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Venture Predation

papers.ssrn.com

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Re: Venture Predation

#21

Post by seanhunter »

satvikpendem wrote: post #9

Are there any that are actually successful with this strategy? Uber and Lyft, for one, but they still don't make profit and aren't really that sticky, honestly, given that people will use other services if they're cheaper, like Waymo and some new ride sharing upstarts I've seen around recently.

I can't escape the feeling that it boils down to the old classic 3 stage business model:

1. collect underpants

2. ?

3. Profit

Uber and Lyft are great examples. They haven't established long-term stickiness with drivers or passengers. So if either of those groups get offered a better deal they will switch. Therefore it's just a relentless race to the bottom with no sustainable business in sight.

Re: Venture Predation

#22

Post by cactusplant7374 »

ivansmf wrote: post #14

You. don't. say. Really?!? OMG, what an insight! What are they going to say next? That startups also use the good will of the internet to create their IP to then take it private as a way to get free labor? I'm shocked! And because this is also the internet, that was sarcasm.

Normally it is described as a positive practice because consumers get lower prices for an extended period of time.

I personally benefited from this but I can see the drawbacks.

Re: Venture Predation

#24

Post by fnord77 »

I remember a game on the Apple ][ that was basically a simulation of the bicycle manufacturing business

you could tweak various "fair" parameters like quality and price

but I guess the makers of this were naive and never considered any "unfair" practices like getting cheap cash and wiping out the competition

Re: Venture Predation

#25

Post by satvikpendem »

seanhunter wrote: post #21
satvikpendem wrote: post #9

Are there any that are actually successful with this strategy? Uber and Lyft, for one, but they still don't make profit and aren't really that sticky, honestly, given that people will use other services if they're cheaper, like Waymo and some new ride sharing upstarts I've seen around recently.

I can't escape the feeling that it boils down to the old classic 3 stage business model: 1. collect underpants 2. ? 3. Profit Uber and Lyft are great examples. They haven't established long-term stickiness with drivers or passengers. So if either of those groups get offered a better deal they will switch. Therefore it's just a relentless race to the bottom with no sustainable business in sight.

Exactly. Well, I'm not complaining at my VC funded rides though, it's a great transfer of wealth from the rich to the poor, ie me, lol.

Re: Venture Predation

#26

Post by anigbrowl »

satvikpendem wrote: post #9

Are there any that are actually successful with this strategy? Uber and Lyft, for one, but they still don't make profit and aren't really that sticky, honestly, given that people will use other services if they're cheaper, like Waymo and some new ride sharing upstarts I've seen around recently.

I think Google is like that. Imagine going from such a lofty initial mission to running an advertising spot market.

Re: Venture Predation

#27

Post by lotsofpulp »

bityard wrote: post #5

This is essentially how Carvana has decimated the private used car market in my area. Only instead of low product prices, they offer well-above market value for used cars to private sellers so that Carvana becomes the only source for a car that fits your criteria.

I do not see Carvana lasting long, at least not if their only strategy is to pay above market for used cars and getting in the crosshairs of multiple state regulators.

https://www.macrotrends.net/stocks/charts/CVNA/carvana/net-i...

https://www.macrotrends.net/stocks/charts/CVNA/carvana/marke...

https://en.wikipedia.org/wiki/Carvana

Re: Venture Predation

#28

Post by ClumsyPilot »

seanhunter wrote: post #21
satvikpendem wrote: post #9

Are there any that are actually successful with this strategy? Uber and Lyft, for one, but they still don't make profit and aren't really that sticky, honestly, given that people will use other services if they're cheaper, like Waymo and some new ride sharing upstarts I've seen around recently.

I can't escape the feeling that it boils down to the old classic 3 stage business model: 1. collect underpants 2. ? 3. Profit Uber and Lyft are great examples. They haven't established long-term stickiness with drivers or passengers. So if either of those groups get offered a better deal they will switch. Therefore it's just a relentless race to the bottom with no sustainable business in sight.

> just a relentless race to the bottom with no sustainable business in sight.

Isnt it ironic that the main thing they teach to the general public is benefits of competition in free markets. But the first thing they teahc to MBA types is to avoid competition by any means possible.

Re: Venture Predation

#29

Post by eastern »

senko wrote: post #4
zeroxfe wrote: post #3

Earlier quoted context omitted.

It's the playbook of any well funded organization trying to break into a new market. This is the entire premise of loss leaders, and they're effectively risking their entire capital.

Yes, but: for a profitable organization a loss-leader is expected to enable profit-making elsewhere in the org, so a total sum ought to be positive. For example, console hardware is loss leader for console makers because they make up for it for every game sold. Google Chrome and Android are loss leaders for Google, but are strategic assets protecting its revenue business. In both cases, these companies can continue t…

This paper is not about grabbing most of the market etc and eventually making a profit. As the abstract quoted above says, it's about creating an illusion that this can be done so as to sell stock to a greater fool. Uber was quite successful at this, as were many others.

Really, from the pov of Travis Kalanick and the original funders, Uber is a fabulously successful business.

The original founders and the venture predators made their money. The professional execs at the top running the business now are also making lots of money. It doesn't matter to any of them what happens to competitors, employees and current shareholders.

Re: Venture Predation

#30

Post by lotsofpulp »

ClumsyPilot wrote: post #28
seanhunter wrote: post #21

Earlier quoted context omitted.

I can't escape the feeling that it boils down to the old classic 3 stage business model: 1. collect underpants 2. ? 3. Profit Uber and Lyft are great examples. They haven't established long-term stickiness with drivers or passengers. So if either of those groups get offered a better deal they will switch. Therefore it's just a relentless race to the bottom with no sustainable business in sight.

> just a relentless race to the bottom with no sustainable business in sight. Isnt it ironic that the main thing they teach to the general public is benefits of competition in free markets. But the first thing they teahc to MBA types is to avoid competition by any means possible.

Not ironic because buyers and sellers have opposing interests.
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