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

theengineeringmanager.com

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

#21

Post by fabricexpert »

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…

It’s not the volume of jobs, it’s the quality.

Driving a taxi or delivering food is a pretty bad job, doing it as a self employed contractor is almost criminal. You have to cover all your own expenses and have no guarantee of work, with zero progression (ever heard of an Uber driving saving up and staring their own minicab business?). It’s a terrible economic decision.

The market does not correct for this as it is entirely controlled by a small group of companies.

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

#22

Post by timdiggerm »

neom wrote: post #3

A fun thought experiment: how could you go from selling $10 bills for $5 to selling $10 bills for $15?

I believe the plan is to undercut everyone else until all other sellers of $10 go out of business, then bring the price up to $15 and use your position to prevent anyone else from selling $10 bills again.

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

#25

Post by saalweachter »

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…

As a quibble, I would say the traditional VC-backed tech startup is a technology that costs $50mm to develop, but can be sold into a market of 10 million units @ $100 with a per-unit cost of $75.

"We can develop a monopoly by selling below cost" is some kind of traditional business, but I wouldn't call it a traditional tech startup.

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

#26

Post by neffy »

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…

Think of society as a very slow (this is key) networked system, subject to the same kind of feedback loops and manipulations we can perform in computer networks, just progressing in human time over years.

Now within this system there are two strategies to run a company, #1) employ people, make a product, sell it for a profit, rinse, recycle, keep going for decades if you´re good.

Or #2, for a short (but longish in human terms, several years at least, remember it´s a very, very slow system, and hey interest rates have been really low now for a decade), borrow money, employ people, make a product, and sell it for less than it cost to make.

Eventually with #2 the borrowed money runs out, but until it does you stand a more than decent chance of beating #1, and since you borrowed the money you can throw some great parties with it along the way.

For extra thrills and lolz, borrow the money from the banking system, so that when you can´t repay it, you crash the entire country with a credit crisis. Note there isn´t necessarily as clear a division between the two strategies as we might want, most companies need some kind of startup capital, and have to borrow that from somewhere.

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

#27

Post by Radim »

Udik wrote: post #11
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…

Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of VCs and/or shareholders to cover the losses, and live the sweet, exciting life of the entrepreneur until the game is over. By the time the value of the company drops to zero, I'll probably have accumulated enough cash to live comfortably ever after.

And that's perfectly fine, as long as the people paying the price (here, VCs) are the ones bearing the responsibility for their eventual losses.

It only gets disgusting when such "musical chairs" scams get too popular, becoming "too big to fail". Then the society at large will cover the bill, including those actors who were more prudent and honest throughout (adding insult to their injury).

The more involved and indirect the chain of responsibility, the larger the potential for scams.

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

#28

Post by dragonwriter »

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…

> I genuinely don't understand the argument that tech companies are hurting society by providing lower paying gig-economy jobs.

The whole point of “disruption” is that these businesses are squeezing out existing business which either provide more and/or higher-paying jobs.

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

#29

Post by Razengan »

huffmsa wrote: post #7
neom wrote: post #3

A fun thought experiment: how could you go from selling $10 bills for $5 to selling $10 bills for $15?

Replace all of the ports on the bill with a single USB-C port and call it revolutionary ? Edit1: /s Slightly more seriously, you could promise to anyone who bought a $10 bill that in some x number of years they could redeem that bill for $20. This is called "being the Treasury and Federal Reserve". The hard part is finding a way to invest the $5 of profit they gave you in an asset which will appreciate faster than yo…

That gave me another idea which I haven't considered the implications of, but it sounds fun and video game'y:

Electronic/Smart bills, that keep track of how many times they've been used to purchase stuff with.

After a bill has been circulated N times, it increases in value by Y, and/or unlocks special artwork.

Some bills may become highly sought-after collectibles worth far more than their face value.

Would it help or harm the economy?

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

#30

Post by marcosdumay »

michaelt wrote: post #19
Udik wrote: post #11

Earlier quoted context omitted.

Also, there seems to be no personal accountability for those who lost all that money. I can set up a business that sells 10$ notes for 9$, convince a number of VCs and/or shareholders to cover the losses, and live the sweet, exciting life of the entrepreneur until the game is over. By the time the value of the company drops to zero, I'll probably have accumulated enough cash to live comfortably ever after.

Why should anyone else be accountable for sophisticated investors' failure to do their due diligence? If I go to the Kentucky Derby put $1000 on Fancy Dancy Magic Prancy, it's hardly the horse's fault if my gamble doesn't pay off.

It's not the investor that decides to give money to the $10 bills seller. It's a third party.

Now, I don't know what kind of punishment the GP wanted to see. If the question is why doesn't all the money run away from the VP's fund, I wonder about that too.

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