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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?

#31

Post by i_am_proteus »

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…

Because workers often stake their livelihoods on a single source of income. This is perilous enough when the source of income is result of them making contributions to the economy at the actual market rate.

But there is nothing "market rate" about rank-and-file work for a company that's pouring gasoline on VC money and setting it ablaze. If demand for your labor is only due to artificially low prices, that demand will evaporate once growth targets are met.

See also: existing business that was disrupted. If the new service is not actually more efficient and was only able to undercut existing players on price because of VC money, there are no real long-term winners on the ground. Sure, maybe some founders, early employees, and investors net a tidy profit, but that profit isn't based on an actual economic contribution if the product isn't viable after the VC spigot gets turned off

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

#32

Post by countryqt30 »

fabricexpert wrote: post #21
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 en…

Again, nobody forces you to do this so what's the point?

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

#34

Post by michaelt »

marcosdumay wrote: post #30
michaelt wrote: post #19

Earlier quoted context omitted.

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.

Don't you have to be an accredited investor to invest in venture capital and angel investments?

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

#35

Post by tristor »

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.

Your made up horse name made me just think of (which may already exist outside my awareness) a corollary to Poe's Law.

"That without a clear indicator of the author's intent, it is impossible to create a parody of race horse names so obviously exaggerated that it cannot be mistaken by some readers for a sincere and accurate name of a horse."

We could call it the "Derby Law".

I actually searched for "Fancy Dancy Magic Prancy" because I thought that might be an actual horse. I found out it's a reference to PBF, but nonetheless it /could/ have been a real horse.

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

#36

Post by gcb0 »

neffy wrote: post #26
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 hu…

it used to be called investor diligence. if a small startup was selling at a loss like Microsoft can, nobody would be crazy to have their money there.

now big finance saw they just need unicorns, not actual business models, so everything and anything is fair game and stocks are less sound than Vegas.

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

#37

Post by 542458 »

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…

The difference being that the fed can actually reliably keep that promise, since they can issue new currency and borrow at extremely low rates...

Edit: https://money.stackexchange.com/questions/5400/why-is-the-fr...

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

#39

Post by TorKlingberg »

neom wrote: post #3

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

Get people so used to buying $10 bills from you that they stop paying attention to the numbers. Like how a lot of people buy from Amazon without even checking if it's cheaper elsewhere.

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

#40

Post by mannykannot »

saalweachter wrote: post #25
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.

Developing a monopoly while selling below cost was Amazon's path, and others took note - Uber, for example, which is hoping to corner the autonomous taxi market, and is effectively offering its current services with human drivers in order to position itself for that.
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