I don’t think the overall thesis of the article was that, necessarily.
But he did miss the big picture.
Whether or not any of these companies ever turn a profit is secondary.
The handful of dudes that started them will pocket a shitload of money along the way (if there is an IPO, then a metric shitload) and if the thing tanks, whatevs. They’ll get on somewhere else in the Valley if they want to, or ride off into the sunset with their pocketed largess.
Driving a company into the ground whether it’s young or old is nothing new.
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Unless you count deception as a business model, which a lot of these companies do. From today’s paper:
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In big picture terms, I agree (at least for as long as Marx’s predictions fail to come true). Starbucks, for example, has no reason to stop opening unprofitable coffee shops next door to its soon-to-be-ex-competitors.
But it is an open question whether Silicon Valley, specifically, will continue to be the hot ticket. They’ve been sucking up investment on a biblical scale for decades with little to show for it, and a Ponzi scheme doesn’t need to turn a profit to keep going, but it does need fresh rubes. Once SoftBank finally incinerates its mountain of Saudi cash, I’m not sure how many people will be prepared to invest $50bn in an app selling wifi cat diapers.
The natural follow-up question is, if that happens, how much damage will the rest of society be left cleaning up? Investors will probably be fine if Uber and Airbnb collapse, but a bunch of drivers and mortgage-laden retirees might be fucked.
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I think so, Brain, but then it’d be Snow White and the Seven Samurai…
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When I first started noticing Uber and Lyft prices about 50% higher than normal, I thought great this means that they are making room for ethical competitors. But the article points out that at least for rideshare and roomshare, the issue is really more lack of supply of drivers and rooms, and that at least some of the higher prices are going to the individual suppliers instead of the overlords. The real question is what happens when the pandemic is in the rear view mirror. As long as there is more demand than supply, the market forces that create competition are missing.
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" Yet everything must be centered around the avocado toast-eaters as if they were the prime movers in everything." In my day Silicon Valley was were we used get our avocados from and now they are flown in daily. No wonder the kids can’t catch a break. But seriously blaming anyone but the scofflaws er sorry disruptors is a diversion.
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Amen. Divide and conquer. It’s been the SOP of colonizers and despots since time immemorial.
I’m confused by the comparison of Uber to AirBnB. AirBnB is kind of like eBay or Craigslist in that the people listing the property set the price and get the bulk of the money. AirBnB has absolutely no role in setting the price other than charging their fees. I don’t know how those work. I’ve stayed in a few VRBO properties, which is like AirBnB’s grandpa, and they were all family owned and like I said rates are set by the owner / lister / manager.
If someone is listing an AirBnB for $500 it’s because someone will probably pay it. And if they’re getting $500, then a comparable hotel room is not going to be $300.
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Dear Y’all: I would like to object to the previous article. It is not money fires but fires which are over. It is now re-fix the carbon of the land and salt it.
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The usual “what’s wrong with kids today” articles will be refocusing on Generation Z any moment now
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I think they’re talking more about investor subsidies. AirBnB didn’t set the price, but there are other ways for a company that’s interested in “blitzscaling” and establishing a dominant brand to give consumers price savings in the initial years, especially after the IPO (or now the SPAC “acquistion”).
For example: their fees may be lower than would be profitable; they might ask the hosts in an area to list the property at a discount (say $300 instead of $350) to undercut the hotels and pay them the difference; or perhaps it’s just offering coupons. All of those funds come out of the shareholder’s hide.
Uber’s use of this practise has been particularly egregious (they’re fortunate to have investors like the myopic House of Saud), but it’s been present to one degree or another across most “gig economy”/“sharing” startups.
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Yep, and as others have noted, this is nothing new. In the few years I lived in Aroostook county, Maine I saw a big new theater come in and undersell the independent Main Street theater until the latter went under, then the corporate theater raised their prices to higher than the Main Street version had ever charged. Also saw WalMart come to town and even worked there for a bit (not proud, but I didn’t know any better at the time and needed money for school clothes and such). At one of the “morning meetings” the manager clearly explained that “we” could afford to sell things at a loss longer than the local shops, and we would, just to run them aground. And over, and over, unless there is coordinated community activism, it works. 
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That’s what I thought at first, but have you seen the price of rubber pants these days?
Weird flex but okay?
Why create more art? We’ve already made all that we need! 
Growth for growth’s sake, is, clearly, stupid, but if you look at all the malinvestment and existing problems, I think we’re a far cry from ‘thermodynamically efficient’ enough to justify hanging up our boots.
What’s with the avocado-toast hate?
Sheet. I’ve been enjoying that as an awesome breakfast for years and now I’m supposed to feel bad about it until it goes passé then I’m labeled an out-of-touch dude until it goes retro in the 2030’s and I can whine about how I liked avocado toast before liking avocado toast was even a thing?
<— goes out to buy cilantro, cumin, coriander, limes, tomatoes, red onions, salt, pepper, and garlic powder. Because guac beats avocado toast.
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Yes. You see this happening now with SPACs. The first in / creators make sure they will make a ton of money even if they are investing in things that just won’t come to fruition. All the followers think that if just one investment hits like Amazon or Tesla, they are set. And it’s nothing new. There are just different flavors of modern capitalism awfulness (leveraged buyouts, venture capitalists, SPACs). It’s awful and destructive, but hey, if you’re rich why should it matter?
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Rob is referencing it ironically, but it became a thing thanks to this arsehole Australian plute.
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