man there goes my idea of uber for toaster strudels
Don't give up on the dream. Toaster Struberlder could be the next big thing!
On-Demand Startups Are Hemorrhaging Tens of Billions a Year
71–80 of 191 posts
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#72As both a startup programmer and having worked in the financial industry, it's really hard to know how companies like these will be viewed by history. The technologist argument is: we are enduring losses, even large ones, in the short term so that we can bring inevitable future tools forward in time (i.e. "Of course everyone can get anything delivered on-demand in the future, so why not now!?") The value-based invest…
> they do genuinely have a lot of users who love the services. Turns out selling $10 bills for $5 is extremely popular. MoviePass did in fact get people go to the movies.
It would've been different had MoviePass been under a large chain --yet able to draw the mass appeal, unlike, say, AMC Stubs-- to wrestle pricing control back from the entertainment industry. Profit margins are quite thin on tickets these days.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#73Maybe we should just recognize that Facebook / software business models don’t work for operating, boots on the ground services. Network effects don’t work with negative unit economics.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#74Earlier quoted context omitted.
> they do genuinely have a lot of users who love the services. Turns out selling $10 bills for $5 is extremely popular. MoviePass did in fact get people go to the movies.
The counter example is Amazon with Prime.
Probably contrarian, but I refuse to sign up for Prime out of principle. The quicker and easier I make it to buy things, the more money I'm going to spend, which is orthogonal to my savings/investment goals. I'm not going to pay extra to have the privilege of making spending my money any easier.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#75I asked in the recent thread how Meituan could possibly be affording to subsidize restaurant meals to be significantly below cost at restaurant as that didn’t make any sense. Turns out according to this article that it’s simply that. It doesn’t make sense. They lost $17 Billion in 2018 for a shallow moat around an ugly castle. The next recession is going to hit hard, and I’m guessing a lot of the gig economy jobs wil…
I've never heard the expression "for a shallow moat around an ugly castle" before but it's a wonderful picture to paint for just this kind of situation. I'm excited to start incorporating it into my conversations.
I was proud of that one so you’re very welcome.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#76Earlier quoted context omitted.
It's called malinvestment, and it's tied to monetary policy. When the central bank churns out money, the lower interest rates discourage banks from lending, making it harder for small businesses to collect capital that way. The lower interest rates simultaneously drive investment from bonds into the stock market and real estate. Look up Business Cycle Theory
Is it bad though? I would think new innovative services would be a better place for money to go compared to sticking into some long term bond. At least this way a bunch of people get jobs and servers/compute/CPU/whatever get bought. For every Uber there are dozens if not hundreds of Slack/Splunk/Softlayer type companies that end up with some of that money and employ people. This is somewhat related to how I perceive…
In addition to what the other reply said, it's bad because
- it's inefficient wasted energy and capital
- it causes bubbles which eventually pop, resulting in booms and busts
- it pulls resources away from other opportunities
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#77I would care about the profits and business plan of a company if I were an employee, or an investor. But as a consumer, it's not clear to me why that should matter. If I want a ride somewhere and Lyft will do it for $8 or whatever, and that price sounds good to me, I'm not sure there's much left to consider.
We like to rag on businesses with (what we consider to be) bad business models around here, but as far as I'm concerned that's between the leadership, the board, and their investors.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#78It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…
If they fail there will still have been a massive amount of learning, so it won’t be a waste.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#79It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…
It's called malinvestment, and it's tied to monetary policy. When the central bank churns out money, the lower interest rates discourage banks from lending, making it harder for small businesses to collect capital that way. The lower interest rates simultaneously drive investment from bonds into the stock market and real estate. Look up Business Cycle Theory
This does not explain why VCs are willing to invest in business models tha light cash on fire for growth in the hope of reaching a dominant market share and establishing a moat around the business.
VCs believe in network effects, VCs believe monopolies are worth burning cash to achieve, VCs believe operating businesses can achieve what software businesses like google and Facebook achieved.
Question their belief but don’t blame monetary policy or government for a clear investment thesis driven by private actors that is based on prior success of similar models.
Banks lending to small businesses, hire interest rates, tighter monetary policy would not change current VCs investment thesis or make them any less willing to pursue these models.
Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year
#80Earlier quoted context omitted.
Is it bad though? I would think new innovative services would be a better place for money to go compared to sticking into some long term bond. At least this way a bunch of people get jobs and servers/compute/CPU/whatever get bought. For every Uber there are dozens if not hundreds of Slack/Splunk/Softlayer type companies that end up with some of that money and employ people. This is somewhat related to how I perceive…
In addition to what the other reply said, it's bad because - it's inefficient wasted energy and capital - it causes bubbles which eventually pop, resulting in booms and busts - it pulls resources away from other opportunities
It’s not bad if the short term losses lead to long term monopolies. You might not believe that WeWork will ever be a monopoly, or achieve positive unit economics, but that is the bet. In some ways, the ability to focus on such long term strategy is an excellent example of markets functioning rationally rather than a short term profit optimization that leads to long term stagnation.