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VCs are scared when they should be greedy

blog.aaronkharris.com

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Re: VCs are scared when they should be greedy

#141

Post by cu6LANde9fbnSgw »

Jommi wrote: post #54
vkou wrote: post #36

Earlier quoted context omitted.

How many uber drivers are in Priuses? I haven't ridden in a single one... How many people do you personally know that make their living as an Uber driver? I don't mean pensioners making beer money, or people doing it as a side job, here. I know one. He's been doing it for a year and half, or so. He doesn't own his car. he has to lease it on a weekly basis, and he's paying through the nose for the privilege. He's doin…

the first sentence is a terrible take unfortunately, prius one of the most popular taxi and ridehailing cars ever, it's sully arund >50% of car supply in most western cities. As usual, you are conflsting your singular consumer experience of Uber with the global business giant Uber.

I have literally never once seen a Prius as a taxi in the US.

Re: VCs are scared when they should be greedy

#142

Post by ceeplusplus »

rileymat2 wrote: post #111
ceeplusplus wrote: post #105

Earlier quoted context omitted.

If you assume 25k MSRP on a base model Prius, and that the car will sell for $5k after 150k miles (absolute garbage offer - an actual number would be something like $10k-12k in today's market), then you get a worst case depreciation of 13 cents/mile. Let's say a Prius gets 45 mpg, gas costs $5/gal which gives you 11 cents/mile. Factor in tires and oil/brake fluid changes and maybe you get another $2k all in costs ove…

You need to do the math on a deduction v credit. If you are spending .30 and deducting .58, you need to multiply the .58 by your tax rate. You can’t simply say .58 - .30 is .28 and that is a profit of .28. Deductions don’t work that way.

Okay, that's my bad. But if you assume an effective tax rate of 15% (combined federal + state + SS + Medicare), which sounds about right for an Uber driver making 40k/year, 0.58 * 15% * 75k mi/year is an $6525 tax reduction. A quick look at an income tax calculator says someone in California making 40k pays about 6k in tax, so your credit per mile is 6k / 75k = 8 cents/mile.

Depending on your costs that could put you under 20 cents/mile in cost. And you get paid over $1/mile in practice, even on delivery orders. Really the only party getting screwed by gig apps is the government, because they get 0 tax revenue from these guys.

Re: VCs are scared when they should be greedy

#144

Post by dmix »

cpursley wrote: post #139
MegaButts wrote: post #3

> In contrast with the scenario in 2000, most of today’s tech companies are real businesses. How many of today's startups are just servicing each other with VC money? This isn't meant to be flippant - I'm genuinely curious (and while I bet it's a lot, I am skeptical it is overwhelming). I mean if we really look at some of the business models for these companies, they're clearly unsustainable. Uber is a prime example…

100% - when interest rates are over 5% and/or gas is over $5, the delivery startups are toast. The economics just don't work. Especially when people start cutting back on conveniences.

Are you sure people wont just pay 10-15% more for an Uber taxi or SkipTheDishes? Those have become staples of peoples lives. It take a pretty significant change to stop people from using them to the point where it’d be a failure (of course there will a subset of more price sensitive people, especially during recessions).

Re: VCs are scared when they should be greedy

#145

Post by raverbashing »

btown wrote: post #45
drchopchop wrote: post #41

Earlier quoted context omitted.

I'd disagree re: Figma and Notion. These are very sticky, best-in-class tools which have a lot of use outside of "VC-land". Figma is becoming the de-facto way to share designs across the internet. Notion has a good shot at becoming the internet's default business wiki, killing Confluence.

Figma's incredibly hard to replace because its tools are highly customized for specific design workflows. Notion, I'm not nearly as sure about. With Google Workplace having pageless Google Docs now, and other shops having content centralized on Office 365, a lot of cost-cutting companies will ask "we just use Notion for a wiki anyways, can we migrate over to the system we're already paying for?" And sure, Notion is m…

Notion is such a "local maximum" it's hard to see not being outcompeted by anything else

Firma has a deeper moat around it

Re: VCs are scared when they should be greedy

#146

Post by dinvlad »

moneywoes wrote: post #52
vcfundedmylife wrote: post #21

Earlier quoted context omitted.

I agree, crypto and fintech will be the first dominos to fall - they’re in free fall already. There’s a lot of copycat B2B startups that extremely dependent on crypto and fintech for their revenue. They will be the next domino to fall. After that, it would be infrastructure, security, and analytics vendors that will face a revenue crunch and will be unable to raise another round of funding. And then, all the startups…

What can we do to insulate ourselves from this? As a software engineer at a startup

Or start your own bootstrapped SaaS - the only investment is time and effort. These are some of the most enduring businesses, imho.

Re: VCs are scared when they should be greedy

#147

Post by HWR_14 »

closewith wrote: post #132
gumby wrote: post #72

Earlier quoted context omitted.

> Companies whose unit economics don't work transfer wealth from investors to customers, then get out of the way. Not always. Consider the rash of subsidized “we’ll pick up your dry cleaning and then save by doing the work at a centralized facility elsewhere). These parasites wiped out the network of local dry cleaners, in particular in SF. You could say, well, they wiped out the buggy whip makers. But actually they…

> Consider the rash of subsidized “we’ll pick up your dry cleaning and then save by doing the work at a centralized facility elsewhere). Is that not the default business model of dry cleaners globally? Chemicals like PERC are nearly completely banned in residential/commercial zones. Almost all dry cleaning in the developed world is done in centralised depots in industrial areas, for health & safety reasons.

No, most dry cleaners use more friendly chemicals locally, and only send out things like leather goods. Otherwise, how would they be able to do sub 8-hour turn arounds?

Re: VCs are scared when they should be greedy

#148

Post by missedthecue »

cu6LANde9fbnSgw wrote: post #128
missedthecue wrote: post #32

Earlier quoted context omitted.

Boy, this is an evergreen narrative on HN, but I don't really think it's true. The total all-in cost of a Prius (depreciation, maintenance, gasoline, etc...) is about 30 cents per mile. Uber drivers make about $1-$2 per mile which is a pretty big margin. Uber has been around for over 10 years now. Sure, not everyone is an accountant, but if Uber drained every driver's wallet, they'd have noticed by now. Interesting t…

Uber drivers don't make anywhere near $1-$2 per mile. More like $0.50-$1 according to some Googling ($1 seems reasonable from conversations with friends who drive for them, here in Austin). 30 cents per mile costs is also extremely low, at least on average.

I don't think that's extremely low at all. Prius forums are full of users who share their mileage costs.

Re: VCs are scared when they should be greedy

#149

Post by twoodfin »

swyx wrote: post #116
twoodfin wrote: post #48

Earlier quoted context omitted.

2) Most VCs (and founders) hate down rounds. So a lot of existing companies are stuck because they previously raised at $X valuation, and now the market price is $0.75X, and either the VC doesn't want to push for a down round or a founder won't accept it, or both. They discussed this phenomenon at length on a recent Odd Lots podcast, and I can’t understand it as anything but a market inefficiency that some smart VC f…

> Values (and thus prices) go up and down. you might be underestimate the importance of narrative in a startup. a startup takes a tremendous amount of belief to will into existence, and a lot of belief depends on an unbroken narrative. to most outward folks, a startup generally wants to appears to be continuously crushing it - people understand that there are ups and downs, but generally have no patience for a "well…

Right, right, but fundamentally that attitude is irrational. If startups with actual long-term value are going under for want of $N million in a down round, that represents a big opportunity for anyone who can successfully combat the “narrative”.

Re: VCs are scared when they should be greedy

#150

Post by kypro »

MegaButts wrote: post #3

> In contrast with the scenario in 2000, most of today’s tech companies are real businesses. How many of today's startups are just servicing each other with VC money? This isn't meant to be flippant - I'm genuinely curious (and while I bet it's a lot, I am skeptical it is overwhelming). I mean if we really look at some of the business models for these companies, they're clearly unsustainable. Uber is a prime example…

> Uber is a prime example of a company that seems destined to fail.

I'm not a fan of Uber, both as a company and as an investment thesis, but I think this is far too strong. Uber isn't prioritising profitability at the moment, so obviously the unit economics isn't going to work.

I think the important question to ask here is if people continue to want to pay & hail taxis from their phone? If the answer to that is yes then Uber will be fine so long as they're one of the apps that people continue to use to hail taxis. Personally I don't see taxi hailing apps going anywhere and I don't see Uber losing significant market share to its competition if they price competitively.

Where I think you have a point is in regards to Uber's potential operating margins. Is it reasonable to assign Google / Facebook sized margins to a company like Uber? Probably not imo, and that's where I have problems with it as an investment. I think as an investment it's more likely to end up like a Twitter or Snapchat. They'll make a bit of money and as a company they'll be fine, but I doubt they'll ever reach the levels of profitability that other big tech companies have achieved. The stock seems likely to trade fairly flat as they continue to see decent demand for their product, but continue to struggle to achieve significant profitability.

I'd argue taxi hailing apps (as they currently exist) are basically commodities. There's no real difference in experience between the different apps and if I'm being made to pay then I'll just pick the cheapest. Only if they're all pricing around the same will I use Uber and that's just because I know I can trust them and there's a friction in downloading and signing up for something else. They have a viable business, but very little operating leverage.

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