The Theranos experience has not chastened Arizona in its chase for California tech companies.
Maybe Uber will.
Under Gov. Doug Ducey, Arizona has aggressively sold California tech companies on the benefits of moving to Arizona, especially for those businesses involved in the so-called “sharing economy.”
Theranos, a blood-testing company, was one of the favored few. The Legislature passed laws allowing people to request blood work without a doctor’s order, in large measure to accommodate the company’s business model. Then that business model blew up in a flurry of revelations and investigations about a key technology that didn’t work and that the company lied about.
All along, Uber has been a special favorite of the governor. After signing a law that allowed the company to operate all over Arizona in 2015, he helped persuade the company to locate a customer-service center here. He also invited the company to work on its driverless-car technology here — notably after California cracked down on the testing last year.
(In a surprise on Friday, news emerged that Uber will apply for a self-driving car permit from California and reiterated that it is "100 percent committed" to the state.)
But the future is cloudy for Uber, a company that has projected an image of a cutting-edge, “disruptive” business while at the same time cultivating America’s powerful interests for financial and political support. The reason, in short, is that it may never be able to make a profit.
A slew of stories have come out in the last week questioning whether Uber is, as one piece put it starkly, doomed. The recent problems are multiple: Ongoing questions about whether drivers should be classified as employees instead of contractors, an exposé about rampant sexism within the notoriously macho company, a lawsuit by Google alleging an Uber employee stole driverless-car technology, and a videotaped argument in which Uber’s CEO lambasted a driver who dared criticize the company’s fare structure.
As a writer at the online auto-news site Jalopnik put it: “Yet even when those factors are removed, it’s becoming more evident that Uber will collapse on its own. Barring a drastic shift in the company’s business — an implausible rollout of self-driving car fleets across the U.S., an increase of fares by threefold, or a complete monopolization of the taxi and ride-hailing markets — Uber’s lifeline is shrinking. Its business model could collapse if one court case, and there are many, goes against it. Or perhaps more pressing, if it simply runs out of cash.”
To be fair, Arizona has not invested much in Uber, other than the state’s credibility and maybe its citizens’ safety. Under Ducey, the state made ride-sharing legal in Arizona. And Ducey very publicly brought Uber’s self-driving vehicle project to Arizona in December, after California shut it down over safety concerns.
New reporting in the New York Times, by the way, shows that Uber’s self-driving vehicles ran through six red lights in San Francisco before the project was transferred to Arizona. Nevertheless, Ducey has promised that Arizona will put people’s safety first in developing guidelines for the cars.
None of that may matter, though. Uber has never had anything but massive losses — likely somewhere in the vicinity of $3 billion for all of 2016. And it’s questionable whether it can ever wean itself from massive infusions of venture capital and start turning profits.
If it fails, it’ll be another example of Arizona naively handing our state over to a company and business model that we simply didn’t know enough about. In honor of spring training, a baseball metaphor: These are home-run swings that lead to a lot of strikeouts, when the better teams have great fundamentals -- strong fielding, pitching and base-running -- not big swings for the fences.
Babeu for CBP?
Rumors have been swirling for weeks that former Pinal County Sheriff Paul Babeu is a candidate for commissioner of U.S. Customs and Border Protection, the agency that oversees the Border Patrol and inspections at ports of entry.
Cochise County Sheriff Mark Dannels, who was involved in the Trump administration’s transition and remains in touch as an official of the National Sheriffs Association, confirmed for me Thursday that Babeu was a candidate who was being vetted.
Arizona’s DPS Director, Frank Milstead, was also a candidate but no longer is.
As some readers know, I’ve covered Babeu for years and would be aghast at his appointment. Repeatedly, my colleagues and I pointed out lies and exaggerations Babeu made in the service of a broader border-alarmist position. They’re too numerous to list here, but those same alarmist positions made him a regular on Fox News. As has become clear, the president favors job candidates who present well on TV, so that is a real qualification.
It turns out, though, that as the Casa Grande Dispatch revealed, the FBI is investigating Babeu’s use of RICO money while sheriff. Investigators asked the department, as well as the Pinal County Attorney’s Office, for materials on the use of RICO money over the last week. But with several members of the Trump administration under FBI investigation, who knows if that’ll be considered a strike against him — or just another qualification.
Maybe the bigger question is: Has Babeu met the qualification of having forgotten a meeting with a Russian official?
TUSD recall rumors
Now that Superintendent H.T. Sanchez has resigned (more about that in Sunday’s column), talk is in the air of recall elections against various TUSD board members.
Curiously, the most serious inquiries so far have been about recalling member Kristel Foster. I say it’s curious because she was on the losing end of the vote to accept Sanchez’s resignation, so replacing her would not make a difference in the balance of power on the board.
Rumors have circulated of other members being recalled as well, but the rules for such elections make it a tough prospect for anyone to carry out without significant financial backing. Once a person returns the application and maximum-200-word statement required to start a recall, the campaign must get 29,178 signatures from voters registered within the district boundaries.
That’s a high hurdle to clear. I asked Jimmy Lovelace, the accountant who headed an independent-expenditure group during the school-board campaign, if his group TUSD Kids First is involved in a recall. He said no.
Without that kind of financial backing, it’ll be a tough project to complete.