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Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

economist.com

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Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#131

Post by Ekaros »

dktoao wrote: post #74
bogota wrote: post #60

Earlier quoted context omitted.

Please explain what you think a ponzi scheme is. Because losing money on something isn’t close to the definition

I think they mean it is sort of a ponzi scheme for those invested. It requires more and more investor money to operate and will eventually collapse leaving the last round of investors holding the bag while those that got in early may get out fine. I think the ponzi scheme is more an apt metaphor than the actual structure of the company?

In Ponzi scheme there is profits given out or at least reinvested... Start-ups just burning money and finding greater fool really isn't such scheme.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#132

Post by Ekaros »

rovolo wrote: post #111
hervature wrote: post #89

Earlier quoted context omitted.

A Ponzi scheme requires an element of fraud. Very difficult to tell me that building a global fleet of ride hailing and being transparent with the financials is a Ponzi scheme. The outcome might be similar (later investors bearing most of the losses) but that's more of an investor problem and not fraud.

They probably mean a Pyramid scheme. In regular use, Ponzi and Pyramid schemes are interchangeable terms because you need new money to stay afloat. Legally they're different because a Ponzi scheme requires lying about where the returns are coming from, but a Pyramid scheme can be entirely truthful about the finances.

Pyramid scheme is system where income is derived from recruitment of new investors. Ponzi scheme is centralized system where profits of old ones is paid with money of new ones.

VC start-up burning money to make things or subsidise customers in attempt to acquire them is neither.

I'm really starting to hate when these terms that have rather specific and well understood meanings are thrown at anything. If you want to call it something just say it is big scam. Scam really could be anything. Not specific thing.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#133

Post by edanm »

mmazing wrote: post #114
edanm wrote: post #104

Earlier quoted context omitted.

> Actually, I think a lot of businesses are just that. Can you explain what you mean by that? People often say this and I never really understand what they mean. Most businesses which aren't unicorns just sell stuff for money. What's a ponzi scheme about it? I also think calling these startups ponzi schemes is disingenuous. They are not lying about anything - they're offering a very clear, risky bet to people, which…

I've known several entrepreneurs in my life that simply lived off investor money and never really got anything out the door. They would come up with a new idea, get money, and then botch the execution, over and over. I've been a part of companies where the owners cashed out millions of dollars after round 3 of funding where the business never really sustained itself, yet continued to receive funding. In the end, both…

I mean, those are bad investment that those investors probably shouldn't have made. But that's really on the investors, unless the founders were somehow lying about what they were doing.

> I've been a part of companies where the owners cashed out millions of dollars after round 3 of funding where the business never really sustained itself, yet continued to receive funding.

Just as an example, founders don't cash out without the investors knowing about it. It's a negotiation in which the investors knowingly decide that it's worth paying millions to founders in order to get a piece of the company.

That might be wrong! It might be a bad investment. But it is in no way fraud, and there is no reason at all to feel bad for those investors - we're not even talking about retail investors, we're talking about investors who pay lawyers and accountants 10s of thousands to do due diligence on companies, and who negotiate for a living.

That is nothing at all like a ponzi scheme (again, unless someone is lying somewhere along the way / committing fraud).

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#134

Post by crocodiletears »

toomuchtodo wrote: post #37
xyzzy21 wrote: post #30

Ultimately you can NOT "magically" negate "Last Mile Costs" in cities and towns where the Last Mile path distance is enormous. Did my MBA thesis on this subject with the benefit of 20 years of engineering experience. The numbers simply do not work unless you change how cities and residences are built, which would cost far more than you'd ever gain from solving Last Mile costs - the breakeven time is of the order of 1…

Would love to read your thesis if you’re willing to share.

Seconded

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#135

Post by bostonsre »

savanaly wrote: post #99
bostonsre wrote: post #49

Earlier quoted context omitted.

Do they still lose money on every ride they give? I've been skeptical for a while now, it's a ponzi scheme.

For the last time, not everything that's not everything that's a bad financial proposition == ponzi scheme. At what point have new drivers ever paid the wages of old drivers? Uber drivers have always done ok in the short term, new or old, it's Uber that loses money on every ride. And if the drivers are not coming out ahead long term due to maintenance costs, that's not affecting newer drivers any more than older driv…

I don't understand why you are going into driver wages. I'm completely fine with their drivers making good money, but if they lose money on every ride, it doesn't sound like a good business.

What makes it a ponzi scheme is that the initial investors and the people that run it knew they couldn't possibly make money and yet they were able to get tons of investors to pour capital into a business that couldn't make money. New investors aka public markets paid out the old investors aka venture capitalists.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#136

Post by aaggarwal »

I see these articles every now and then over last 5-10 years, but as someone who has followed/worked around this industry in the past, I can tell you that there is enough demand, supply and capital for this industry and it is not going anywhere.

All of these companies are EBDITA profitable with decent margins and the net loss is them reinvesting in marketing, product and M&A (from their earnings reports). As the effects of covid wanes, their profits are going to go up very quickly which will be seen over the next year.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#137

Post by jesussaves »

dang wrote: post #113
mmazing wrote: post #79

Earlier quoted context omitted.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

Could you please stop posting flamebait and/or unsubstantive comments to HN? You've been doing it repeatedly, unfortunately, and it goes against what we're trying for here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

Can you stop trying to be Big Brother? This sort of moderation is just a guy with a stick. Really lame Dan G.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#138

Post by lostcolony »

OldHand2018 wrote: post #96
lostcolony wrote: post #52

Earlier quoted context omitted.

Tesla is profitable; so are some small mom and pop stores. The valuation isn't a boolean "isProfitable ? trillion dollars : worthless". Compare Tesla's revenues against other trillion dollar companies and it clearly seems overvalued. Here's Bloomberg's analysis - https://www.bloomberg.com/news/articles/2021-10-26/tesla-is-...

> However, Jonas said Morgan Stanley clients also noted the company’s larger addressable market, and an opportunity to dominate the internet-of-cars market as other possible factors built into its valuation. Ah yes, the internet-of-cars market. It would be very wise and lucrative to dominate there.

Yeah; the ink spilled on "IoV" (Internet of Vehicles) is...hilariously bad. And even if you assume there's something there, Tesla doesn't seem well prepared to dominate it, since all of the use cases assume every car is connected. Maybe I missed it, but I haven't seen Tesla seeking to write software for other manufacturers, nor seeking to create RFCs or similar collaborative methods for ensuring a standard that would connect all vehicles.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#139

Post by mmazing »

edanm wrote: post #133
mmazing wrote: post #114

Earlier quoted context omitted.

I've known several entrepreneurs in my life that simply lived off investor money and never really got anything out the door. They would come up with a new idea, get money, and then botch the execution, over and over. I've been a part of companies where the owners cashed out millions of dollars after round 3 of funding where the business never really sustained itself, yet continued to receive funding. In the end, both…

I mean, those are bad investment that those investors probably shouldn't have made. But that's really on the investors, unless the founders were somehow lying about what they were doing. > I've been a part of companies where the owners cashed out millions of dollars after round 3 of funding where the business never really sustained itself, yet continued to receive funding. Just as an example, founders don't cash out…

Yeah, I guess I don't mean that my examples are explicit ponzi schemes, but merely similar.

I certainly wouldn't say they are fraud.

I think my examples are instances where people are good at selling an idea and not having full intention of executing well after receiving financing.

I'm certain that some percentage of entrepreneurs actively think "If I can just sell my idea to investors, I can get rich regardless of whether the idea works or not." That's my ponzi scheme analog.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#140

Post by bb328 »

xyzzy21 wrote: post #30

Ultimately you can NOT "magically" negate "Last Mile Costs" in cities and towns where the Last Mile path distance is enormous. Did my MBA thesis on this subject with the benefit of 20 years of engineering experience. The numbers simply do not work unless you change how cities and residences are built, which would cost far more than you'd ever gain from solving Last Mile costs - the breakeven time is of the order of 1…

I'd be really interested to read your thesis if you have it posted somewhere.
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