Simple math. Suppose opening a city costs $10 (once) and returns $1/year in revenue.
Year 1: Open 1 city, loss = $10.
Year 2: Open 3 cities, loss = $29 (spending $30 on new cities, gaining $1 from year 1's city).
Year 3: Open 9 cities, loss = $86.
Year 4: expansion stops, profit = $13.
That's a pretty bubblicious thing to say. Your model depends on the nature of the costs. Expansion costs aren't 100% and operational costs aren't 0%. I realize it was just a quick example, but profit will depend on how their costs are actually distributed. Certainly not automatic.
said nobody ever
However, if you look here there's some indication that earlier markets were at least closing the operating loss gap: QQ4.12: 8.2M / 7.0M Q1.13: 12.9M / 7.3M Q2.13: 19.3M / 8.1M
Losses slowed dramatically here, while revenue grew. Note, Uber was still launching cities at this point, but had already taken most of the major US markets - my guess is that SF + NY + LA were getting closer to paying for themselves while they streamlined their launch process into smaller markets in the US. I feel OK making that guess because it's hard to believe that an investor would not have asked for that, and it's hard to believe that an investor would value Uber at $3.5B (the valuation at that time) if that wasn't happening. (Note - I understand that investors are not always actually this rational, I'm just making an assumption in this case).
I imagine the pitch was: look at our early markets, they are cash-cows, and we know how to make them. Now, give us $XB to go make more of these cash-cows please and don't ask us about losses for a long time, thanks! Which is why they don't really care about these leaked #s.
What happens to the disrupted sector is the people who work there go find new jobs. Then when the giant monopolizer fails the sector can't return to the way it was before, too much knowledge has been lost.
Example: if WalMart closed tomorrow most of the thousands of small and medium sized businesses they put under wouldn't come back.
If Uber's model turns out to be unrealistic long-term the intellectual capital lost from the global taxi cab sector will only be partially recoverable.
When a company grows based on money they've earned it's the normal process of scaling. When they grow based on money they've borrowed it's no longer the market giving them the thumbs up, it's a couple of dozen investors. By the time WalMart was rapidly expanding it was clear their business model worked, might be evil but it works. It's not clear that Uber's business model is even legal.