221–230 of 264 posts
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MoviePass
Movie pass was literally a loss for the vast majority of its investors. If anything it was a wealth transfer from the public/private market to the app users who got extremely subsidized movie tickets. Moviepass was a total loss for it's investors, so how does that not prove the opposite of what's being argued here
The crazy thing about Theranos is that so many people with experience in microfluidics (developed mainly for DNA sequencing although there are other uses) knew that their claims were impossible, technologically speaking. Working with such small volumes to obtain quantitive estimates of blood chemistry is so implausible, as you are introducing uncontrollable variability - micro-evaporation, even tissue localization is…
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Excluding an integral part of the costs to say they are profitable is like saying you are cash flow positive, after including external funding. There is a reason why companies are running their books the way they are. Very good and valid ones!
I don’t know if that’s a technical accounting term but “integral” is the key word there. Massive expansion is not integral to the normal operations of a business. R&D and literal billion dollar ad campaigns are tools to expand and grow into whatever space is open from lack of competition. Amazon filled their space, Tesla theirs and one of the computerized taxi companies will fill that space. Until they do, they will…
Earlier quoted context omitted.
MoviePass
Movie pass was literally a loss for the vast majority of its investors. If anything it was a wealth transfer from the public/private market to the app users who got extremely subsidized movie tickets. Moviepass was a total loss for it's investors, so how does that not prove the opposite of what's being argued here
The modern wisdom, "fake it till you make it", requires you to make it, otherwise you'll pay for lying to us.
I'm curious, does this case get so much publicity because it touches upon all the tropes of Silicon Valley? 'Fake it till you make it', 'move fast and break things', 'disrupt the markets', etc. IMHO, this business model is fine when the only things at risk are venture capital and you're trying to sell more widgets, but when it comes to life and safety - bad news.
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"Uber might not have lied about their business" Yea that is what we discussing about Theranos. Theranos was an outright fraud. You cannot say the same about Uber whether they inflated or lied about their profits etc. Uber provides a real service and honestly a good one for people. Theranos on the other hand, played with people's lives by lying about their entire business model and product which never worked. Big diff…
I think you're somewhat making an argument that the "means" are justified if the end is noble. I think the whole discussion revolts around the several issues with that "system" or "philosophy" here in the Valley. I personally don't think it's the right way to do things. Big fraud, small lies (fraud), it's all pretty bad.
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> The idea that Uber is not profitable is a myth isn’t it? I worked on the long-term forecasting team while I was there. At least 5-6 years ago, Uber was very, very far from profitable. I can't imagine much has changed enough for it to make them profitable. Maybe with the new CEO things changed but I'm doubtful. That company had a slew of issues.
Right, but would they be profitable if you took out the advertising and expansion costs? From the document I saw, yes. Can you please explain where are these enormous costs that are necessary to run the business? Is it SV salaries? Are their servers costing too much money? It doesn’t make sense. It’s like saying that the concept of dispatching taxis with a computer is not capable of being profitable. It simply isn’t…
If that’s all you are doing, then yeah, that’s probably not profitable because competition would just eat your margins. You’re essentially a broker matching drivers with passengers, and they can use any service they want. They will choose the one with the lowest cost to use and that pays the most to serve i.e. they will use the one that leaves the least amount of profit for the broker.
Therefore Uber has to have some other value add, which will eat into profits (unclear what that could be, I think they were hoping it could be robotaxis); or, they have to spend massively in advertising to maintain mindshare, which will also eat into profits.
This is why they spend so much on advertising and expansion. They want to be the first player in town because when there are more players, it’s a race to the bottom. You can’t take out the advertising and expansion dollars and say they would be profitable without them, because those dollars are staving off competitors for as long as Uber can. Imagine a future where you have an “Expedia” of taxi services, that search dozens of providers and gives you the lowest one. That’s Uber’s future if they stop their spending.
The question of profitability then becomes: how can Uber justify its existence while staving off competitors, and can they manage this before going under? Maybe given an infinite time horizon and infinite VC cash, Uber could be profitable one day, but for now I don’t think it’s clear they are or will be soon.
Earlier quoted context omitted.
> The idea that Uber is not profitable is a myth isn’t it? I worked on the long-term forecasting team while I was there. At least 5-6 years ago, Uber was very, very far from profitable. I can't imagine much has changed enough for it to make them profitable. Maybe with the new CEO things changed but I'm doubtful. That company had a slew of issues.
Right, but would they be profitable if you took out the advertising and expansion costs? From the document I saw, yes. Can you please explain where are these enormous costs that are necessary to run the business? Is it SV salaries? Are their servers costing too much money? It doesn’t make sense. It’s like saying that the concept of dispatching taxis with a computer is not capable of being profitable. It simply isn’t…
An issue with this line of thought is that you think that they could one day flip a switch and just like that stop expanding or acquiring new customers.
Two problems with that are: 1) most likely if they stop growing, they start shrinking - it’s not like they are the only ones out there doing what they do, and 2) a lot of their marketing and expansion expenses (as corroborated by the sibling comment) don’t go towards acquiring new customers, but rather new drivers, which given their turn over, they can’t stop putting money into.
So basically if they stop spending money on advertising and expansion, they will loose all their drivers and slowly churn customers as well.
Hence, it doesn’t matter if they could technically be profitable without advertising and expansion, because then their business becomes unviable.