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Venture Predation

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Re: Venture Predation

#91

Post by revelio »

Easy to criticize but to be consistent you'd also have to consider non-VC-backed products dumped at below price by regular companies too, and that would get uncomfortable real fast:

- Chrome

- VS Code

- LetsEncrypt

- Everything open source

etc. Sometimes I wonder how much this practice distorts the software industry, preventing new innovations from happening. The industry settled on this approach without being forced to, so I wouldn't want legal changes to prevent it either, but it's worth a bit of self-reflection on how much we all love free stuff.

Re: Venture Predation

#92

Post by paulddraper »

abigail95 wrote: post #87
degreesoffun wrote: post #78

And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries due to their position as a stock market darling. They use ultra-cheap money and a willingness to run negative margins which they refer to "reinvesting in the business" to bleed competitors dry. Few other companies on the planet have the ability to run negative or break-even margins the way Amazon d…

They have money because of AWS, which is a fantastic product in an extremely competitive market, competing against players who lose money like GCP and Azure. Amazon.com as a store makes next to nothing as profit. Who cares what he did to some diaper companies. Are consumers paying more or less because of amazon? Much less. They basically run amazon.com for no profit and consumers get fantastic deals and cheaper produ…

> Who cares what he did to some diaper companies.

Going out on a limb here, but I'd say the diaper companies.

Re: Venture Predation

#93

Post by arcticbull »

revelio wrote: post #91

Easy to criticize but to be consistent you'd also have to consider non-VC-backed products dumped at below price by regular companies too, and that would get uncomfortable real fast: - Chrome - VS Code - LetsEncrypt - Everything open source etc. Sometimes I wonder how much this practice distorts the software industry, preventing new innovations from happening. The industry settled on this approach without being forced…

Recovering your costs through advertising isn't really dumping. Chrome definitely makes Google way more money than they put into it.

Re: Venture Predation

#94

Post by boeingUH60 »

degreesoffun wrote: post #78

And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries due to their position as a stock market darling. They use ultra-cheap money and a willingness to run negative margins which they refer to "reinvesting in the business" to bleed competitors dry. Few other companies on the planet have the ability to run negative or break-even margins the way Amazon d…

Quidsi founder Marc Lore sold his next company, Jet.com, to Walmart for $3.3 billion [1]. Both Quidsi and Jet.com were never profitable, meaning Lore was also playing the game of venture predation, so hardly any pity from me.

To add, Lore's current startup is a premium food delivery service called Wondery that raised $350 million at at $3.5bn valuation last year [2], and it's not profitable too. None of Lore's companies have ever turned profits but he's made enough money to buy the Minnesota Timberwolves...he's the perfect example of venture predation, lol

1- https://corporate.walmart.com/newsroom/2016/08/08/walmart-ag...

2- https://techcrunch.com/2022/06/17/marc-lores-food-delivery-s...

Re: Venture Predation

#95

Post by degreesoffun »

abigail95 wrote: post #87
degreesoffun wrote: post #78

And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries due to their position as a stock market darling. They use ultra-cheap money and a willingness to run negative margins which they refer to "reinvesting in the business" to bleed competitors dry. Few other companies on the planet have the ability to run negative or break-even margins the way Amazon d…

They have money because of AWS, which is a fantastic product in an extremely competitive market, competing against players who lose money like GCP and Azure. Amazon.com as a store makes next to nothing as profit. Who cares what he did to some diaper companies. Are consumers paying more or less because of amazon? Much less. They basically run amazon.com for no profit and consumers get fantastic deals and cheaper produ…

> Who cares what he did to some diaper companies. Are consumers paying more or less because of amazon? Much less.

They are probably generally paying less but Amazon isn't the surefire low-cost provider on the internet the way they used to be. I don't expect the trend of them raising prices to reverse as they gain market power.

> How much would you have to charge for same day delivery for that many products? Could you get close to Amazon? You would have to rip off you customers so badly just to stay alive.

It's not "ripping off" it's just charging customers the actual cost of the service they are getting.

Re: Venture Predation

#97

Post by pixl97 »

xp84 wrote: post #62
Aunche wrote: post #58

Earlier quoted context omitted.

> What's the end game to VC subsidies? I don't think VC's give a damn about long-term profitability. All they want to do is to trick later investors into buying them out. I can't think of a single one of these types of companies that has had a profitable year* let alone make enough profit to recoup their losses. *I'm excluding AirBNB because their prices are cheap by operating in a legal gray-zone.

*Citation needed-- ABNB is so expensive these days, although they won't disclose half the cost until the final phase of checkout!

That's two slightly different things...

Not showing you the price actually makes it more profitable for the end user, not directly for Abnb. By showing price in this way Abnb attracts you, then the end user scams you for a higher price.

But this is different from the 'legal grey zone' OP was talking about. The Abnb hosts should likely be paying local taxes/fees for operating as a short term rental, in which if they were doing so the final costs to rent an Abnb would be higher in most jurisdictions.

Re: Venture Predation

#98

Post by Andrex »

arcticbull wrote: post #93
revelio wrote: post #91

Easy to criticize but to be consistent you'd also have to consider non-VC-backed products dumped at below price by regular companies too, and that would get uncomfortable real fast: - Chrome - VS Code - LetsEncrypt - Everything open source etc. Sometimes I wonder how much this practice distorts the software industry, preventing new innovations from happening. The industry settled on this approach without being forced…

Recovering your costs through advertising isn't really dumping. Chrome definitely makes Google way more money than they put into it.

Also, outside of Opera, all browsers (that I know of) have been free for over two decades.

Re: Venture Predation

#99

Post by maxk42 »

Funny to see nobody's mentioned Cloudflare yet. They're not making any money: This is presumably their exact plan: Offer CDN services and other web infrastructure services at a loss for a prolonged period of time until the competition is destroyed, then jack up rates and eat the market.

Re: Venture Predation

#100

Post by throwaway290 »

degreesoffun wrote: post #78

And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries due to their position as a stock market darling. They use ultra-cheap money and a willingness to run negative margins which they refer to "reinvesting in the business" to bleed competitors dry. Few other companies on the planet have the ability to run negative or break-even margins the way Amazon d…

> And don't forget Amazon. They aren't venture backed but they have access to capital at cheaper rates than most countries

If we are talking about non-venture cases, OpenAI+Microsoft is doing the same with ChatGPT.

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