4 ms·

In today's environment, it's better to be one of the "hot" companies with presumably poor unit economics. Otherwise, your competition will out-market and out-s

In today's environment, it's better to be one of the "hot" companies with presumably poor unit economics. Otherwise, your competition will out-market and out-sell you every month simply by spending more money.

vinceguidry 11y ago
If you can achieve profitability, then you could presumably wait for your competitors' business models to fail and then rake it in when all their customers have to migrate. They pay all the costs to build up your customer base then go away.
- deleted 11y ago
  [deleted]
- nemothekid 11y ago
  >then you could presumably wait for your competitors' business models to fail Isn't that essentially playing the market? You might be waiting until the bubble bursts - which puts you in the same position as everyone else trying to short this bubble thats supposed to pop any day now. And even if you are profitable now, the effects of a bubble doesn't mean you will be profitable afterwards.
  - vinceguidry 11y ago
    The market is not a company. If you're playing anyone, it's your competitors. Understanding your competitors is much easier than understanding the market. Actually running a business in the space makes you much more familiar with the unit economics of it. If the market fails, that is, if people decide they no longer wants the service you're both offering, then you're both hosed. If you feel there's a bubble, that is, if you feel that demand for a product / service is going to eventually collapse, then the rational response is to get out of that market, assuming your position is liquid enough to do that, and invest in asset classes that will do well if and when the market collapses. You don't start taking short positions unless you have specific reason to believe a specific company isn't looking good. Otherwise volatility could cause you to lose a lot of money in a very short period of time. Also, you can't short a whole market, you can only bet against it.
zeckalpha 11y ago
Or find an underserved market, such that you will not have competition that can out-market and out-sell you.

vinceguidry 11y ago

If you can achieve profitability, then you could presumably wait for your competitors' business models to fail and then rake it in when all their customers have to migrate. They pay all the costs to build up your customer base then go away.

deleted 11y ago
[deleted]
nemothekid 11y ago
>then you could presumably wait for your competitors' business models to fail Isn't that essentially playing the market? You might be waiting until the bubble bursts - which puts you in the same position as everyone else trying to short this bubble thats supposed to pop any day now. And even if you are profitable now, the effects of a bubble doesn't mean you will be profitable afterwards.
- vinceguidry 11y ago
  The market is not a company. If you're playing anyone, it's your competitors. Understanding your competitors is much easier than understanding the market. Actually running a business in the space makes you much more familiar with the unit economics of it. If the market fails, that is, if people decide they no longer wants the service you're both offering, then you're both hosed. If you feel there's a bubble, that is, if you feel that demand for a product / service is going to eventually collapse, then the rational response is to get out of that market, assuming your position is liquid enough to do that, and invest in asset classes that will do well if and when the market collapses. You don't start taking short positions unless you have specific reason to believe a specific company isn't looking good. Otherwise volatility could cause you to lose a lot of money in a very short period of time. Also, you can't short a whole market, you can only bet against it.

zeckalpha 11y ago

Or find an underserved market, such that you will not have competition that can out-market and out-sell you.