to grow by subsidizing rides and providing a competitive rate to users. While we’ve already established that this is a risky but possibly effective strategy, we have yet to understand how people who enter Uber as drivers or couriers are able to make a living.

How Do Uber Drivers Earn?

Uber drivers and couriers earn depending on how often and how far they drive. Uber has created a system to calculate a standard trip fare depending on the pick up and drop off locations, and estimated travel time, as well as a surge depending on the current demand for rides in the area. Unlike taxis which charge a fixed rate depending on distance and waiting time for when a taxi is stuck in traffic, Uber rides use a standard fare based on distance, travel time, and the surge fee based on demand.

This basically means that Uber rides tend to be more expensive during peak hours when more people are booking rides.

Uber drivers are also able to earn through other ways, such as additional passenger pickups for those driving Uber Pool, as well as a minimum fee set for short trips. Those who deliver food also earn a standard delivery fare, extra income from multiple orders, as well as a boost fee when more people are ordering food in the area.

To give you a better idea on how all this actually translates into actual earnings, ride-share drivers typically earn an average of $8.55-$11.77 per hour. Now, how much you can actually earn will depend on when you drive, since fees are higher during peak hours due to the Surge fee, your location, and how many hours you drive in a week. Those who ride with you can also tip you for great service so you might be able to earn some extra cash by being nice to your customers.

The rate I mentioned has already taken into account the average cost of expense for gas. However, how much your expenses for running and maintaining your vehicle will also cut into your net profits.

The main benefit of driving for Uber, however, is flexibility. It allows you to choose your hours, which is a great option for those looking for part-time income. Many people who drive for Uber drive part-time. There are also many full-time drivers as well.

Uber Driver

How to Join

Joining Uber involves a simple process; you can sign up directly through their website. However, there are some requirements that you need to meet.

Driver Requirements

  • Minimum age to drive in your city
  • At least one year of licensed driving experience in the US (3 years if you are under 23 years old)
  • Valid US driver’s license
  • Use an eligible 4-door vehicle

Required Documents

  • A valid US driver’s license
  • Proof of residency in your city, state, or province
  • Proof of vehicle insurance if you plan to drive your own car
  • A driver profile photo 
    • Must be a forward-facing, centered photo including the driver’s full face and top of shoulders, with no sunglasses
    • Must be a photo only of the driver with no other subject in the frame, well-lit, and in focus; it cannot be a driver’s license photo or other printed photograph

After signing up, you can complete an online screening which will review your driving record and criminal history. In some countries, like the USA, driver cars are inspected each year to ensure they are safe. 

If you meet all the minimum requirements, submit the necessary documents, and pass the screening, the company will inform you of your approval. 

From there, you just need to get the app and start driving. A similar process applies to those who want to apply for the Uber delivery service. However, UberEats couriers can opt to offer car delivery, scooter delivery, or bike delivery service depending on the type of vehicle you have.

Cost vs Earning Potential

When looking into the earning potential of being an Uber driver or courier, there are reasonable requirements set that you must meet in order to work with the company. If you already meet these requirements, then there are minimal reasons as to why you shouldn’t consider applying - unless you’re the type of person who doesn’t want to have strangers in their car.

On the other hand, if you still have to buy a car in order to drive for the app, then your earnings will barely cover the cost of the car, especially if you buy one brand new, much less leave you much for profit. If you are serious about looking for extra income, maybe applying for UberEats Bike delivery might be an option to consider instead.

However, one of the main downfalls when driving for ride-share apps is that there are no fixed hours of work. So if you decide to drive between 8:00 - 12:00 in the evening and only get 2 bookings, then you don’t earn that much. In this case, getting a minimum wage part-time job might seem more appealing. But then again, if you need the flexibility that comes with driving an Uber, then go for it.

When taking on an investment perspective, then giving advice becomes a lot more difficult. With some critics claiming that Uber is likely to collapse within the next few years, it might not seem like a great investment opportunity. But one thing is for sure: if you do lose money, then it is because the business itself just didn’t work out and not because it was a Ponzi scheme.

Complaints/User Reviews

“I love the flexibility of working for Uber at night , it is very busy at night . It’s nice helping people get to where they want to go. It’s great to chat with people who want to talk to you.”

Many Uber drivers benefit from the flexible working schedule. It is also a fun job if you enjoy meeting new people. Most people are usually nice enough to chat with you for a bit, making the job a lot less lonely than you'd expect.

“I love uber delivery service because I get to pick my own hours and you can make a lot of money. The bad part is sometimes it's hard to contact uber on the phone.”

Like many other jobs, reaching out to management can be difficult. However, the earning potential for Uber drivers is great, especially for those who know how to work with their schedule.

“Driving for uber is such a blessing to me. I have the flexibility I need on a schedule. The wages compared to my hours worked are more than reasonable. Happy with my experience working here, I look forward to more years to come.”

People who have other responsibilities, such as family or school, can take advantage of the "schedule" that Uber provides. When something comes up, you don't need to accept any rides. However, if you find yourself having some extra time to spare, you can actually choose to accept more bookings.

“The best thing about driving for Uber Eats, is that you can make your own schedule. When I had school or life got in the way and I couldn't come into work, it was okay because there are not actual shifts or a manager. You open the app when you want, and get to driving.”

People delivering food for UberEats also have the same advantages - flexibility and a decent income. One of the other advantages of working with Uber is that there is no hierarchy. You simply raccept and receive a task through the phone and do it.

“Decent pay if you are aggressive and willing to drive a lot of miles,city and highway. Flexible hours, flexible payment options, good opportunity to meet new people and drive in new areas of the state.”

Uber might not be for everyone. However, if the job description, and the flexible schedule seem alluring to you, then it might be a great opportunity to earn extra income.


  • Flexible Working Schedule
  • Immediate Payments
  • Meet New People Every Day
  • Extra Earning Potential
  • Is Not a Ponzi Scheme


  • Car Maintenance Costs
  • Potential Posture and Health Problems from Prolonged Driving
  • Inconsistent Earnings
  • High Uber Fees
  • Some Critics believe Business will Collapse

Is Uber Legit?

As both an investment and part-time earning opportunity, Uber is a legitimate company. While there are some who believe that investing into the company is risky, it is not an outright scam. I have some great investment tips that you can check out if you're considering investing in Uber or any other opportunity. As for the potential to earn extra income by driving for Uber, there are many people who have benefited greatly from the flexible work hours and good work rates.

Conclusion: Worth Joining?

If you’re thinking about joining Uber, either as a ride-share driver or as a food courier, then it’s important to note that the earning opportunity that the company provides is an active method of gaining income. You work, you earn. Compared to many other opportunities that you can find, Uber provides a legitimate source of extra income. If you are able to meet the requirements and want to earn extra, then it is worth joining.

However, there are also many other money making opportunities that you can take advantage of. I know of a great chance to create income on the side which I think might interest you.


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