9 ms·

I was getting insecure that my side-projects/hoped-for-businesses are things like a social news app and a podcast discovery app while Uber, SpaceX etc are chang

by firasd 7y ago

I was getting insecure that my side-projects/hoped-for-businesses are things like a social news app and a podcast discovery app while Uber, SpaceX etc are changing the world but now that the software-is-eating-the-world companies are getting massacred in the stock market I feel at least some slight relief about my choices. Near-zero-marginal-cost is a magic that only pure-software (and other IP-based?) businesses have... (Of course I'm overlooking that most new software biz that is doing well is B2B unlike my projects... but still.)

jacquesm 7y ago
SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.
- WhyNotThough 7y ago
  Taxi and hotel businesses deserved a little punch in the gut.
  - agumonkey 7y ago
    Be gentle please, I understand and agree that these industries got complacent but these are people. I think our societies should integrate this 'kick' phases to make them smoother and more respectable rather than have toxic competitors attack them.
    - cat199 7y ago
      yes, state sponsored 'economic efficiency' purges. what could possibly go wrong?
      - agumonkey 7y ago
        Not necessarily this. There may be other ways.
        cat199 7y ago
        oh? all ears about these 'ways'.
        agumonkey 7y ago
        me too
      - dang 7y ago
        You've been posting flamebait and unsubstantive comments quite a bit to HN lately, and we've already asked you not to. If you keep doing this we will have to ban you. I don't want to do that, so please read the site guidelines and follow them from now on: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.
  - lotsofpulp 7y ago
    Why hotel businesses? There are many different hotel brands to choose from, pricing is transparent, photos/reviews are available on many websites, customer service at the chains take care of complaints pretty well, and there has been a ton of new hotel room supply added.
    - bilbo0s 7y ago
      Not as many pervert, I mean, "security" cams in the hotel rooms either.
    - chubot 7y ago
      I started staying in AirBNB's around 2013 because I could get a kitchen, e.g. for a week-long stay. I like drinking water and not eating out 2-3 times a day, every day, for a week! I was staying by myself, but I've heard from traveling families that hotels are a big hassle for them because they lack a kitchen. Imagine feeding a couple kids while staying for a week. That cost will really add up if you're eating out 3 times a day. The standard hotel practice of giving you ice but nothing else, so you spend on expensive drinks and water, is pretty obnoxious in my book. The little fridges stocked with $5 bags of chips are also obnoxious. Another reason is that I'm not limited to "airport-hotel" land, which feels the same in every city. (Admittedly, this is something hotels can't easily fix.) Also, the prices for AirBNB's were significantly more varied. At the low end, you could get one room in an apartment occupied by others, etc.
      - jschwartzi 7y ago
        The last AirBnb I stayed in was sparkling clean and totally infested with cockroaches. And they had the nerve to tell me they couldn't get me a full refund, and that I should be used to staying in lower-end places. In the end my fiance and I had to book a hotel anyway, at great inconvenience to ourselves and with no guarantee from AirBnb that they would refund anything. That was way more inconvenient than not having a kitchen for a few days. So the flip side of it is that you're rolling the dice and AirBnb doesn't actually have a way to guarantee anything for you the way a hotel would.
      - ghaff 7y ago
- wisty 7y ago
  Uber has a market cap of like 50 billion. It's real. It's no Apple or Google though.
  - ninkendo 7y ago
    In a conversation where “real” can be partially defined as “are they worth their market cap”, saying a company has a high market cap does little to convince me. In fact it’s the opposite: it implies a long way to fall.
  - NeedMoreTea 7y ago
    That makes it a large bubble. Market cap in and of itself is useless. How long do you see customers staying loyal after VC money stops subsidising every ride?
    - ghaff 7y ago
      It will be interesting to see what happens when subsidies end. There are likely to be both first order and second order effects. The first order effect is just price sensitivity. People will decide to take public transportation, drive, take a conventional cab (which now has an app)--or just skip going out for the evening--if prices, say, double. The second order effect is that there will be fewer passengers which will lead to fewer drivers. This probably doesn't matter much in a big urban core. But in marginal areas, such as where I live, it may be the difference between a viable service and an unviable one.
    - vidarh 7y ago
      I think that's very hard to predict. Just 5 minutes ago I had a conversation with my ex about how I always use Uber for ad hoc travel despite the fact it's often significantly more expensive than the local minicab companies, because they can get someone here much faster. Often it's a 3 minute wait, while I otherwise might wait 10+ minutes. Their app also gives me more reliable feedback. If I schedule in advance, or need more flexibility in car type, then the minicab companies win, but it's very rare for me to pick them because of price, even though they're often much cheaper. But of course not everyone can afford the luxury of paying extra, and will just factor in longer waits instead.
- firasd 7y ago
  I think the word 'subsidy' is kinda questionable here. (This writer's previous article used the same word to discover many companies[1]) If a company is not losing money on gross margins--if they are losing money in total 'unit economics' because the customer acquisition cost is high--does it really mean they are subsidizing usage? An example is Casper, the mattress company. They are still selling mattresses to consumers for more than the mattresses cost to them. They are losing money on ads. If I see/hear a Casper ad, is that ad really a subsidy to me? PS. Saw an interesting Twitter thread from Tren Griffin: "Whenever you read or hear the phrase 'losing money' you should ask yourself: what does this person mean?"[2] 1) https://www.theatlantic.com/ideas/archive/2019/10/say-goodbye-millennial-urban-lifestyle/599839/ https://www.theatlantic.com/ideas/archive/2019/10/say-goodby... 2) https://threadreaderapp.com/thread/1184981449172144128.html https://threadreaderapp.com/thread/1184981449172144128.html
  - oarsinsync 7y ago
    If the money is going on tangental customer acquisition costs (ie marketing), it's probably not a subsidy. If the money is going directly either to the supplier or the customer (subsidizing the customer's costs directly or indirectly), then it's probably a subsidy.
  - mdorazio 7y ago
    In my opinion, customer acquisition cost should be baked into your effective margin calculations. If you're selling things "for a profit", but it costs you more than the entire profit on the sale to make the sale, your business model still sucks and is being subsidized by something, debt or otherwise. This is a common trap online sellers fall into - gross margins are kind of useless if your selling costs are through the roof.
    - ghaff 7y ago
      See also Blue Apron et al. If you're selling something to a customer base that is almost certainly going to have a lot of churn, that acquisition cost has to be built into your business model. Maybe if churn is low and the main cost is initial acquisition you can sustain losses for a time but not if it's ongoing. ADDED: And a mattress is an example of a product that people buy very rarely so the marketing/advertising to acquire a customer is mostly a cost of a unit sale. Yes, maybe they get some residual word of mouth but it's mostly effectively part of the product cost.

by firasd 7y ago

jacquesm 7y ago

SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.

WhyNotThough 7y ago
Taxi and hotel businesses deserved a little punch in the gut.
- agumonkey 7y ago
  Be gentle please, I understand and agree that these industries got complacent but these are people. I think our societies should integrate this 'kick' phases to make them smoother and more respectable rather than have toxic competitors attack them.
  - cat199 7y ago
    yes, state sponsored 'economic efficiency' purges. what could possibly go wrong?
    - agumonkey 7y ago
      Not necessarily this. There may be other ways.
      - cat199 7y ago
        oh? all ears about these 'ways'.
        agumonkey 7y ago
        me too
    - dang 7y ago
      You've been posting flamebait and unsubstantive comments quite a bit to HN lately, and we've already asked you not to. If you keep doing this we will have to ban you. I don't want to do that, so please read the site guidelines and follow them from now on: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.
- lotsofpulp 7y ago
  Why hotel businesses? There are many different hotel brands to choose from, pricing is transparent, photos/reviews are available on many websites, customer service at the chains take care of complaints pretty well, and there has been a ton of new hotel room supply added.
  - bilbo0s 7y ago
    Not as many pervert, I mean, "security" cams in the hotel rooms either.
  - chubot 7y ago
    I started staying in AirBNB's around 2013 because I could get a kitchen, e.g. for a week-long stay. I like drinking water and not eating out 2-3 times a day, every day, for a week! I was staying by myself, but I've heard from traveling families that hotels are a big hassle for them because they lack a kitchen. Imagine feeding a couple kids while staying for a week. That cost will really add up if you're eating out 3 times a day. The standard hotel practice of giving you ice but nothing else, so you spend on expensive drinks and water, is pretty obnoxious in my book. The little fridges stocked with $5 bags of chips are also obnoxious. Another reason is that I'm not limited to "airport-hotel" land, which feels the same in every city. (Admittedly, this is something hotels can't easily fix.) Also, the prices for AirBNB's were significantly more varied. At the low end, you could get one room in an apartment occupied by others, etc.
    - jschwartzi 7y ago
      The last AirBnb I stayed in was sparkling clean and totally infested with cockroaches. And they had the nerve to tell me they couldn't get me a full refund, and that I should be used to staying in lower-end places. In the end my fiance and I had to book a hotel anyway, at great inconvenience to ourselves and with no guarantee from AirBnb that they would refund anything. That was way more inconvenient than not having a kitchen for a few days. So the flip side of it is that you're rolling the dice and AirBnb doesn't actually have a way to guarantee anything for you the way a hotel would.
    - ghaff 7y ago
wisty 7y ago
Uber has a market cap of like 50 billion. It's real. It's no Apple or Google though.
- ninkendo 7y ago
  In a conversation where “real” can be partially defined as “are they worth their market cap”, saying a company has a high market cap does little to convince me. In fact it’s the opposite: it implies a long way to fall.
- NeedMoreTea 7y ago
  That makes it a large bubble. Market cap in and of itself is useless. How long do you see customers staying loyal after VC money stops subsidising every ride?
  - ghaff 7y ago
    It will be interesting to see what happens when subsidies end. There are likely to be both first order and second order effects. The first order effect is just price sensitivity. People will decide to take public transportation, drive, take a conventional cab (which now has an app)--or just skip going out for the evening--if prices, say, double. The second order effect is that there will be fewer passengers which will lead to fewer drivers. This probably doesn't matter much in a big urban core. But in marginal areas, such as where I live, it may be the difference between a viable service and an unviable one.
  - vidarh 7y ago
    I think that's very hard to predict. Just 5 minutes ago I had a conversation with my ex about how I always use Uber for ad hoc travel despite the fact it's often significantly more expensive than the local minicab companies, because they can get someone here much faster. Often it's a 3 minute wait, while I otherwise might wait 10+ minutes. Their app also gives me more reliable feedback. If I schedule in advance, or need more flexibility in car type, then the minicab companies win, but it's very rare for me to pick them because of price, even though they're often much cheaper. But of course not everyone can afford the luxury of paying extra, and will just factor in longer waits instead.
firasd 7y ago
I think the word 'subsidy' is kinda questionable here. (This writer's previous article used the same word to discover many companies[1]) If a company is not losing money on gross margins--if they are losing money in total 'unit economics' because the customer acquisition cost is high--does it really mean they are subsidizing usage? An example is Casper, the mattress company. They are still selling mattresses to consumers for more than the mattresses cost to them. They are losing money on ads. If I see/hear a Casper ad, is that ad really a subsidy to me? PS. Saw an interesting Twitter thread from Tren Griffin: "Whenever you read or hear the phrase 'losing money' you should ask yourself: what does this person mean?"[2] 1) https://www.theatlantic.com/ideas/archive/2019/10/say-goodbye-millennial-urban-lifestyle/599839/ https://www.theatlantic.com/ideas/archive/2019/10/say-goodby... 2) https://threadreaderapp.com/thread/1184981449172144128.html https://threadreaderapp.com/thread/1184981449172144128.html
- oarsinsync 7y ago
  If the money is going on tangental customer acquisition costs (ie marketing), it's probably not a subsidy. If the money is going directly either to the supplier or the customer (subsidizing the customer's costs directly or indirectly), then it's probably a subsidy.
- mdorazio 7y ago
  In my opinion, customer acquisition cost should be baked into your effective margin calculations. If you're selling things "for a profit", but it costs you more than the entire profit on the sale to make the sale, your business model still sucks and is being subsidized by something, debt or otherwise. This is a common trap online sellers fall into - gross margins are kind of useless if your selling costs are through the roof.
  - ghaff 7y ago
    See also Blue Apron et al. If you're selling something to a customer base that is almost certainly going to have a lot of churn, that acquisition cost has to be built into your business model. Maybe if churn is low and the main cost is initial acquisition you can sustain losses for a time but not if it's ongoing. ADDED: And a mattress is an example of a product that people buy very rarely so the marketing/advertising to acquire a customer is mostly a cost of a unit sale. Yes, maybe they get some residual word of mouth but it's mostly effectively part of the product cost.