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Venture Predation

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Re: Venture Predation

#71

Post by abigail95 »

JumpinJack_Cash wrote: post #50
frithsun wrote: post #37

I believe a lot of this was driven by fed rate shenanigans creating far more investment wealth than there were organic opportunities for investing it. All of these market-distorting startup deals were just symptoms of that broader systemic monetary policy error. While the mom and pop taxi companies and others impacted by it have my sympathy and support, all the regulatory alternatives other than waiting until they ac…

> > I believe a lot of this was driven by fed rate shenanigans creating far more investment wealth than there were organic opportunities for investing it. All of these market-distorting startup deals were just symptoms of that broader systemic monetary policy error. The Fed is not distorting anything. It's an anomaly that you can "invest with Uncle Sam" , for the longest time if you wanted to see your money grow you…

Classic zero sum thinking with no evidence or even an overarching thesis on the neutrality of money.

You need to back this up with some serious economic citations

Re: Venture Predation

#72

Post by pydry »

jjeaff wrote: post #56
conjecTech wrote: post #43

Earlier quoted context omitted.

No, there isn't much nuance here. Accounting has notions of fixed costs and marginal costs. The startups you are referring almost all lose money on fixed costs, but sell things at per-unit economics which make sense at scale because they are below marginal cost/COGS. Things like Uber are a typical dumping cases. For years, they charged below their COGS and eventual profitability depended on driving out competition an…

The only issue is that companies like Uber are lying to themselves and their investors that costs will go down significantly in the future. Both through scale and advances in technology. Which is true. But rarely true to the extent to which they believe it.

It's a bet not a lie, theyre betting that they can squeeze out competition and jack up ride prices and jack down wages.

It's a rather sickening bet though. One would hope they'd lose.

Re: Venture Predation

#73

Post by JumpinJack_Cash »

revelio wrote: post #70
JumpinJack_Cash wrote: post #50

Earlier quoted context omitted.

> > I believe a lot of this was driven by fed rate shenanigans creating far more investment wealth than there were organic opportunities for investing it. All of these market-distorting startup deals were just symptoms of that broader systemic monetary policy error. The Fed is not distorting anything. It's an anomaly that you can "invest with Uncle Sam" , for the longest time if you wanted to see your money grow you…

Interesting perspective, thank you for that, but the issue is not merely driving bond rates to zero. The money created by central banks also flows into VC funds and the stock markets via various indirect paths and from there into the startup ecosystem.

That's a problem of trust, money flows to startups because the so called capital allocators don't trust themselves with such amount of money, otherwise they'd be investing all into companies where they are at the helm.

The whole family office concept is something new, back in the day if someone had money they'd just invest in themselves by expanding their own business.

Re: Venture Predation

#74

Post by asah »

lotsofpulp wrote: post #27
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

yyy "cornering the market" is exceptionally difficult to execute. In used cars for example, other companies could make a fortune trucking in used cars from elsewhere and selling them to Carvana...

Re: Venture Predation

#75

Post by waboremo »

brookst wrote: post #32
nico wrote: post #20

In international trade this is called “dumping”, and it’s often considered illegal and most definitely unfair It’s usually used as a reason for regulating imports/exports https://www.investopedia.com/terms/d/dumping.asp#:~:text=Dum... .

Eh, there is alot more nuance here. Dumping is typically when an established company attacks a competitor with temporarily low prices. If you squint right, sure, VC backed low costs could be seen as dumping. But the problem is that also means virtually every startup is dumping, even bootstrapped garage efforts. And I guess any company that reports a quarterly loss is also dumping. So I think it probably makes sense t…

Not sure how you reach the conclusion that bootstrapped garage efforts would equate to dumping under these conditions. Bootstrapped garage efforts, unlike VC backed, have very little if any runway. They can't afford to.

Re: Venture Predation

#76

Post by JumpinJack_Cash »

abigail95 wrote: post #71
JumpinJack_Cash wrote: post #50

Earlier quoted context omitted.

> > I believe a lot of this was driven by fed rate shenanigans creating far more investment wealth than there were organic opportunities for investing it. All of these market-distorting startup deals were just symptoms of that broader systemic monetary policy error. The Fed is not distorting anything. It's an anomaly that you can "invest with Uncle Sam" , for the longest time if you wanted to see your money grow you…

Classic zero sum thinking with no evidence or even an overarching thesis on the neutrality of money. You need to back this up with some serious economic citations

> > Classic zero sum thinking

All the stuff that gives the most satisfaction is zero sum.

Only one team wins the Super Bowl, only one NBA team wins the Finals and only one franchise gets to claim the World Series.

You can see it when you look at investors, even the notorious ones, they are rich but mentally they are not stoked or feeling as powerful as athletes who won such trophies.

Re: Venture Predation

#77

Post by mrguyorama »

jeffbee wrote: post #64
SOLAR_FIELDS wrote: post #51

Earlier quoted context omitted.

Circa 2015, Uber charged roughly $30 USD for a trip to the airport from my house. Now it is usually between $60 and $70. There has been significant inflation, but $30 in 2015 is only worth about $38 today.

The source of Uber's dumping wasn't chiefly VC funds, though. Uber's ability to price below market was mostly funded by the residual value of their drivers' vehicles.

Uber was charging riders less than they paid drivers for a long time. That's not "residual in the drivers car", that's subsidizing their drivers

Re: Venture Predation

#78

Post by degreesoffun »

And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries due to their position as a stock market darling. They use ultra-cheap money and a willingness to run negative margins which they refer to "reinvesting in the business" to bleed competitors dry. Few other companies on the planet have the ability to run negative or break-even margins the way Amazon does.

Diapers.com example: "When Bezos’s lieutenants learned of Wal-Mart’s counterbid, they ratcheted up the pressure, telling the Quidsi founders that [Bezos] was such a furious competitor that he would drive diaper prices to zero if they sold to Bentonville. The Quidsi board convened to discuss the possibility of letting the Amazon deal expire and then resuming negotiations with Wal-Mart. But by then, Bezos’s Khrushchev-like willingness to use the thermonuclear option had had its intended effect. The Quidsi executives stuck with Amazon, largely out of fear. The deal was announced Nov. 8, 2010."

https://slate.com/technology/2013/10/amazon-book-how-jeff-be...

Re: Venture Predation

#79

Post by abigail95 »

JumpinJack_Cash wrote: post #76
abigail95 wrote: post #71

Earlier quoted context omitted.

Classic zero sum thinking with no evidence or even an overarching thesis on the neutrality of money. You need to back this up with some serious economic citations

> > Classic zero sum thinking All the stuff that gives the most satisfaction is zero sum. Only one team wins the Super Bowl, only one NBA team wins the Finals and only one franchise gets to claim the World Series. You can see it when you look at investors, even the notorious ones, they are rich but mentally they are not stoked or feeling as powerful as athletes who won such trophies.

What the fuck are you talking about?

Re: Venture Predation

#80

Post by [deleted] »

brookst wrote: post #32
nico wrote: post #20

In international trade this is called “dumping”, and it’s often considered illegal and most definitely unfair It’s usually used as a reason for regulating imports/exports https://www.investopedia.com/terms/d/dumping.asp#:~:text=Dum... .

Eh, there is alot more nuance here. Dumping is typically when an established company attacks a competitor with temporarily low prices. If you squint right, sure, VC backed low costs could be seen as dumping. But the problem is that also means virtually every startup is dumping, even bootstrapped garage efforts. And I guess any company that reports a quarterly loss is also dumping. So I think it probably makes sense t…

[deleted]
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