31 ms·

The Entire Economy Is MoviePass Now

447 points by jds375 8y ago

xivzgrev 8y ago
Pretty much. Seated was another gravy train. You got a $15 Amazon or Uber gift card just for going to restaurant with a second person. There were no minimums. you just had to show up and had to order food. There was a 2-3 month period where my girlfriend and I were getting good meals for a net $15-$20 total. It was awesome, but I knew it wouldn't last. Then they put in restrictions - to qualify for the $15, you needed at least 4 people or spend $X. It's no longer even a "good" deal, so now I don't use it anymore.
- pmoriarty 8y ago
  I got an even better deal: I cook my own meals, or eat at even cheaper restaurants. I'm also looking in to joining a community garden and growing some of my own food. Amazon restaurant deals are not worth it for me, even with their discounts. But I understand that a certain segment of the population doesn't think much of such an expense, and that's who Amazon is targeting.
  - CabSauce 8y ago
    That sounds like a different product, not a better deal.
austinl 8y ago
Reminds me of VC Fund My Life. It's an index of discounts offered by startups, which you more or less know they're taking a loss on. Clever name. http://www.vcfml.com/ http://www.vcfml.com/
- erentz 8y ago
  That site seems like it’s all fake promotion - e.g. coinbase is on their and last I looked coinbase’s fees were monstrously high compared to Gemini and other exchanges. It’s definitley not saving you anything choosing them.
  - adjkant 8y ago
    $10 on $100 is far more than their fee. If you signed up, bought on Coinbase and sold on GDAX at the same price you'd make $8.51. Small but indeed free money if you know what you're doing.
  - bonestamp2 8y ago
    Agreed, and Gemini is not well known enough... it's basically no fees for most users moving between USD and BTC, and it's legit, based in NYC and follows all of the NY state regulations on crypto.
    - wmf 8y ago
      Gemini recently increased fees to 1% so it's now far more expensive than GDAX.
      - erentz 8y ago
        Wow, that’s insane. I can no longer recommend retail buyers use Gemini if they’re charging 1%. Very disappointing.
        bonestamp2 8y ago
        Guess it's Robinhood then. Free to buy BTC.
        wmf 8y ago
        Note that you can't transfer BTC into or out of Robinhood so you may be stuck if they increase fees in the future.
  - dylz 8y ago
    It is all fake promotion. Virtually every single link, if not every single link is an not-disclosed affiliate/referral link; half of them aren't VC or startups.
- zawerf 8y ago
  Is there a community around this like /r/churning? Preferably sorted by reward to effort ratio (e.g., $20 giftcard for a 5 min referral signup with personalcapital.com that you can just cancel after was pretty good).
andrewjrangel 8y ago
I am curious if this will end with a "bubble-burst" or a slow burn like twitter has experienced. Surely the money has to dry up sometime? It is too bad that none of these companies create any kind of net good for society like a startup that pays you over minimum wage to clean up a park or sort recycling.
- empath75 8y ago
  There will eventually be a pets.com of the tech bubble. Something like Tesla or Uber or Blue Apron going belly up.
  - product50 8y ago
    Blue Apron going belly up won't even create ripples. They are not in the same league as the other 2 companies you mentioned. Just saying..
    - empath75 8y ago
      Pets.com only had 320 employees when its IPO flopped.
      - product50 8y ago
        It is a different era now. Top 6 most valuable companies are all tech now. Blue Apron has laid off more employees in the past year than pets.com had in total.
    - xkjkls 8y ago
      Also, if you look at the bleak bleak picture of Blue Apron's stock price since IPO, them going bankrupt wouldn't even be close to shocking.
  - dragontamer 8y ago
    Pets.com is probably the wrong example from the 90s. Webvan.com is a bit better: hundreds of millions spent on actual warehouses, trucks and more. Pets.com clearly overspent on advertising, but I don't think they risked too many assets on the line. So when Pets.com eventually died, it wasn't a big deal. Its funny, because they had superbowl commercials and huge outreach. But nothing like like Webvan's huge warehouses or fleets of trucks.
nerfhammer 8y ago
thank goodness so many people are smarter than those darn goofy VCs. Businesses competing for customers! It's flagrant hubris. Those Silicon Valley guys who became billionaires doing this still have no idea what they are doing. I am pretty sure they have a big comeuppance due to them.
- Retric 8y ago
  The number of internet only SV companies that regularly pull in 100+ million in actual profit each year and are thus stable billion dollar companies is surprisingly small. The companies that shoot past that into 50+ billion dollar territory are a large part of why SV has so many billionaires.
  - Analemma_ 8y ago
    The number of people who became billionaires through venture capital– as opposed to becoming a VC after you were already independently wealthy through family or another business– is also quite small.
- Apocryphon 8y ago
  Making big money through unsustainable business models is not a sign of healthy capitalism. Remember CDOs?
empath75 8y ago
This dude stole my startup idea: https://news.ycombinator.com/item?id=16945451 https://news.ycombinator.com/item?id=16945451
- bonestamp2 8y ago
  I think he got the idea from bernie madoff. Probably not going to end well. But, maybe you'll break even with the proceeds from the TV movie and mini-series. Try to get that money first though.
- overcast 8y ago
  So how can I invest in this incredible journey?
- jpao79 8y ago
  'MoviePass inspired me to start my $20 bill club where you send me $10/mo and I send you a $20 bill in the mail.' Hey - that just might work - once you've shown enough traction and proven demand for DollarPass monthly membership subscriptions, then you should be able to go to USA.gov and negotiate a bulk pricing on $20 bills at a sig-ni-fi-cant discount. Plus if you had a payment app so the end user could pay for stuff with the $20, you could show the user ads and charge a fee of every transaction. You could also track their GPS location 24/7 and sell that. It's all about leveraging and fully monetizing your captive user base!
- cityzen 8y ago
  Or the old, put an ad in the paper telling you to send me $20 to tell you how to make money. Then I just send you a note that says, "put an ad in the paper telling people to send you $20 and send them this note".
vinhboy 8y ago
> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitely benefitted from many of the opportunities. However, I do spend a considerable amount of time wondering what will happen when this house of cards comes falling down. But you know, I think that for every one person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going.
- protonimitate 8y ago
  Yup. I know things are too good to last, but (for the time being) I am happy to be on the 'winning' side of bad investments. I'm curious what is attracting investors to these start ups in the first place, is it really just the idea that 'this could be the next amazon'? As the article pointed out - Amazon dumped a ton of its money back into the company to expand services. Most of these burn rate services are happy with just getting people signed up and then stagnating.
  - Mahn 8y ago
    > what is attracting investors to these start ups in the first place Growth, basically. As long as you can make a case that your 75 cent dollar store is rapidly accumulating customers, investors will be more than happy to overlook the economics of the business. Sometimes that works out, but I guess at that point it's more like gambling than investing for investors.
- mmt 8y ago
  > But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a regulatory end to the winner-take-all scenario, as a different comment suggested.
  - 8y ago
bmpafa 8y ago
VC bucks creating discounts is about the only form of wealth redistribution we [the U.S.] can count on these days.
- whataretensors 8y ago
  Cryptocurrency seems like another.
  - Apocryphon 8y ago
    Ad earnings from being a YouTube Partner or Twitch streamer!
  - TACIXAT 8y ago
    It allows miners in poorer parts of the world to resell their electricity at massive profit to more wealthy parts of the world.
    - whataretensors 8y ago
      Yes. It also allows for some to get rich. Pump and dumps are also wealth redistribution.
- adventured 8y ago
  Not quite. The US is currently undergoing a renaissance of successful government programs that have massively cut poverty and homelessness over the last 15 years. "Child Poverty Falls to Record Low [nearly a 50% reduction since 1967], Comprehensive Measure Shows Stronger Government Policies Account for Long-Term Improvement" https://www.cbpp.org/research/poverty-and-inequality/child-poverty-falls-to-record-low-comprehensive-measure-shows https://www.cbpp.org/research/poverty-and-inequality/child-p... "The U.S. Social Safety Net Has Improved a Lot. ... Its social safety net is only a couple of percentage points below the OECD total, and larger than that of Canada, Australia and South Korea." "Furthermore, U.S. government transfers have been increasing over time. The U.S. system of taxation and spending has become more progressive during the past two decades. Per-capita government transfers were about $8,567 a person in 2016, up from about $5,371 at the turn of the century (adjusted for inflation) — an increase of 60 percent" "After 16 years of expansions in the safety net under Republican and Democratic presidents alike, the U.S. has a much more robust welfare state than people seem to realize." https://www.bloomberg.com/view/articles/2018-05-16/the-u-s-social-safety-net-has-improved-a-lot https://www.bloomberg.com/view/articles/2018-05-16/the-u-s-s... The National Alliance to End Homelessness, reports that total US homelessness declined by 27% from 2005 to 2017. The drop was from 763,000 to 553,000 for all forms of homelessness (while the US simultaneously added 30 million people to its population). "the rate per 10,000 people is at its lowest value on record." https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness-report/ https://endhomelessness.org/homelessness-in-america/homeless... (their 2013 report which gives figures back to 2005): https://b.3cdn.net/naeh/bb34a7e4cd84ee985c_3vm6r7cjh.pdf https://b.3cdn.net/naeh/bb34a7e4cd84ee985c_3vm6r7cjh.pdf
mabbo 8y ago
> The king of money-losers, of course, is Amazon, which went years without turning a profit. Instead, it plowed billions of dollars back into its business The key difference with Amazon is that Amazon could choose to be profitable at any time- just raise prices ever so slightly, reducing growth in customer demand, and the stop building out its enormous logistics empire and new businesses. Amazon could have had profits for a very long time, but Bezos understands that re-investing money in the company grows the value quickly. Plus, you only pay taxes on profits. MoviePass can't really do that. They don't have potential profits that they can just stop re-investing. They aren't spending money on investments- they just don't have income high enough to cover the costs of their product. And lots of other start-ups have the same problem right now.
- worldsayshi 8y ago
  But MoviePass "could also choose to raise prices ever so slightly". It seems very likely it would not work. What's the categorical difference between the two business models? Guess it's the fact that when MoviePass tries to change prices it will force every user to opt in all over again. Opting in is part of the everyday user interaction for Amazon.
  - Mindwipe 8y ago
    MoviePass doesn't have to raise prices ever so slightly to be a viable business. It has to raise prices by significant integer multiples. (And heck, Amazon don't even need to raise prices, they could be very profitable just by investing in growth less. But their investors are clearly happy with the current state of affairs).
    - walshemj 8y ago
      Not really could just have tiered prices 6.99 for weekdays before 5:30, 9.99 after - and say 12.99 at the weekends/holidays. For example my local VUE in the UK I can get a ticket on Mondays for less than $6 full price is $16 I suspect that its the paying up front for a year when a substantial majority of its customers wont goto the cinema
sp332 8y ago
I misread the author as Kevin Rose, which would have been fitting. https://en.wikipedia.org/wiki/Kevin_Rose#Startups https://en.wikipedia.org/wiki/Kevin_Rose#Startups
deleted 8y ago
[deleted]
Certhas 8y ago
> But it also reflects the willingness of shareholders and deep-pocketed private investors to keep fast-growing upstarts afloat long enough to conquer a potential “winner-take-all” market. That's the gamble. Destroy competition, get lock in, become a monopolist and the free market is your money printing machine. If regulators had teeth to break up such monopolies, we wouldn't be seeing these gambles, and maybe more honest competition.
- dlwdlw 8y ago
  This strategy only works if you can effecticely build new habits that are sticky enough to persist when the friction increases. Even better is if the new behavior has interesting interactions with other things. The reason enterprise tools tend to be “worse” is because the stickiness is arbitrarily enforced instead of being rooted in reality. Uber/lyft are non-sticky because theyre basically the same.
acchow 8y ago
> Over all, 76 percent of the companies that went public last year were unprofitable on a per-share basis How is this the entire economy? I bet if you added the revenues (or market caps) of all those companies together, they would pale in comparison to Apple.
_bxg1 8y ago
I wonder if this is a bubble that's going to burst eventually. With so many ships sinking and so much optimism being for naught, investors might grow tired of the game and stop investing so aggressively, perhaps shifting things too far to the other side of the spectrum.
- adventured 8y ago
  The article implodes when you actually start comparing the scale of what the article is basing itself on to anything else. The US economy will hit $20 trillion in GDP this year. The article is built heavily upon a few dozen IPO listings for just one year. With US business profitability at essentially record highs for all sizes of business, the article is going to comical lengths to present a false headline. If we had 500 unprofitable tech companies pulling an IPO in 2017, that would mean something. 30? That's not even a rounding error in the US economy and it obviously says nothing about the ability of those companies to reach profitability. One year also does not make a trend. The number of unprofitable tech listings in 2015 and 2016 was similar to: 2001, 2005, 2007, 2011, 2013.
  - ryanwaggoner 8y ago
    Looking at the original analysis, it looks like 108 IPOs, where did you get 30? https://site.warrington.ufl.edu/ritter/files/2018/01/IPOs2017Statistics_January17_2018.pdf https://site.warrington.ufl.edu/ritter/files/2018/01/IPOs201...
    - adventured 8y ago
      In that PDF it breaks out the number of tech and biotech IPOs. 66% of the "other" category (ie everything else) reported being profitable. Something the article goes out of its way to not mention. The 30 tech IPOs and the 32 biotech IPOs dramatically tilt the number of unprofitable listings as a percentage. If you only have 108 IPOs and 32 are biotechs, which are almost always unprofitable, you start with an extreme tilt.
    - skinnymuch 8y ago
adventured 8y ago
The entire economy.... Talk about an extreme click-bait headline. Their fraudulent premise is extracted from this single setup: "Over all, 76 percent of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings" There were a whopping 30 tech IPOs in 2017 (tech & biotech IPOs substantially tilt the percentage of unprofitable listings; there has been no change in the number of unprofitable biotech listings, they overwhelmingly tend to be unprofitable across all years). You see, that's the entire economy. By comparison there were 370 tech IPOs in 1999, 12x more. Meanwhile, back in reality, the S&P 500's profits are at record highs. Small business profitability is also booming per the National Federation of Independent Business survey (a survey going back to 1973), which is registering sales & profit growth levels rarely seen in the last five decades. "NFIB: A ‘record level’ of small businesses are growing their profits" https://www.washingtonpost.com/news/on-small-business/wp/2018/05/08/nfib-a-record-level-of-small-businesses-are-growing-their-profits/ https://www.washingtonpost.com/news/on-small-business/wp/201... "Small business profits are at a 45-year high: NFIB survey" https://finance.yahoo.com/video/small-business-profits-45-high-144509636.html https://finance.yahoo.com/video/small-business-profits-45-hi... https://www.bloomberg.com/news/articles/2018-03-13/u-s-small-business-optimism-index-rises-to-highest-since-1983 https://www.bloomberg.com/news/articles/2018-03-13/u-s-small...
- salvar 8y ago
  > The entire economy.... Talk about an extreme click-bait headline. I don't think the headline meant to imply that literally the entire economy is MoviePass.
nraynaud 8y ago
Yeah, I am a bit sad to see those Ofo, limebike, Bird going all out in the streets, they are trying to outspend each other for the winner to raise the price. I just want a sustainable shared transportation system.
- pwinnski 8y ago
  Ofo has been free to use for many months now, at least in Dallas. Are they counting on the competitors to all fold and leave them the sole market owner? Such weird economics!
  - nraynaud 8y ago
    Yeah, here in Scottsdale too, I think they are way bigger and way older than all the others, I guess they have more killing power.
  - pcr0 8y ago
    1. Yep, they're funded by Alibaba and they've been buying out bankrupted bikeshare companies. 2. Alibaba and Tencent both own competing bikeshare services, so it's a cash-burning contest.
Mc_Big_G 8y ago
Buy HNMY @ $0.65 if you have the cajones. If there was ever a case of "be greedy when others are fearful" this is it. There's a good chance you'll lose it all but the potential is there if they can get it right. I like that they're adding more services like a premium for 3D/IMAX and front-row seats.
mearly87 8y ago
I'm curios the impact VC subsiding goods happens on traditional players in industries -- they can't compete because they don't have the luxury of operating at a loss.
osteele 8y ago
DELETED as a misreading of the OP.
- ryanwaggoner 8y ago
  The author's thesis is that all unprofitable business are the same. This is not the author's thesis. The author's thesis appears to be: "An economy full of unprofitable companies has risks." and we should be concerned about the rise of so many unprofitable companies.
dalore 8y ago
Hmm you laugh, but if you could sell dollar bills at $0.75 but you limited the amount any person could buy. And you made them look at advertising, and collected all sorts of personal info on them. You could easily quite a bit of money off them. More then what you lose in selling the dollar bills at a loss.
- theNJR 8y ago
  They did this in the 90s. I remember I had the All Advantage tool bar running at all times and made like $20 a month.
- supertrope 8y ago
  My economics professor auctioned $1. Someone bought it above par.
  - dsr_ 8y ago
    The lesson your class was supposed to learn is that people aren't always rational. Did they? (And did your economics class then go on to assume everyone is perfectly rational and understands their own utility functions, anyway?)
    - sullyj3 8y ago
      Rational doesn't mean valuing every dollar exactly the same. Buying a $1 for more than $1 from an economics professor is funny, maybe a good story, maybe a good keepsake, and plausibly worth more in utility than what they paid.
  - Atheros 8y ago
    Was it a Dollar Auction? Because if so there is a little more nuance than you're implying. https://en.wikipedia.org/wiki/Dollar_auction https://en.wikipedia.org/wiki/Dollar_auction "players are compelled to make an ultimately irrational decision based completely on a sequence of apparently rational choices made throughout the game."
privexpert5 8y ago
This business model makes sense for some products, like Snapchat. Get as many users as possible and maybe eventually the advertising revenue will pay off. Focusing on monetization early makes for successful businesses, but good products happen because they fix or solve a problem --not because they make money.
jonbarker 8y ago
Positive cash flow is actually way more important than profit, although you should have both ideally. If you are running a positive cash flow business with good growth and accurate depreciation numbers on fixed assets, you are in a better position than a profitable microbusiness in a small market. Amazon's breakthrough wasn't realizing this, it was realizing how big the ecommerce market was and how to grow to be able to address the whole market using cash flow to invest. They also used a large pile of investment to get there along the way too. (Four negative cash flow years in their history according to this)): https://realmoney.thestreet.com/articles/08/12/2016/comparing-amazon-then-tesla-now https://realmoney.thestreet.com/articles/08/12/2016/comparin...
acd 8y ago
Central banks are pumping out new money in form debt of close to zero interest rates. This is below market rate interest rates if the market would freely choose the interest rate would be higher. The new money flows to automation in startups that makes processes cheaper. Thus the central banks are not creating inflation through salary inflation they are creating deflation through automation. Robots on average replace 5.7 humans. Software is also a form of automation. Thus the central banks keep printing new money in hope for inflation but the process where the money flows are creating deflation.
- johnvanommen 8y ago
  Interesting. I've long thought that the ZIRP policies of the last ten years had the exact OPPOSITE effect of what was intended. The idea of ZIRP was that the Fed would inflate house prices, and this would keep homeowners from defaulting on their mortgages. But the truth was that many homeowners only "owned" a tiny fraction of their home. Often as little as 5-10% of what they paid for it. So if their home price dropped by even 15%, they were underwater. This created a cascade of defaults. Then gasoline was added to the fire, when the government began to forgive the capital gains of walking away from a home that was underwater. This created a scenario where thousands of people walked away from their homes, and then large hedge funds scooped up thousands of properties for pennies on the dollar. Naturally, prices recovered eventually, but then the former homeowners were now renters, and the rent was prohibitively expensive. To a large degre because the value of the dollar had been devalued to prop up prices in the first place.
Karrot_Kream 8y ago
How do startups that don't network well with VCs survive in this kind of an ecosystem? Doesn't this make VC money the kingmaker to penetrating a market? I'm not sure having to be well-connected enough to be favored by VCs is a good thing in the long run for the economy, but maybe this isn't such a different situation from the pre-VC status quo.
textmode 8y ago
"The fact that Google and Facebook were able to generate such enormous profits and growth does give hope to some companies," Mr. Ritter said. If start-ups can figure out to convert a large user base into paying customers, he added, "it can be enormously profitable." Did Google or Facebook "convert a large user base into paying customers"? Is that what enabled them to "generate such enormous profits"?
blueyes 8y ago
Joel Spolsky addressed this, much more insightfully, in one of his early strategy letters: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-... There are real reasons why companies like MoviePass exist, why companies like Snap lose money, and why investors back them. It's just a land grab where you have to move fast to establish dominance.
- lozenge 8y ago
  Snap I can understand, but MoviePass not. People can easily switch to another subscription.
  - twostorytower 8y ago
    People can easily switch to another social video app, too. Instagram Stories stunted Snap pretty heavily.
  - tlynchpin 8y ago
    People can easily switch, maybe so, but generally they don't. That is one of the reasons subscription revenue is highly prized. Many businesses are sustained on long forgotten subscriptions landing on credit card bills every month.
    - intrasight 8y ago
      This is so true. Less true for me since I have my credit card email me about every transaction, and every time I get one I must decide if I wish to keep that subscription. Here's an idea for a business. Monitor customers credit card transactions for subscriptions, and do bulk negotiation with the service provider to knock down the price based upon how much service the customer is actually using. Take 10% of the savings. Each time one of these subscription payment emails arrives, the user would be shown a few extra buttons: 1. cancel my subscription, 2. Offer service $X/month to keep me as a customer, 3. No change. Just the "one click cancel" would be useful, but the "get me a better price" should be real popular.
eldavido 8y ago
This is such a stupid and uninsightful analysis. You can tell just by the terms they use. A company that isn't profitable isn't necessarily "losing money". Sure the amount of cash on hand can be declining, but if the business is building long-term assets such as a consumer brand, recurring transactions, differentiating IP, etc., that's hardly bad business management. In order to really understand this you have to look company-by-company at what's really going on with the financials. If someone wants to give away for 75 cents something that costs a dollar, sure, that's a fast lane to bankruptcy. But there are tons of other cases, including aggressive new customer expansion, trying to create winner-take-all network effects, development of core IP, etc. that really will create long-term benefits for their owners. Using "profit" as a metric is such bullshit. Ask Amazon. They focused on creating as much free cash flow as they could for two decades, and look where they are now. Why someone would insist a company earn an accounting profit, or even worse, pay cash dividends, in an environment with a sub-2% fed funds rate and near-zero returns on cash to investors is silly. I would much rather have a company with 10-15% return on equity "lose my money" than hand it back as relatively useless cash. tl;dr read Ks and Qs, this stuff isn't amenable to sound bites.
the_cat_kittles 8y ago
so i guess the first thing i think is: where does the money go? i think it mostly goes to employees and contractors of the company, who get paid a lot usually. it doesnt go to the consumers of the product, they just get a better deal on things- not the same as getting money. in movie pass' case, i guess it goes to the theaters? i guess its just interesting to try and pin down where the money ends up going in lots of the these vc backed money losing endeavors. seems like the kind of article pricenomics would do a really good job on- taking 10 or so big money losers that ultimately kicked the bucket, and seeing where the cash all ultimately went.
mrbonner 8y ago
Comparing MoviePass to Amazon is like comparing Michael Scott Paper company and Dunder Mifflin.
rdiddly 8y ago
It's kind of too obvious to even point out, but why act surprised that a company, each of whose customers causes a net loss, gets poorer, faster, as it grows? Spotify, the popular music streaming service based in Sweden, lost $1.5 billion last year, even as [because] it continued to add millions of users. On Tuesday, Helios reported that MoviePass lost $98.3 million in the first quarter," despite adding [because it added] more than a million net subscribers. FTFY.
ghostbrainalpha 8y ago
I think of MoviePass as very similar to Groupon. Their business model eventually eats itself and the growth in unsustainable, but at the end of the day they are still ok. Sure Groupon's stock went from $30 to $5, but the company still exists, and is a solid part of the marketplace.
amelius 8y ago
It's called "predatory pricing", and it's illegal in many places. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
alexchantavy 8y ago
> So, back to the 75 Cent Dollar Store. Are you in? Anyone care to share great examples of these MoviePass-like businesses right now so we can enjoy the savings?
aaron695 8y ago
This is a dumb article. The fact they quote "Slate" should tip you off. For starters many small business do the same, take years to profit, the owner works at a loss if you include their wages and most fail. MoviePass is a brilliant idea. Get people to the movies again in bulk for a moderate increase in the money they pay per month. Cinemas are mostly well below capacity and losing customers with pre owned assets so it's theoretically a brilliant idea. The current implementation seems strange but why do we "WANT" it to fail! It can work for everyone. The real baddies here are the cinemas who won't play ball with MoviePass and give any discounts. This could be great, people go out more, theaters make more money and MoviePass doesn't fail.
cityzen 8y ago
One thing I found interesting is that MoviePass Ventures has started acquiring rights to movies. From an article on IndieWire: Just five days after MoviePass declared that it would acquire films through a new subsidiary, MoviePass Ventures, the company has made good on the promise. Partnering with The Orchard, MPV will share the reported $3 million bill for North American rights to “American Animals,” the first narrative feature from BAFTA and Sundance Grand Jury Prize-winning documentarian Bart Layton (“The Imposter”). A U.S. Dramatic Competition contender at Sundance, “American Animals” premiered there January 19, hours after the MoviePass announcement. Full article: http://www.indiewire.com/2018/01/moviepass-the-orchard-acquisition-american-animals-sundance-1201921511/ http://www.indiewire.com/2018/01/moviepass-the-orchard-acqui... Trailer: https://www.youtube.com/watch?v=SKvPVvy2Kn8 https://www.youtube.com/watch?v=SKvPVvy2Kn8 I saw the trailer for that movie and had to pause it to make sure it said MoviePass. The movie looks like something I'd like and I'm looking forward to seeing it in the theater with MoviePass. I like to see MoviePass movies with MoviePass, dawg. I think the $10/month thing is a marketing stunt. Don't forget they hired Mitch Lowe who was an executive at Netflix and Redbox as CEO in 2016. I would say there's some method to the madness here. They're gaining a lot of insights and a lot of users. I would still pay $10/month even if they limited it to 4-5 movies per month. Also, don't forget about the tech. MoviePass has built out a system that I am still fascinated by where you can check in for a movie and your pre-paid debit card is instantly funded for enough to cover the price of a ticket. I know it's nothing earth shattering but as a nerd I get a little giddy thinking about it whenever I use it. It will be interesting to see how it all plays out. I think they're playing a long game.
pishpash 8y ago
Not every one of the half dozen "MoviePasses" in a given market category can come out on top to dominate (by definition, one -- at most two -- can) but every one is funded/priced like it will. This thing will come crashing down, it's just a matter of time.
candiodari 8y ago
This is why I think we don't have inflation. Very low loans, and for managers personal careers it is actually beneficial to do this. The more of this is done, the more others are forced to do the same. This then results in lower interest rates, which ironically make it cheaper to do this, and results in more below-cost and more capacity, making the problems worse. But in reality many companies are producing/exporting under cost, because it results in cashflow. To "conquer market-share". It also means that at some point interest rates will rise ever-so-slightly and boom the whole thing will stop in a matter of a few months and we'll see 10% inflation in quite a few products and an absolute disaster in the stock and bond markets. But in reality inflation is already here. The money has been printed. Governments have given it to their favorite banks, and financed their own careers ahem I meant government programs with it. Banks have given this in loans to everyone (because governments demanded they do this), and those managers have "invested" it in growth. In reality of course, the vast majority of those managers and governments have no idea how to grow the economy (in fact, according to secular stagnation theory it hasn't really grown, for individuals, since ~1980-1990 depending on where you are in the world). So it's just been invested in unnecessary capacity expansion, making products they have no hope in hell of selling at the normal price, or just outright into financial constructions. These things will have to be paid, and they will have to be paid by the customers. So the cause for price increases has occurred in the past, but people have used loans to stave off the consequences of their decisions on a large scale. So inflation is already here, and done, it's just suddenly it will need to explode.
_nalply 8y ago
> So, back to the 75 Cent Dollar Store. Are you in? Yes, of course. (And thinking: «only as a customer»).
telltruth 8y ago
It’s just basic economics. Let’s say you are CEO of a company. Your CFO informs you that you are going to make $1B in profit this quarter. You will be a fool to leave the money on table and give it back to shareholders. That doesn’t buy you anything. You don’t gain any competitive advantage or significant stock price boost (because market keeps going up anyway). From the eyes of CEO, you are simply throwing away your profit money in to a garbedge bin. Instead, you would take out another billion dollar in credit at tiny interest rates based on your growth. Use all that up in expansions, building moat, acquisitions, long term projects and then show $1B in loss to get full tax credits. Market would love you even more because you are building up expectations for even bigger things to come as well as becoming safer bet by gaining bigger moat. Taking losses and burning cash to aquire customers also makes sense when mountain of cheap investment money and credit lines are easily available. Remember, IPO is the major event for cashing out for most investors. Balance sheets before or after don’t matter too much as long as you can cross that proverbial finish line called IPO. Once that event happens, you take a dip in so-called “river of money” fueled by massive trillion dollar funds like Blackrock (which are in turn fueled by our 401Ks) and all your sins are washed away over night. Current economy and business models wouldn’t make sense to people who are still living in past when money wasn’t cheap and companies were valued for dividends they returned. In a way, new way is actually all good. This is what allows taking on high risk bets. Without these models, we wouldn’t have massive cloud infrastructure built up so fast without worrying about chicken-and-egg problem. We wouldn’t have app based taxies available so fast virtually all of the world without worrying about establishment. We also wouldn’t have such massive investments in AI research without worrying about actual impact. All these stuff simply wouldn’t be possible in 60s and 70s because companies would be reluctant to do investments on such massive scale without being extremely confident and diligent. Most likely these stuff would have gotten killed right away. Hype is good. Cheap money is great.
JansjoFromIkea 8y ago
What exactly happens the entertainment industry when MoviePass fails? When Netflix stop deciding to lose colossal sums of money each year and their competitors get to scale back as a result? When a large number of people don't have enough disposable money to justify paying $10 a month on Patreon to a podcast they can get for free? I do feel like the free movie ticket business in general is a bit of a mad bubble that's gonna burst in a big way. A huge number of people currently going to the cinema seem to be going on things like this instead of directly paying the huge ticket prices themselves. I get free tickets weekly from my health insurance to a cinema that shows stuff I'd never dream of paying to see, you'd have to imagine the chain and distributor are getting some reasonable kind of kickback from each time I go though.
- slivym 8y ago
  It's not really all straight forward though. Whilst it's true that it's cheaper to get a MoviePass for a month than to buy 2 tickets in that month I can't remember the last time I paid full price for a movie ticket anyway. The cinema industry is basically a chaotic experiment in price discrimination. The most successful Cinema is the one that can get the 50 people willing to pay full price to pay it whilst also giving heavy discounts to the other 200 people to make sure the cinema is full.
Shivetya 8y ago
I do not accept putting Amazon and places like Moviepass in the same comparison. I would not even accept Moviepass is comparable to Airbnb/Uber/etc. I never understood the allure of Moviepass to the investor. So basically you want to buy another companies product and resell it to another party and expect the source company to cave to your demands of partnership? What service are you providing and to who? It is similar to all those attempts to deliver groceries but they mostly failed because they were buying from a source who could care less who bought their product at full price as long as they were paid.
ada1981 8y ago
Non-paywalled: http://outline.com/ctYCuP http://outline.com/ctYCuP Perhaps this is the redistribution of wealth we’ve been waiting for. Can I look forward to the AptPass Startup that will pay my rent in Park Slope so they can study my consumption patterns?
organicmultiloc 8y ago
Consumers are wising up to this and just turning the tables on companies, exploiting them for the first reduced month or whatever the unit of service is and then jumping ship immediately. Hey if you want to lose money on the transaction I'm happy to help you out.

447 points by jds375 8y ago

Pretty much. Seated was another gravy train. You got a $15 Amazon or Uber gift card just for going to restaurant with a second person. There were no minimums. you just had to show up and had to order food. There was a 2-3 month period where my girlfriend and I were getting good meals for a net $15-$20 total. It was awesome, but I knew it wouldn't last. Then they put in restrictions - to qualify for the $15, you needed at least 4 people or spend $X. It's no longer even a "good" deal, so now I don't use it anymore.

pmoriarty 8y ago
I got an even better deal: I cook my own meals, or eat at even cheaper restaurants. I'm also looking in to joining a community garden and growing some of my own food. Amazon restaurant deals are not worth it for me, even with their discounts. But I understand that a certain segment of the population doesn't think much of such an expense, and that's who Amazon is targeting.
- CabSauce 8y ago
  That sounds like a different product, not a better deal.

austinl 8y ago

Reminds me of VC Fund My Life. It's an index of discounts offered by startups, which you more or less know they're taking a loss on. Clever name. http://www.vcfml.com/ http://www.vcfml.com/

erentz 8y ago
That site seems like it’s all fake promotion - e.g. coinbase is on their and last I looked coinbase’s fees were monstrously high compared to Gemini and other exchanges. It’s definitley not saving you anything choosing them.
- adjkant 8y ago
  $10 on $100 is far more than their fee. If you signed up, bought on Coinbase and sold on GDAX at the same price you'd make $8.51. Small but indeed free money if you know what you're doing.
- bonestamp2 8y ago
  Agreed, and Gemini is not well known enough... it's basically no fees for most users moving between USD and BTC, and it's legit, based in NYC and follows all of the NY state regulations on crypto.
  - wmf 8y ago
    Gemini recently increased fees to 1% so it's now far more expensive than GDAX.
    - erentz 8y ago
      Wow, that’s insane. I can no longer recommend retail buyers use Gemini if they’re charging 1%. Very disappointing.
      - bonestamp2 8y ago
        Guess it's Robinhood then. Free to buy BTC.
        wmf 8y ago
        Note that you can't transfer BTC into or out of Robinhood so you may be stuck if they increase fees in the future.
- dylz 8y ago
  It is all fake promotion. Virtually every single link, if not every single link is an not-disclosed affiliate/referral link; half of them aren't VC or startups.
zawerf 8y ago
Is there a community around this like /r/churning? Preferably sorted by reward to effort ratio (e.g., $20 giftcard for a 5 min referral signup with personalcapital.com that you can just cancel after was pretty good).

andrewjrangel 8y ago

I am curious if this will end with a "bubble-burst" or a slow burn like twitter has experienced. Surely the money has to dry up sometime? It is too bad that none of these companies create any kind of net good for society like a startup that pays you over minimum wage to clean up a park or sort recycling.

empath75 8y ago
There will eventually be a pets.com of the tech bubble. Something like Tesla or Uber or Blue Apron going belly up.
- product50 8y ago
  Blue Apron going belly up won't even create ripples. They are not in the same league as the other 2 companies you mentioned. Just saying..
  - empath75 8y ago
    Pets.com only had 320 employees when its IPO flopped.
    - product50 8y ago
      It is a different era now. Top 6 most valuable companies are all tech now. Blue Apron has laid off more employees in the past year than pets.com had in total.
  - xkjkls 8y ago
    Also, if you look at the bleak bleak picture of Blue Apron's stock price since IPO, them going bankrupt wouldn't even be close to shocking.
- dragontamer 8y ago
  Pets.com is probably the wrong example from the 90s. Webvan.com is a bit better: hundreds of millions spent on actual warehouses, trucks and more. Pets.com clearly overspent on advertising, but I don't think they risked too many assets on the line. So when Pets.com eventually died, it wasn't a big deal. Its funny, because they had superbowl commercials and huge outreach. But nothing like like Webvan's huge warehouses or fleets of trucks.

nerfhammer 8y ago

thank goodness so many people are smarter than those darn goofy VCs. Businesses competing for customers! It's flagrant hubris. Those Silicon Valley guys who became billionaires doing this still have no idea what they are doing. I am pretty sure they have a big comeuppance due to them.

Retric 8y ago
The number of internet only SV companies that regularly pull in 100+ million in actual profit each year and are thus stable billion dollar companies is surprisingly small. The companies that shoot past that into 50+ billion dollar territory are a large part of why SV has so many billionaires.
- Analemma_ 8y ago
  The number of people who became billionaires through venture capital– as opposed to becoming a VC after you were already independently wealthy through family or another business– is also quite small.
Apocryphon 8y ago
Making big money through unsustainable business models is not a sign of healthy capitalism. Remember CDOs?

empath75 8y ago

This dude stole my startup idea: https://news.ycombinator.com/item?id=16945451 https://news.ycombinator.com/item?id=16945451

bonestamp2 8y ago
I think he got the idea from bernie madoff. Probably not going to end well. But, maybe you'll break even with the proceeds from the TV movie and mini-series. Try to get that money first though.
overcast 8y ago
So how can I invest in this incredible journey?
jpao79 8y ago
'MoviePass inspired me to start my $20 bill club where you send me $10/mo and I send you a $20 bill in the mail.' Hey - that just might work - once you've shown enough traction and proven demand for DollarPass monthly membership subscriptions, then you should be able to go to USA.gov and negotiate a bulk pricing on $20 bills at a sig-ni-fi-cant discount. Plus if you had a payment app so the end user could pay for stuff with the $20, you could show the user ads and charge a fee of every transaction. You could also track their GPS location 24/7 and sell that. It's all about leveraging and fully monetizing your captive user base!
cityzen 8y ago
Or the old, put an ad in the paper telling you to send me $20 to tell you how to make money. Then I just send you a note that says, "put an ad in the paper telling people to send you $20 and send them this note".

vinhboy 8y ago

> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitely benefitted from many of the opportunities. However, I do spend a considerable amount of time wondering what will happen when this house of cards comes falling down. But you know, I think that for every one person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going.

protonimitate 8y ago
Yup. I know things are too good to last, but (for the time being) I am happy to be on the 'winning' side of bad investments. I'm curious what is attracting investors to these start ups in the first place, is it really just the idea that 'this could be the next amazon'? As the article pointed out - Amazon dumped a ton of its money back into the company to expand services. Most of these burn rate services are happy with just getting people signed up and then stagnating.
- Mahn 8y ago
  > what is attracting investors to these start ups in the first place Growth, basically. As long as you can make a case that your 75 cent dollar store is rapidly accumulating customers, investors will be more than happy to overlook the economics of the business. Sometimes that works out, but I guess at that point it's more like gambling than investing for investors.
mmt 8y ago
> But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a regulatory end to the winner-take-all scenario, as a different comment suggested.
- 8y ago

bmpafa 8y ago

VC bucks creating discounts is about the only form of wealth redistribution we [the U.S.] can count on these days.

whataretensors 8y ago
Cryptocurrency seems like another.
- Apocryphon 8y ago
  Ad earnings from being a YouTube Partner or Twitch streamer!
- TACIXAT 8y ago
  It allows miners in poorer parts of the world to resell their electricity at massive profit to more wealthy parts of the world.
  - whataretensors 8y ago
    Yes. It also allows for some to get rich. Pump and dumps are also wealth redistribution.
adventured 8y ago
Not quite. The US is currently undergoing a renaissance of successful government programs that have massively cut poverty and homelessness over the last 15 years. "Child Poverty Falls to Record Low [nearly a 50% reduction since 1967], Comprehensive Measure Shows Stronger Government Policies Account for Long-Term Improvement" https://www.cbpp.org/research/poverty-and-inequality/child-poverty-falls-to-record-low-comprehensive-measure-shows https://www.cbpp.org/research/poverty-and-inequality/child-p... "The U.S. Social Safety Net Has Improved a Lot. ... Its social safety net is only a couple of percentage points below the OECD total, and larger than that of Canada, Australia and South Korea." "Furthermore, U.S. government transfers have been increasing over time. The U.S. system of taxation and spending has become more progressive during the past two decades. Per-capita government transfers were about $8,567 a person in 2016, up from about $5,371 at the turn of the century (adjusted for inflation) — an increase of 60 percent" "After 16 years of expansions in the safety net under Republican and Democratic presidents alike, the U.S. has a much more robust welfare state than people seem to realize." https://www.bloomberg.com/view/articles/2018-05-16/the-u-s-social-safety-net-has-improved-a-lot https://www.bloomberg.com/view/articles/2018-05-16/the-u-s-s... The National Alliance to End Homelessness, reports that total US homelessness declined by 27% from 2005 to 2017. The drop was from 763,000 to 553,000 for all forms of homelessness (while the US simultaneously added 30 million people to its population). "the rate per 10,000 people is at its lowest value on record." https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness-report/ https://endhomelessness.org/homelessness-in-america/homeless... (their 2013 report which gives figures back to 2005): https://b.3cdn.net/naeh/bb34a7e4cd84ee985c_3vm6r7cjh.pdf https://b.3cdn.net/naeh/bb34a7e4cd84ee985c_3vm6r7cjh.pdf

mabbo 8y ago

> The king of money-losers, of course, is Amazon, which went years without turning a profit. Instead, it plowed billions of dollars back into its business The key difference with Amazon is that Amazon could choose to be profitable at any time- just raise prices ever so slightly, reducing growth in customer demand, and the stop building out its enormous logistics empire and new businesses. Amazon could have had profits for a very long time, but Bezos understands that re-investing money in the company grows the value quickly. Plus, you only pay taxes on profits. MoviePass can't really do that. They don't have potential profits that they can just stop re-investing. They aren't spending money on investments- they just don't have income high enough to cover the costs of their product. And lots of other start-ups have the same problem right now.

worldsayshi 8y ago
But MoviePass "could also choose to raise prices ever so slightly". It seems very likely it would not work. What's the categorical difference between the two business models? Guess it's the fact that when MoviePass tries to change prices it will force every user to opt in all over again. Opting in is part of the everyday user interaction for Amazon.
- Mindwipe 8y ago
  MoviePass doesn't have to raise prices ever so slightly to be a viable business. It has to raise prices by significant integer multiples. (And heck, Amazon don't even need to raise prices, they could be very profitable just by investing in growth less. But their investors are clearly happy with the current state of affairs).
  - walshemj 8y ago
    Not really could just have tiered prices 6.99 for weekdays before 5:30, 9.99 after - and say 12.99 at the weekends/holidays. For example my local VUE in the UK I can get a ticket on Mondays for less than $6 full price is $16 I suspect that its the paying up front for a year when a substantial majority of its customers wont goto the cinema

sp332 8y ago

I misread the author as Kevin Rose, which would have been fitting. https://en.wikipedia.org/wiki/Kevin_Rose#Startups https://en.wikipedia.org/wiki/Kevin_Rose#Startups

deleted 8y ago

[deleted]

Certhas 8y ago

> But it also reflects the willingness of shareholders and deep-pocketed private investors to keep fast-growing upstarts afloat long enough to conquer a potential “winner-take-all” market. That's the gamble. Destroy competition, get lock in, become a monopolist and the free market is your money printing machine. If regulators had teeth to break up such monopolies, we wouldn't be seeing these gambles, and maybe more honest competition.

dlwdlw 8y ago
This strategy only works if you can effecticely build new habits that are sticky enough to persist when the friction increases. Even better is if the new behavior has interesting interactions with other things. The reason enterprise tools tend to be “worse” is because the stickiness is arbitrarily enforced instead of being rooted in reality. Uber/lyft are non-sticky because theyre basically the same.

acchow 8y ago

> Over all, 76 percent of the companies that went public last year were unprofitable on a per-share basis How is this the entire economy? I bet if you added the revenues (or market caps) of all those companies together, they would pale in comparison to Apple.

_bxg1 8y ago

I wonder if this is a bubble that's going to burst eventually. With so many ships sinking and so much optimism being for naught, investors might grow tired of the game and stop investing so aggressively, perhaps shifting things too far to the other side of the spectrum.

adventured 8y ago
The article implodes when you actually start comparing the scale of what the article is basing itself on to anything else. The US economy will hit $20 trillion in GDP this year. The article is built heavily upon a few dozen IPO listings for just one year. With US business profitability at essentially record highs for all sizes of business, the article is going to comical lengths to present a false headline. If we had 500 unprofitable tech companies pulling an IPO in 2017, that would mean something. 30? That's not even a rounding error in the US economy and it obviously says nothing about the ability of those companies to reach profitability. One year also does not make a trend. The number of unprofitable tech listings in 2015 and 2016 was similar to: 2001, 2005, 2007, 2011, 2013.
- ryanwaggoner 8y ago
  Looking at the original analysis, it looks like 108 IPOs, where did you get 30? https://site.warrington.ufl.edu/ritter/files/2018/01/IPOs2017Statistics_January17_2018.pdf https://site.warrington.ufl.edu/ritter/files/2018/01/IPOs201...
  - adventured 8y ago
    In that PDF it breaks out the number of tech and biotech IPOs. 66% of the "other" category (ie everything else) reported being profitable. Something the article goes out of its way to not mention. The 30 tech IPOs and the 32 biotech IPOs dramatically tilt the number of unprofitable listings as a percentage. If you only have 108 IPOs and 32 are biotechs, which are almost always unprofitable, you start with an extreme tilt.
  - skinnymuch 8y ago

adventured 8y ago

The entire economy.... Talk about an extreme click-bait headline. Their fraudulent premise is extracted from this single setup: "Over all, 76 percent of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings" There were a whopping 30 tech IPOs in 2017 (tech & biotech IPOs substantially tilt the percentage of unprofitable listings; there has been no change in the number of unprofitable biotech listings, they overwhelmingly tend to be unprofitable across all years). You see, that's the entire economy. By comparison there were 370 tech IPOs in 1999, 12x more. Meanwhile, back in reality, the S&P 500's profits are at record highs. Small business profitability is also booming per the National Federation of Independent Business survey (a survey going back to 1973), which is registering sales & profit growth levels rarely seen in the last five decades. "NFIB: A ‘record level’ of small businesses are growing their profits" https://www.washingtonpost.com/news/on-small-business/wp/2018/05/08/nfib-a-record-level-of-small-businesses-are-growing-their-profits/ https://www.washingtonpost.com/news/on-small-business/wp/201... "Small business profits are at a 45-year high: NFIB survey" https://finance.yahoo.com/video/small-business-profits-45-high-144509636.html https://finance.yahoo.com/video/small-business-profits-45-hi... https://www.bloomberg.com/news/articles/2018-03-13/u-s-small-business-optimism-index-rises-to-highest-since-1983 https://www.bloomberg.com/news/articles/2018-03-13/u-s-small...

salvar 8y ago
> The entire economy.... Talk about an extreme click-bait headline. I don't think the headline meant to imply that literally the entire economy is MoviePass.

nraynaud 8y ago

Yeah, I am a bit sad to see those Ofo, limebike, Bird going all out in the streets, they are trying to outspend each other for the winner to raise the price. I just want a sustainable shared transportation system.

pwinnski 8y ago
Ofo has been free to use for many months now, at least in Dallas. Are they counting on the competitors to all fold and leave them the sole market owner? Such weird economics!
- nraynaud 8y ago
  Yeah, here in Scottsdale too, I think they are way bigger and way older than all the others, I guess they have more killing power.
- pcr0 8y ago
  1. Yep, they're funded by Alibaba and they've been buying out bankrupted bikeshare companies. 2. Alibaba and Tencent both own competing bikeshare services, so it's a cash-burning contest.

Mc_Big_G 8y ago

Buy HNMY @ $0.65 if you have the cajones. If there was ever a case of "be greedy when others are fearful" this is it. There's a good chance you'll lose it all but the potential is there if they can get it right. I like that they're adding more services like a premium for 3D/IMAX and front-row seats.

mearly87 8y ago

I'm curios the impact VC subsiding goods happens on traditional players in industries -- they can't compete because they don't have the luxury of operating at a loss.

osteele 8y ago

DELETED as a misreading of the OP.

ryanwaggoner 8y ago
The author's thesis is that all unprofitable business are the same. This is not the author's thesis. The author's thesis appears to be: "An economy full of unprofitable companies has risks." and we should be concerned about the rise of so many unprofitable companies.

dalore 8y ago

Hmm you laugh, but if you could sell dollar bills at $0.75 but you limited the amount any person could buy. And you made them look at advertising, and collected all sorts of personal info on them. You could easily quite a bit of money off them. More then what you lose in selling the dollar bills at a loss.

theNJR 8y ago
They did this in the 90s. I remember I had the All Advantage tool bar running at all times and made like $20 a month.
supertrope 8y ago
My economics professor auctioned $1. Someone bought it above par.
- dsr_ 8y ago
  The lesson your class was supposed to learn is that people aren't always rational. Did they? (And did your economics class then go on to assume everyone is perfectly rational and understands their own utility functions, anyway?)
  - sullyj3 8y ago
    Rational doesn't mean valuing every dollar exactly the same. Buying a $1 for more than $1 from an economics professor is funny, maybe a good story, maybe a good keepsake, and plausibly worth more in utility than what they paid.
- Atheros 8y ago
  Was it a Dollar Auction? Because if so there is a little more nuance than you're implying. https://en.wikipedia.org/wiki/Dollar_auction https://en.wikipedia.org/wiki/Dollar_auction "players are compelled to make an ultimately irrational decision based completely on a sequence of apparently rational choices made throughout the game."

privexpert5 8y ago

This business model makes sense for some products, like Snapchat. Get as many users as possible and maybe eventually the advertising revenue will pay off. Focusing on monetization early makes for successful businesses, but good products happen because they fix or solve a problem --not because they make money.

jonbarker 8y ago

Positive cash flow is actually way more important than profit, although you should have both ideally. If you are running a positive cash flow business with good growth and accurate depreciation numbers on fixed assets, you are in a better position than a profitable microbusiness in a small market. Amazon's breakthrough wasn't realizing this, it was realizing how big the ecommerce market was and how to grow to be able to address the whole market using cash flow to invest. They also used a large pile of investment to get there along the way too. (Four negative cash flow years in their history according to this)): https://realmoney.thestreet.com/articles/08/12/2016/comparing-amazon-then-tesla-now https://realmoney.thestreet.com/articles/08/12/2016/comparin...

acd 8y ago

Central banks are pumping out new money in form debt of close to zero interest rates. This is below market rate interest rates if the market would freely choose the interest rate would be higher. The new money flows to automation in startups that makes processes cheaper. Thus the central banks are not creating inflation through salary inflation they are creating deflation through automation. Robots on average replace 5.7 humans. Software is also a form of automation. Thus the central banks keep printing new money in hope for inflation but the process where the money flows are creating deflation.

johnvanommen 8y ago
Interesting. I've long thought that the ZIRP policies of the last ten years had the exact OPPOSITE effect of what was intended. The idea of ZIRP was that the Fed would inflate house prices, and this would keep homeowners from defaulting on their mortgages. But the truth was that many homeowners only "owned" a tiny fraction of their home. Often as little as 5-10% of what they paid for it. So if their home price dropped by even 15%, they were underwater. This created a cascade of defaults. Then gasoline was added to the fire, when the government began to forgive the capital gains of walking away from a home that was underwater. This created a scenario where thousands of people walked away from their homes, and then large hedge funds scooped up thousands of properties for pennies on the dollar. Naturally, prices recovered eventually, but then the former homeowners were now renters, and the rent was prohibitively expensive. To a large degre because the value of the dollar had been devalued to prop up prices in the first place.

Karrot_Kream 8y ago

How do startups that don't network well with VCs survive in this kind of an ecosystem? Doesn't this make VC money the kingmaker to penetrating a market? I'm not sure having to be well-connected enough to be favored by VCs is a good thing in the long run for the economy, but maybe this isn't such a different situation from the pre-VC status quo.

textmode 8y ago

"The fact that Google and Facebook were able to generate such enormous profits and growth does give hope to some companies," Mr. Ritter said. If start-ups can figure out to convert a large user base into paying customers, he added, "it can be enormously profitable." Did Google or Facebook "convert a large user base into paying customers"? Is that what enabled them to "generate such enormous profits"?

blueyes 8y ago

Joel Spolsky addressed this, much more insightfully, in one of his early strategy letters: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-... There are real reasons why companies like MoviePass exist, why companies like Snap lose money, and why investors back them. It's just a land grab where you have to move fast to establish dominance.

lozenge 8y ago
Snap I can understand, but MoviePass not. People can easily switch to another subscription.
- twostorytower 8y ago
  People can easily switch to another social video app, too. Instagram Stories stunted Snap pretty heavily.
- tlynchpin 8y ago
  People can easily switch, maybe so, but generally they don't. That is one of the reasons subscription revenue is highly prized. Many businesses are sustained on long forgotten subscriptions landing on credit card bills every month.
  - intrasight 8y ago
    This is so true. Less true for me since I have my credit card email me about every transaction, and every time I get one I must decide if I wish to keep that subscription. Here's an idea for a business. Monitor customers credit card transactions for subscriptions, and do bulk negotiation with the service provider to knock down the price based upon how much service the customer is actually using. Take 10% of the savings. Each time one of these subscription payment emails arrives, the user would be shown a few extra buttons: 1. cancel my subscription, 2. Offer service $X/month to keep me as a customer, 3. No change. Just the "one click cancel" would be useful, but the "get me a better price" should be real popular.

eldavido 8y ago

This is such a stupid and uninsightful analysis. You can tell just by the terms they use. A company that isn't profitable isn't necessarily "losing money". Sure the amount of cash on hand can be declining, but if the business is building long-term assets such as a consumer brand, recurring transactions, differentiating IP, etc., that's hardly bad business management. In order to really understand this you have to look company-by-company at what's really going on with the financials. If someone wants to give away for 75 cents something that costs a dollar, sure, that's a fast lane to bankruptcy. But there are tons of other cases, including aggressive new customer expansion, trying to create winner-take-all network effects, development of core IP, etc. that really will create long-term benefits for their owners. Using "profit" as a metric is such bullshit. Ask Amazon. They focused on creating as much free cash flow as they could for two decades, and look where they are now. Why someone would insist a company earn an accounting profit, or even worse, pay cash dividends, in an environment with a sub-2% fed funds rate and near-zero returns on cash to investors is silly. I would much rather have a company with 10-15% return on equity "lose my money" than hand it back as relatively useless cash. tl;dr read Ks and Qs, this stuff isn't amenable to sound bites.

the_cat_kittles 8y ago

so i guess the first thing i think is: where does the money go? i think it mostly goes to employees and contractors of the company, who get paid a lot usually. it doesnt go to the consumers of the product, they just get a better deal on things- not the same as getting money. in movie pass' case, i guess it goes to the theaters? i guess its just interesting to try and pin down where the money ends up going in lots of the these vc backed money losing endeavors. seems like the kind of article pricenomics would do a really good job on- taking 10 or so big money losers that ultimately kicked the bucket, and seeing where the cash all ultimately went.

mrbonner 8y ago

Comparing MoviePass to Amazon is like comparing Michael Scott Paper company and Dunder Mifflin.

rdiddly 8y ago

It's kind of too obvious to even point out, but why act surprised that a company, each of whose customers causes a net loss, gets poorer, faster, as it grows? Spotify, the popular music streaming service based in Sweden, lost $1.5 billion last year, even as [because] it continued to add millions of users. On Tuesday, Helios reported that MoviePass lost $98.3 million in the first quarter," despite adding [because it added] more than a million net subscribers. FTFY.

ghostbrainalpha 8y ago

I think of MoviePass as very similar to Groupon. Their business model eventually eats itself and the growth in unsustainable, but at the end of the day they are still ok. Sure Groupon's stock went from $30 to $5, but the company still exists, and is a solid part of the marketplace.

amelius 8y ago

It's called "predatory pricing", and it's illegal in many places. https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing

alexchantavy 8y ago

> So, back to the 75 Cent Dollar Store. Are you in? Anyone care to share great examples of these MoviePass-like businesses right now so we can enjoy the savings?

aaron695 8y ago

This is a dumb article. The fact they quote "Slate" should tip you off. For starters many small business do the same, take years to profit, the owner works at a loss if you include their wages and most fail. MoviePass is a brilliant idea. Get people to the movies again in bulk for a moderate increase in the money they pay per month. Cinemas are mostly well below capacity and losing customers with pre owned assets so it's theoretically a brilliant idea. The current implementation seems strange but why do we "WANT" it to fail! It can work for everyone. The real baddies here are the cinemas who won't play ball with MoviePass and give any discounts. This could be great, people go out more, theaters make more money and MoviePass doesn't fail.

cityzen 8y ago

One thing I found interesting is that MoviePass Ventures has started acquiring rights to movies. From an article on IndieWire: Just five days after MoviePass declared that it would acquire films through a new subsidiary, MoviePass Ventures, the company has made good on the promise. Partnering with The Orchard, MPV will share the reported $3 million bill for North American rights to “American Animals,” the first narrative feature from BAFTA and Sundance Grand Jury Prize-winning documentarian Bart Layton (“The Imposter”). A U.S. Dramatic Competition contender at Sundance, “American Animals” premiered there January 19, hours after the MoviePass announcement. Full article: http://www.indiewire.com/2018/01/moviepass-the-orchard-acquisition-american-animals-sundance-1201921511/ http://www.indiewire.com/2018/01/moviepass-the-orchard-acqui... Trailer: https://www.youtube.com/watch?v=SKvPVvy2Kn8 https://www.youtube.com/watch?v=SKvPVvy2Kn8 I saw the trailer for that movie and had to pause it to make sure it said MoviePass. The movie looks like something I'd like and I'm looking forward to seeing it in the theater with MoviePass. I like to see MoviePass movies with MoviePass, dawg. I think the $10/month thing is a marketing stunt. Don't forget they hired Mitch Lowe who was an executive at Netflix and Redbox as CEO in 2016. I would say there's some method to the madness here. They're gaining a lot of insights and a lot of users. I would still pay $10/month even if they limited it to 4-5 movies per month. Also, don't forget about the tech. MoviePass has built out a system that I am still fascinated by where you can check in for a movie and your pre-paid debit card is instantly funded for enough to cover the price of a ticket. I know it's nothing earth shattering but as a nerd I get a little giddy thinking about it whenever I use it. It will be interesting to see how it all plays out. I think they're playing a long game.

pishpash 8y ago

Not every one of the half dozen "MoviePasses" in a given market category can come out on top to dominate (by definition, one -- at most two -- can) but every one is funded/priced like it will. This thing will come crashing down, it's just a matter of time.

candiodari 8y ago

This is why I think we don't have inflation. Very low loans, and for managers personal careers it is actually beneficial to do this. The more of this is done, the more others are forced to do the same. This then results in lower interest rates, which ironically make it cheaper to do this, and results in more below-cost and more capacity, making the problems worse. But in reality many companies are producing/exporting under cost, because it results in cashflow. To "conquer market-share". It also means that at some point interest rates will rise ever-so-slightly and boom the whole thing will stop in a matter of a few months and we'll see 10% inflation in quite a few products and an absolute disaster in the stock and bond markets. But in reality inflation is already here. The money has been printed. Governments have given it to their favorite banks, and financed their own careers ahem I meant government programs with it. Banks have given this in loans to everyone (because governments demanded they do this), and those managers have "invested" it in growth. In reality of course, the vast majority of those managers and governments have no idea how to grow the economy (in fact, according to secular stagnation theory it hasn't really grown, for individuals, since ~1980-1990 depending on where you are in the world). So it's just been invested in unnecessary capacity expansion, making products they have no hope in hell of selling at the normal price, or just outright into financial constructions. These things will have to be paid, and they will have to be paid by the customers. So the cause for price increases has occurred in the past, but people have used loans to stave off the consequences of their decisions on a large scale. So inflation is already here, and done, it's just suddenly it will need to explode.

_nalply 8y ago

> So, back to the 75 Cent Dollar Store. Are you in? Yes, of course. (And thinking: «only as a customer»).

telltruth 8y ago

It’s just basic economics. Let’s say you are CEO of a company. Your CFO informs you that you are going to make $1B in profit this quarter. You will be a fool to leave the money on table and give it back to shareholders. That doesn’t buy you anything. You don’t gain any competitive advantage or significant stock price boost (because market keeps going up anyway). From the eyes of CEO, you are simply throwing away your profit money in to a garbedge bin. Instead, you would take out another billion dollar in credit at tiny interest rates based on your growth. Use all that up in expansions, building moat, acquisitions, long term projects and then show $1B in loss to get full tax credits. Market would love you even more because you are building up expectations for even bigger things to come as well as becoming safer bet by gaining bigger moat. Taking losses and burning cash to aquire customers also makes sense when mountain of cheap investment money and credit lines are easily available. Remember, IPO is the major event for cashing out for most investors. Balance sheets before or after don’t matter too much as long as you can cross that proverbial finish line called IPO. Once that event happens, you take a dip in so-called “river of money” fueled by massive trillion dollar funds like Blackrock (which are in turn fueled by our 401Ks) and all your sins are washed away over night. Current economy and business models wouldn’t make sense to people who are still living in past when money wasn’t cheap and companies were valued for dividends they returned. In a way, new way is actually all good. This is what allows taking on high risk bets. Without these models, we wouldn’t have massive cloud infrastructure built up so fast without worrying about chicken-and-egg problem. We wouldn’t have app based taxies available so fast virtually all of the world without worrying about establishment. We also wouldn’t have such massive investments in AI research without worrying about actual impact. All these stuff simply wouldn’t be possible in 60s and 70s because companies would be reluctant to do investments on such massive scale without being extremely confident and diligent. Most likely these stuff would have gotten killed right away. Hype is good. Cheap money is great.

JansjoFromIkea 8y ago

What exactly happens the entertainment industry when MoviePass fails? When Netflix stop deciding to lose colossal sums of money each year and their competitors get to scale back as a result? When a large number of people don't have enough disposable money to justify paying $10 a month on Patreon to a podcast they can get for free? I do feel like the free movie ticket business in general is a bit of a mad bubble that's gonna burst in a big way. A huge number of people currently going to the cinema seem to be going on things like this instead of directly paying the huge ticket prices themselves. I get free tickets weekly from my health insurance to a cinema that shows stuff I'd never dream of paying to see, you'd have to imagine the chain and distributor are getting some reasonable kind of kickback from each time I go though.

slivym 8y ago
It's not really all straight forward though. Whilst it's true that it's cheaper to get a MoviePass for a month than to buy 2 tickets in that month I can't remember the last time I paid full price for a movie ticket anyway. The cinema industry is basically a chaotic experiment in price discrimination. The most successful Cinema is the one that can get the 50 people willing to pay full price to pay it whilst also giving heavy discounts to the other 200 people to make sure the cinema is full.

Shivetya 8y ago

I do not accept putting Amazon and places like Moviepass in the same comparison. I would not even accept Moviepass is comparable to Airbnb/Uber/etc. I never understood the allure of Moviepass to the investor. So basically you want to buy another companies product and resell it to another party and expect the source company to cave to your demands of partnership? What service are you providing and to who? It is similar to all those attempts to deliver groceries but they mostly failed because they were buying from a source who could care less who bought their product at full price as long as they were paid.

ada1981 8y ago

Non-paywalled: http://outline.com/ctYCuP http://outline.com/ctYCuP Perhaps this is the redistribution of wealth we’ve been waiting for. Can I look forward to the AptPass Startup that will pay my rent in Park Slope so they can study my consumption patterns?

organicmultiloc 8y ago

Consumers are wising up to this and just turning the tables on companies, exploiting them for the first reduced month or whatever the unit of service is and then jumping ship immediately. Hey if you want to lose money on the transaction I'm happy to help you out.