Who Pays the Price for Selling $10 Bills for $5? • Hacker News Board

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

#71

Post by tomohawk » Fri, Apr 05, 2019, 1:23 PM UTC

Money Quote:

> I once read a tongue-in-cheek description of San Francisco as “an assisted-living community for tech workers in their thirties”. This snide jab pokes fun at the wave of Silicon Valley startups creating services and products for a stereotypical technology worker in the city. Nowhere to park your car? Uber and Lyft can get you around. Too busy working to cook and do grocery shopping? Postmates can deliver your lunch and dinner. Living in an apartment too small for a laundry room? Rinse can do your washing.

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

#72

Post by barry-cotter » Fri, Apr 05, 2019, 1:24 PM UTC

joosters wrote: post #46

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…

What about the people in the industries being 'disrupted' by the strategy of flooding the market with unsustainably-cheap products or services (e.g. taxi drivers being undercut by Uber) ?

Fuck taxi drivers and their entire industry. Fuck their lying about someone being there in 15 minutes for four hours. Fuck their “broken” credit card machine. Fuck hailing a taxi while black. Fuck a regulator that does their best to make filing a complaint impossible. Fuck trying to get s taxi to travel to an area that they are legally required to serve but they just refuse to go to.

It is an enormous pity that the taxi industry has not been disrupted more. If better service in every possible way is what disruption looks like count me in. Bring it on.

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

#73

Post by TAForObvReasons » Fri, Apr 05, 2019, 1:45 PM UTC

jondubois wrote: post #58

Gig workers are not the only losers. Any small business which doesn't receive VC funding is also disadvantaged because they aren't able to give consumers the same kinds of deals that these consumers have gotten used to. What some of those big VCs have been doing is criminal and has been hurting both workers and value-producers for over a decade. I hope that they'll end up in jail after it all goes belly up because th…

Everyone is a loser except for the investors. If you really take it to the logical conclusion, the business model is Dumping [1]: capture the market, drive out everyone else, then jack up prices when you are the only show in town. And the winners in the endgame are the investors.

[1] https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

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

#74

Post by howeyc » Fri, Apr 05, 2019, 1:56 PM UTC

ivanbakel wrote: post #64

howeyc wrote: post #52

Earlier quoted context omitted.

Right, but without the gig economy jobs they'd have less possibilities for income.

Which would also mean the need for real jobs is honestly represented. This is a major debate in West at the moment, and in the UK it's synonymous with the term "zero-hour contracts": is it somehow OK to suppress unemployment figures by nominally employing more people but giving each one a smaller share of all the labour, and so, wages? If the gig economy unsustainably employs people at cut-throat rates, then the stat…

I don't understand what you're getting at. So offering someone employment (do this for money) should only be allowed if it's at a consistent frequency (full time) and at a guaranteed non-variable amount? What if the job they're being hired to do does not have consistent demand? Or the service provided has competition, or varying costs, which requires price changes?

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

#75

Post by treis » Fri, Apr 05, 2019, 2:00 PM UTC

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…

>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 gets it fundamentally wrong. Only Moviepass was in the business of selling $10 for $5. Most of what appears to be $10 for $5 can be broken down into two things:

(1) Software is a very high fixed cost and very low marginal cost business. If you spend a million to develop a piece of software your profit is going to look like crap for your first few customers, better for the next bunch, and so on until you are wildly profitable (or so you hope).

(2) Discounting recurring revenue. Spending $10 to get $5 in revenue is stupid. Spending $10 to get a customer who will give you $5 in revenue every year is smart. If you only look at year 1 the smart move looks stupid.

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

#76

Post by ivanbakel » Fri, Apr 05, 2019, 2:00 PM UTC

howeyc wrote: post #74

ivanbakel wrote: post #64

Earlier quoted context omitted.

Which would also mean the need for real jobs is honestly represented. This is a major debate in West at the moment, and in the UK it's synonymous with the term "zero-hour contracts": is it somehow OK to suppress unemployment figures by nominally employing more people but giving each one a smaller share of all the labour, and so, wages? If the gig economy unsustainably employs people at cut-throat rates, then the stat…

I don't understand what you're getting at. So offering someone employment (do this for money) should only be allowed if it's at a consistent frequency (full time) and at a guaranteed non-variable amount? What if the job they're being hired to do does not have consistent demand? Or the service provided has competition, or varying costs, which requires price changes?

Yes. Workers should not be at the mercy of an unreliable paycheck.

> What if...

Can you give an example of what you're talking about?

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

#77

Post by PopeDotNinja » Fri, Apr 05, 2019, 2:03 PM UTC

I get the author's point that they don't like investing in companies that hoover up investment dollars, but the selling $10 for $5 example annoys me. Any GAAP-based income statement starts off total income minus cost of that income equals gross income. Check out the income statement for Amazon...

https://finance.yahoo.com/quote/amzn/financials/

Amazon lost money for a bazillion years, and they continued to get investment dollars. What is one reason that Amazon could do this? Because they were selling things for less than it cost to make or acquire these things. If Amazon's business model was to buy a book for $10 at Barnes & Noble and sell that book for $5 on Amazon.com, they would never have gotten off the ground.

None of the companies in this article buy something in this spend $10 make something they sell for $5.

Interesting article. Bad example.

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

#78

Post by p_roz » Fri, Apr 05, 2019, 2:12 PM UTC

ivanbakel wrote: post #76

howeyc wrote: post #74

Earlier quoted context omitted.

I don't understand what you're getting at. So offering someone employment (do this for money) should only be allowed if it's at a consistent frequency (full time) and at a guaranteed non-variable amount? What if the job they're being hired to do does not have consistent demand? Or the service provided has competition, or varying costs, which requires price changes?

Yes. Workers should not be at the mercy of an unreliable paycheck. > What if... Can you give an example of what you're talking about?

Think about the demand for tax preparers each year. Higher demand Jan-Apr. Lower demand the rest of the year. Should companies be forced to hire tax preparers full time year round or should they be free to contract for only when they are needed?

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

#79

Post by lordnacho » Fri, Apr 05, 2019, 2:17 PM UTC

I wonder what the answer is to these two questions:

- Once we've driven out the competition, what prevents some other VC-backed firm from playing the same trick? If customers go for the cheapest thing -and let's face it, taxi and food delivery are not differentiable- won't there always be another disruptor?

- If there's a monopoly that lets us make huge profits, wouldn't the government come and do something about that?

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

#80

Post by Fjolsvith » Fri, Apr 05, 2019, 2:30 PM UTC

lordnacho wrote: post #79

I wonder what the answer is to these two questions: - Once we've driven out the competition, what prevents some other VC-backed firm from playing the same trick? If customers go for the cheapest thing -and let's face it, taxi and food delivery are not differentiable- won't there always be another disruptor? - If there's a monopoly that lets us make huge profits, wouldn't the government come and do something about tha…

> -and let's face it, taxi and food delivery are not differentiable- won't there always be another disruptor?

Drones and perhaps, down the road, teleporters.