Uber had discovered a winning formula to expansion. But each new city required capital, an upfront investment to kickstart what they called the demand “flywheel.” Drivers wouldn’t work for Uber unless there was enough demand from riders. And new riders wouldn’t sign up or return unless there was a critical mass of available drivers. It was a classic chicken-and-egg problem. “Uber solved that problem by straight-up buying the chicken,” Ilya Abyzov, an early Uber manager in San Francisco, told friends of the strategy. Uber began torching hundreds of thousands of dollars, giving away the money as
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