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Who Pays the Price for Selling $10 Bills for $5?

theengineeringmanager.com

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Re: Who Pays the Price for Selling $10 Bills for $5?

#11

Post by Udik »

dsfyu404ed wrote: post #2

TL;DR: The traditional VC backed tech startup growth curve is an exercise in giving something away for less than it's worth, such as selling a $10 bill for $5. This is done to dominate the market. You will become very popular very quickly and dominate the $10 bull market by selling them for $5. After dominating the market you must find some way to become profitable. Often when a company tries to raise prices and beco…

Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of VCs and/or shareholders to cover the losses, and live the sweet, exciting life of the entrepreneur until the game is over. By the time the value of the company drops to zero, I'll probably have accumulated enough cash to live comfortably ever after.

Re: Who Pays the Price for Selling $10 Bills for $5?

#16

Post by deweller »

I genuinely don't understand the argument that tech companies are hurting society by providing lower paying gig-economy jobs.

By providing more jobs, these companies are increasing options for workers looking for jobs. No one is forcing Uber drivers to drive passengers.

If there is a shortage of labor, then the prices paid to workers will increase due to market forces. If there is not a shortage of labor, then people that need jobs are finding them.

Re: Who Pays the Price for Selling $10 Bills for $5?

#17

Post by golergka »

So, in the end, the analogy breaks: turns out, the companies found out a way to procure $10 bills for ~$6 and then (after initial growth phase) to get it as low as ~$3-4 and finally make a profit.

Now, the logical question is to ask, why is anyone willing to provide this $10 bill for such a low price to begin with? Or, to switch from the analogy back to the subject matter, why are people singing up for the gig economy jobs? The author puts the blame on the unicorns - but they did not create the environment in which a gig worker is willing to accept such a job.

Re: Who Pays the Price for Selling $10 Bills for $5?

#18

Post by golergka »

deweller wrote: post #16

I genuinely don't understand the argument that tech companies are hurting society by providing lower paying gig-economy jobs. By providing more jobs, these companies are increasing options for workers looking for jobs. No one is forcing Uber drivers to drive passengers. If there is a shortage of labor, then the prices paid to workers will increase due to market forces. If there is not a shortage of labor, then people…

Copenhagen principle of moral entanglement in action: regardless of cause and effect, the most powerful actor that is somehow entangled in a situation is called the one responsible by the media.

Re: Who Pays the Price for Selling $10 Bills for $5?

#19

Post by michaelt »

Udik wrote: post #11
dsfyu404ed wrote: post #2

TL;DR: The traditional VC backed tech startup growth curve is an exercise in giving something away for less than it's worth, such as selling a $10 bill for $5. This is done to dominate the market. You will become very popular very quickly and dominate the $10 bull market by selling them for $5. After dominating the market you must find some way to become profitable. Often when a company tries to raise prices and beco…

Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of VCs and/or shareholders to cover the losses, and live the sweet, exciting life of the entrepreneur until the game is over. By the time the value of the company drops to zero, I'll probably have accumulated enough cash to live comfortably ever after.

Why should anyone else be accountable for sophisticated investors' failure to do their due diligence?

If I go to the Kentucky Derby put $1000 on Fancy Dancy Magic Prancy, it's hardly the horse's fault if my gamble doesn't pay off.

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