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What if your business model were to get a huge investment from some rich friends, give away free tacos, put all the other taco stands in your town out of busine
by danjac 7y ago
What if your business model were to get a huge investment from some rich friends, give away free tacos, put all the other taco stands in your town out of business, become a taco stand monopoly, and then charge for tacos at any price you want?
- codesushi42 7y agoI see what you're getting at, and that's the logic some VCs seem to be using. But rarely does it ever work, because you'll need to start charging sooner than later, even at a loss. And once you do, competition will show up. See Uber vs Lyft. You'd be better off investing in a real business with a real revenue plan. Still, yes, your model works in an environment where collusion can take place. Which is why collusion and the VC aristocracy is so damaging.
- jacques_chester 7y agoIf you put other taco stands out of business, their assets are cheap to buy. Tada! You are now competing with someone whose cost base is lower than yours. Value creation doesn't come from the absence of other value creators.