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On-Demand Startups Are Hemorrhaging Tens of Billions a Year

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Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#41

Post by skybrian »

lordnacho wrote: post #33

It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…

If the "waste" is subsidizing services you actually want, is it really waste? It's more of a transfer from investors to landlords and drivers, who certainly wouldn't be as happy with less money.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#42

Post by moorhosj »

dawhizkid wrote: post #19
tomnipotent wrote: post #17

Earlier quoted context omitted.

This isn't about supply & demand, it's about profitability and if these companies are viable long-term. There can be no gig economy jobs if there are no gig economy businesses.

Uber and Lyft can be profitable today. They are in their most mature markets like SF and NYC. If they need to get to profitability they scale back and cut certain cities. That’s it.

Now we see those cities starting to price in the negative externalities of these businesses. The congestion pricing in NYC is directly tied to the rise in ride sharing. This could change the economics even (especially?) in the profitable cities.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#43

Post by pitaj »

lordnacho wrote: post #33

It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…

It's called malinvestment, and it's tied to monetary policy. When the central bank churns out money, the lower interest rates discourage banks from lending, making it harder for small businesses to collect capital that way. The lower interest rates simultaneously drive investment from bonds into the stock market and real estate.

Look up Business Cycle Theory

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#44

Post by ForHackernews »

loganfrederick wrote: post #11

As both a startup programmer and having worked in the financial industry, it's really hard to know how companies like these will be viewed by history. The technologist argument is: we are enduring losses, even large ones, in the short term so that we can bring inevitable future tools forward in time (i.e. "Of course everyone can get anything delivered on-demand in the future, so why not now!?") The value-based invest…

> they do genuinely have a lot of users who love the services.

Turns out selling $10 bills for $5 is extremely popular. MoviePass did in fact get people go to the movies.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#45

Post by motivated_gear »

JMTQp8lwXL wrote: post #29
b_tterc_p wrote: post #6

I asked in the recent thread how Meituan could possibly be affording to subsidize restaurant meals to be significantly below cost at restaurant as that didn’t make any sense. Turns out according to this article that it’s simply that. It doesn’t make sense. They lost $17 Billion in 2018 for a shallow moat around an ugly castle. The next recession is going to hit hard, and I’m guessing a lot of the gig economy jobs wil…

The narrative is that automation will make all of these services cheap, so the "gig economy" jobs get lost regardless to autonomous vehicles and robotic hamburger makers, for example. Only then, do these companies come out on top -- and quite big if they can float until automated solutions exist. At least, that's the story these types of business tell to acquire funding. That's essentially the bet with these companie…

"Theres a lot of people that spend years telling themselves that they're going to work on rockets. These same people build ad tech platforms and never leave. If you want to build rockets, just go build rockets." -- a very paraphrased Peter Thiel.

If these companies are waiting for the next wave of automation they need to build it. Uber and lyft are trying with self driving but they haven't bet the farm on it. If Uber had spent $800 million on autonomous tech and staked the company's entire future on it, maybe they'd be further.

If Tesla gets to level 4 automation, I doubt they'd have trouble whipping up a ride share platform that connects directly with their vehicles.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#46

Post by onlyrealcuzzo »

lordnacho wrote: post #33

It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…

> I wonder what would happen if there was a rule that you could only resell equity in a business whose financials had improved recently.

How does that work with failing businesses? If a business turns into a shit-show, everyone on board is forced to ride the ship down to the seafloor?

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#47

Post by dragonwriter »

dawhizkid wrote: post #14
b_tterc_p wrote: post #6

I asked in the recent thread how Meituan could possibly be affording to subsidize restaurant meals to be significantly below cost at restaurant as that didn’t make any sense. Turns out according to this article that it’s simply that. It doesn’t make sense. They lost $17 Billion in 2018 for a shallow moat around an ugly castle. The next recession is going to hit hard, and I’m guessing a lot of the gig economy jobs wil…

Why would “gig economy jobs” get worse? If anything, during a recession, more people will want(need?) to become gig workers. Uber/Lyft are generally supply constrained today. If there’s a surge of supply because people need money they won’t have to pay new driver incentives, which is one the areas that cause them to bleed cash today. Demand side will fall a little, but people will still need cheap ways to get to/from…

> Why would “gig economy jobs” get worse?

Because...

> If anything, during a recession, more people will want(need?) to become gig workers.

At the same time, the demand for gig services will drop.

So, to the extent possible, things will get worse for the less-scarce workers, but they’ll also get worse for the firms, because they are already often squeezing gig workers as much (or, in some cases, more) than they can legally get away with, so they don't have a cushion to pass on the demand drop to gig workers and see no net harm.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#48

Post by [deleted] »

lordnacho wrote: post #33

It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…

[deleted]

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#49

Post by est31 »

skybrian wrote: post #41
lordnacho wrote: post #33

It's a strange age to be living in. On the same day I've visited people in a WeWork, been driven around in an Uber, and had food delivered by Deliveroo. All of them blowing a huge load of money for the privilege. If they don't make back this money, it will represent a huge waste of resources. It's private money behind, but I still wonder whether this a reasonable way for the economy to run. For one, it means the litt…

If the "waste" is subsidizing services you actually want, is it really waste? It's more of a transfer from investors to landlords and drivers, who certainly wouldn't be as happy with less money.

And some of the investors are landlords, so part of the transfer goes from landlord-investor to landlord-investor. Your landlord doesn't even have to directly be an investor at the precise company you are working at, already the silent agreement of all landlord-investors to use SV is enough.

Re: On-Demand Startups Are Hemorrhaging Tens of Billions a Year

#50

Post by treis »

tomnipotent wrote: post #21
dawhizkid wrote: post #19

Earlier quoted context omitted.

Uber and Lyft can be profitable today. They are in their most mature markets like SF and NYC. If they need to get to profitability they scale back and cut certain cities. That’s it.

Which would mean eliminating upwards of 90% of their workforce. Thus not sustainable, and the jobs disappear.

It's not sustainable for the employees but it probably would be good for the business. Looking at Lyft's careers page, I see 7 UX, 11 product, 14 data science, and 40 engineering positions open. That just seems like an absurd amount.
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