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I’ve been thinking about this a lot lately, and I’m starting to wonder if the objective is to make money at all.
A company like Uber might be able to destroy conventional businesses until the field is open for monopoly pricing, but they have no way of maintaining the monopoly. It seems unlikely that Uber will ever turn a profit, no matter how big they get.
At the same time, these companies that seem designed to do nothing but burn money manage to do it in a way that always makes life worse for their workers. Like, if Uber’s not interested in making a profit then why is it so important to them that they rip off their drivers?
What if they’re not capitalist ventures at all, but a sort of reverse-charity where rich guys donate their money to promote social change for the worse?
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It not just money. It’s a penis-size contest, and a power over us, the muppets, contest.
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The pre-IPO investors are gamblers. If they lose (which is most of the time), they can afford it – often the only loss is a few years’ opportunity cost on initial investment returned; if they win, they win big. It’s the Hollywood business model, where one hit blockbuster makes up for 20 box-office losers.
The founders and executives get paid huge salaries and benefits, get a lot of press, and land board seats on other companies. The worst that happens to most of them is that they end up in C-level positions at other people’s more successful companies. Elizabeth Holmes, an outright fraudster, is already planning her next venture and (if she avoids a lengthy sentence in the slammer) will likely get funding for it.
There’s no real “reverse-charity” programme as you describe. Late-stage capitalism is all about money and power and score-keeping, with social changes for the worse simply being externalities that they know won’t affect them, their kids, and their grandkids.
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Unless you happen to be one of the ones directly affected. Then it becomes a pretty big deal.
It’s not a donation—they expect to receive some sort of return on the investment.
Those who donate to promote change for the worse give their money to the Cato Institute.
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That’s called the “blue ocean” strategy. Red oceans are big markets with lots of competitors, aka sharks and blood. Blue oceans are new markets, wide open water, places where competition has yet to set in. They are hard to find.
Boy that gresham rule describe my experience.
How does the “real thing” survive in this world?
As a shared work and meeting space that is functioning on a unit level by catering to going concerns with integrity instead of exploiting dreamers with little money, I understand exactly what Neumann got wrong and right. http://www.comradity.com/rule-2-might-have-saved-wework/
Softbank and JPMorgan should have applied rule #2.
It’s like a money-laundry activity that is used by mobsters to have a justification from money they got from drug traffic, hookers, and gambling.
And like organized crime some of this money was obtained illegally, with tax evasion, bankrupting and so on, and thinking for example what some pharma companies are doing with prices of essential medicine is looking extortion. The only difference with mafia is that while a “picciotto” will kill you using a sawed-off shotgun, these big companies will kill you making impossible to get a cure.
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Of course, Musk is the poster boy of this bullshit: No profits needed as long as speculators want to throw money at a business.
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Wherein lies the flaw with that mindset. Whenever comes time to expand into bigger markets the same competition that they were avoiding will become an issue. One observes this flawed logic all the time in “test markets” such as Canada or Estonia all the time. The reasoning goes — let’s invent here and then expand to US or UK/Germany respectively. Doesn’t work, most of the time.
Thiel can mean what Thiel means, I’m going to go on meaning what I mean.
The other flaw is that being a monopoly on early stages doesn’t mean that other will arrive in the same fields.
The first transistor portable radio was made by Regency in November 1954, Sony made their first one in August 1955.
Some time people are searching a product and are using somewhat lesser alternatives, so the market is empty, but people want the product: think about the electric fridge, before it contraption filled with ice blocks were used or the xerographic copy system. In other case people didn’t think about it, like the Post-it or the microwave oven, or were too costly to be used outside some specialized situation, like the computer or the car. In any case, or the invention was patentable in some key points or alternatives were made when other companies noticed. And in some cases the fact one arrived first in the market didn’t meant they had success.
And sometimes a new market is empty because the product isn’t useful at all or has some flaws that have to be ironed out.
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