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> "The race isn't to maximize profits, it's to survive the inevitable deflationary spiral in prices as competitors are forced to pass along cost savings to cust

• human20190310 7y ago
  Maybe. If Uber and Lyft both ride their excellent technologies down to penny-stock share prices, because even good technology just barely keeps companies in business, then anyone who expected to profit from their success might be disappointed.
  • freyr 7y ago
    Allow me to present the world’s smallest violin. We’ve forgotten what “good technology” means.
    • human20190310 7y ago
      Uber and Lyft both work pretty well from the customer's perspective.
      • mamon 7y ago
        But they work pretty bad from their shareholders perspective since they generate loss on every ride. Even if they avoid all the legal landmines, they still might have to shut down for the simple reason of running out of money (and shareholders running out of patience).
        • drstewart 7y ago
          What does that have to do with "good technology" though?
        • ardy42 7y ago
          > they still might have to shut down for the simple reason of running out of money (and shareholders running out of patience). My prediction is that Uber and Lyft will either themselves morph into something more like traditional cab companies, or their technology will be bought out of bankruptcy to build something similar. The world will run out of suckers who want to lose money subsidizing their rides and suckers who are willing to wear out their vehicles to drive for them.
    • bsder 7y ago
      While I'm certainly no ridesharing apologist, Uber/Lyft have raised the bar significantly in terms of forcing drivers to do basic things that cabs simply failed to do in most places: 1) Actually freakin' show up. 2) Not take the lifetime of the universe showing up 3) Accept credit cards 4) Clean their car occasionally I can go on ... If Uber/Lyft completely flame out, I would not like to see these things go back to the way they used to be.
      • freyr 7y ago
        They're use products, I just wouldn't call them "technology." The technology is everything that enables these apps (GPS, mobile chipsets, cellular technology, mobile OS, etc.).
  • nonbel 7y ago
    AFAIK, Netflix isn't "profitable" either. As long as people keep giving them loans they are fine.
    • throwaway2048 7y ago
      There is a limited supply of stupid people with billions of dollars to throw away.
      • nonbel 7y ago
        We have no idea how many dollars are out there. There are rumors of multiple ~$20 trillions "gone missing" or "passed out".
        • shwouchk 7y ago
          What exactly are you talking about? https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S
          • nonbel 7y ago
            http://www.forbes.com/sites/traceygreenstein/2011/09/20/the-feds-16-trillion-bailouts-under-reported/#551f0f6d6877 http://www.forbes.com/sites/traceygreenstein/2011/09/20/the-... https://www.forbes.com/sites/kotlikoff/2017/12/08/has-our-government-spent-21-trillion-of-our-money-without-telling-us/ https://www.forbes.com/sites/kotlikoff/2017/12/08/has-our-go...
• onlyrealcuzzo 7y ago
  Deflation isn't exactly great for an investor / investment.
  • nonbel 7y ago
    Stuff people like/need becoming cheaper to produce/attain is always a good thing. It means less waste of resources.
    • jackcosgrove 7y ago
      Deflation is considered bad. The only thing worse monetarily is hyperinflation. Deflation reduces monetary velocity because consumers rightly assume that a dollar tomorrow is worth more than a dollar today, so they spend less. This reduces the effectiveness of monetary policy and various multipliers. Deflation is great if you're a rentier since fewer people can afford financing given that the low/negative inflation rate won't monetize their debts. So there's less competition for assets. If you think deflation is good, you should consider the 30 year malaise Japan has been in.
      • nonbel 7y ago
        Deflation makes people save instead of buying shit they don't need. This preserves resources and limits pollution. It also means they only invest in new ventures when they seem like a really good idea, so less time/resources are wasted on bad ideas.
        • AnthonyMouse 7y ago
          You're both missing something. Currency deflation is bad because it causes people to hoard cash in a mattress because it will be worth more tomorrow than the returns on equally safe investments. Then you get underinvestment and economic collapse, which causes more deflation, which causes more currency hoarding. It spirals into a depression. But that's caused by the value of the currency increasing relative to everything else. "Deflation" in the price of products in a single industry is basically the source of all growth. It's what happens when you make something more efficient. And it doesn't cause anybody to have any reason to hoard cash in a mattress, because it's not the cash that's worth more -- it still buys the same amount of wheat or land -- it's only the computer chips that lose their value. Which just causes people to not hoard manufactured computer chips as an investment, which there is no apparent benefit in anybody doing anyway. (Maybe it would ensure that we have a stock of computer chips available to rely on in a chip shortage, so then instead we get a big price spike when severe weather strikes a major manufacturing region, but that's about it.) And the lower prices don't even necessarily hurt the industry, because they're a result of lower costs. So the companies are still moving product at a profit, but now at the lower price there is more demand and they move more product. Selling a billion of something for $1 each is more profitable than selling a thousand of them for $100,000 each with the same profit margin percentage. Apple today makes a whole lot more money than IBM did in 1970.