15 ms·
Why can’t we have normal businesses where you employ your workers and charge your customers the real cost of the transaction ? If that is not viable, don’t star
by dmode 7y ago
Why can’t we have normal businesses where you employ your workers and charge your customers the real cost of the transaction ? If that is not viable, don’t start the business to begin with. Let’s just go back to first principles, can we ?
- tempsy 7y agoThat’s what Grubhub does
- shanemlk 7y agoFor 30% extra charged to the struggling small restaurant.
- arcticbull 7y agoI mean the idea is that you operate at a loss until the economies of scale catch up and you begin being profitable. Starting with the low price let’s you maximize growth, and you make it up on the back end. That’s not a problematic system. What is problematic is if there are no economies of scale.
- CaptainZapp 7y agoAhh, what you lose on every transaction you make up in volume. Got it!
- arcticbull 7y agoWhat you lose on transactions today you make up on transactions in the future, when the volume reduces your cost basis to the point of profitability :)
- baddox 7y agoIt’s not clear how that would ever happen with last-mile delivery, unless we’re talking about something like drones or self-driving cars, and of course, those problems seem like they would be better solved by drone companies and self-driving car companies.
- lwansbrough 7y agoExcept what every startup in Silicon Valley doesn’t seem to realize is there’s a revolving door of VC funded “businesses” that fail because they can’t make a profit after 10 years. And if they try to make a profit (for example by raising prices) users move on to the new cheap option.
- kohtatsu 7y agoI don't think it's the startups that don't realize, rather the stock market that slurps up the IPOs and fuel it.
- darawk 7y agoNo reason to complain when you're the one picking up the unit loss, though. Might as well take it while you can.
- jiofih 7y agoUnless you care about not fucking over your fellow citizens to get free food deliveries?
- darawk 7y agoIf I offer you $2 to deliver a piece of food, have I fucked you over? Where exactly in the pipeline does the "fucking over" happen?
- jiofih 7y agoIn the part where I have to deliver it 10km away ($3 in gas round way), and if I reject your kind offer you’ll blacklist me from ever being offered a job again?
- darawk 7y agoOk, so prior to this offer, you had no jobs. And after this offer, you have no jobs. How have you been fucked over?
- PanosJee 7y agoEconomy of scale applies to production think chips & screens. What economy of scale can DoorDash achieve? Persuade everyone to be paid below fair wage? Push the margin of restaurants down?
- Drakar1903 7y agoI see a kind of future where restaurants are reduced to a kitchen and packing area, with no seats. Then several kitchens bunched together to save on rent and utilities. Then cut out the drivers with air or land based drones. Then start lobbying so that the drones can move underground, and new buildings have to include a drone delivery vent / conveyor belt. You already can live your whole life and never leave a house, working remote or playing the stock market, having everything delivered. It's grim. And it's coming.
- squiggleblaz 7y ago> I see a kind of future where restaurants are reduced to a kitchen and packing area, with no seats. Then several kitchens bunched together to save on rent and utilities. Isn't that a food court? I'm not sure you've described a particularly grim future. I mean, there's lots of grimness in the future. But you haven't described it.
- hombre_fatal 7y agoMost restaurants in my city use UberEats. A fraction of them have bothered to setup with the 2nd most popular competitor. Fewer yet with the 3rd. And you never see the 4th or 5th. UberEats becomes an obvious money-on-the-table might-as-well for everyone with its incumbency. Same with the user perspective. I use UberEats because it has all the restaurants. I'm not going to download the 2nd most popular app.
- Kalium 7y ago> What economy of scale can DoorDash achieve? Brand awareness among both diners and restauranteurs. Integration with POS systems and financial plumbing. Economies of scale might exist any time you have infrastructure that can be shared.
- sombremesa 7y agoBecause these companies are still finding enough labor after lowering what they pay out drastically. It's the market in action. You're right that as a society we have a duty to step in with policy here, as we do with minimum wage, but this isn't a violation of "first principles".
- deanCommie 7y agoCompanies found plenty of child labour back in the day as well.
- bobsonori 7y agoAs we do not with minimum wage.
- lwhi 7y agoThe market needs to be regulated more stringently.
- PanosJee 7y agoThat's when I thought the economy was doing really great and unemployment was all time low. But wait people want to work for below minimum wage? Something is broken
- mschuster91 7y agoWell that happens when there is no meaningful social security system... when the options are working for a dollar an hour or not having anything to eat, people are forced to work such "jobs".
- ezzzzz 7y agoPeople are being mislead. It appears that DoorDash has preemptively scrubbed anything from their website stating that drivers can make n dollars per hour, but at one point, I remember seeing the claim, somewhere between $15/$25 per hour. I'm not trying to disparage people, but without some level understanding of economics, it's not obvious that whatever rate you receive is not your 'wage'. These gig jobs don't pay wages, they pay something closer to a fee. Maybe it's more like rent. Somebody else can comment on the pedantic differences. Point is, the relationship is skewed in favor of the party doing business, not the party providing the service. So what? This is capitalism, you have the freedom to seek other opportunities elsewhere. Hold up. If this is your business model, you are dependent upon the current wave of de-regulation. What are you going to do if/once the pendulum swings the other direction? What happens if minimum wage ever becomes something reflective of a living wage? These gig jobs posit themselves, subtly, as a 'side-hustle'. Something which shouldn't have to exist, but does, simply due to the lack of well-paying jobs for those without advanced education.
- mjevans 7y agoCan we please do that for all jobs? I want the workers at places I get food and such from to actually just have good base pay. Tips should be about rewarding going BEYOND the normal... not as a basis of someone's wage.
- 2rsf 7y agoYes we can, that's how it works in Sweden and AFAIK in many other European countries. Tips are not expected, and are meant only for extraordinary service. The base pay is decent and so are the benefits like vacation, pension etc.
- franga2000 7y agoIs there any other country other than the US where paying service workers below minimum wage is legal or acceptable? I've been around a fair bit of Europe and surroundings and I've never encountered the US system.
- wolco 7y agoCanada, Africa and the Middle East.
- franga2000 7y agoWhy do I keep expecting Canada to be better than it actually is? Although, a quick web search shows that at least in Quebec, minimum wage for tipped workers is 1.9$ lower vs. not applying at all in many US states - better, but still sad.
- ganeshkrishnan 7y agoI moved from US to Australia and then Canada. Canada is almost the same as US with consumer rights, customer service, citizen rights etc which is that's it's almost non existent. Australia is one of the best countries imo. Minimum wage with penalty can be up to as high as $100 per hour ( yes $100) and starts around $25+
- Sevrene 7y agoThis is just a natural outcome of the way venture capital funding works at the moment. When you care more about speculation than what's actually fundamentally occuring, you're going to get businesses funded that are not even able to survive on those basic fundamentals. If it weren't backed by large capital, it couldn't exist. This isn't always a bad thing, but on a whole, it does distort the market. At some point you have to weigh up if the good effects of this are worth the bad effects. If there were higher taxes, costs, or otherwise more risk for investing, it would limit that a lot.
- TAForObvReasons 7y agoI thought the plan was Dumping https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy) Step 1) Use VC money to subsidize the price so that the market price is below cost Step 2) Continue to use VC money to subsidize while competitors, who don't have the same cash, lose customers and eventually contract or die off Step 3) Once you are the only real player, use your dominant position to raise prices
- abandonliberty 7y agoIn many cases they may find the price cannot be raised enough to generate profitability, and the service can really only exist in a speculative VC-funded bubble.
- baddox 7y agoDoes the strategy even go that far? I thought it was more like 1) VCs invest money in companies hoping that some of them grow very fast 2) some of them do grow fast, so more VCs invest more money 3) the really really big companies IPO and the VCs make a lot of money All of this can happen way before your step 3.
- kohtatsu 7y agoBoth of you are right from my perspective. IPOs haven't had much to do with current profit.
- kragen 7y agoIf you try to compete with DoorDash using that model, you will either have to charge much higher prices than they do, or you will lose money on every transaction. Either way you will go out of business as long as DoorDash or similar companies are able to compete with you.
- frabcus 7y agoIndeed, which is why it is the system that has to be changed. Some things can't be solved by individual entrepreneurial action.
- onion2k 7y agoMaybe I should budget for some labor law lobbyists then.
- break_the_bank 7y agoThis assumes that door dash is able to maintain it's employees despite another employer paying hire for the same job.
- Spooky23 7y agoThese companies have discovered that there is a large market of people whose need for quick cash with no friction exists and is willing to lose money (in terms of car wear and tear) to do so.
- kragen 7y agoWell, if the other employer existed first, you might be right. The other employer might be able to deplete the labor pool of unemployed people with cars to a sufficiently size that DoorDash wouldn't be able to get started, if there were so many people willing to pay for grocery delivery (at the higher prices the other employer charged) that they could employ all or essentially all of the potential deliverypeople. But if there were more potential deliverypeople than potential customers, including at the lower price point that DoorDash can (hic) deliver, or if DoorDash already existed and could therefore prevent the new company from breaking into this two-sided market, then no. The reason the sequence matters is that, for DoorDash to need to raise its payments to its workers in order to keep them from running to the other employer, that other employer needs to be able to hire all of them, or at least so many that DoorDash finds its access to the labor market significantly restricted. But clearly a new entrant starting small will not be able to do that; they can only do it once they get big. But they will not be able to get big if they are charging higher prices for the same service as DoorDash. So, no, much more reasonable assumptions are available to justify my inference.
- paulddraper 7y agoWe can have those businesses. They just don't make as much money, so are inferior. Unless of course, customers don't tip. Then your suggestion is not an inferior competitor.
- bobsonori 7y agoDefine “business”. Seems to me like you mean to say “owner” instead, because the employees would, by definition, make more money.
- paulddraper 7y agoYes, a business owned by shareholders.
- dmode 7y agoI mean Apple built a trillion dollar business by charging customers high prices with huge margins
- paulddraper 7y agoSounds like a good model for a computer hardware business. Extending that to restaurants may be a bit of a stretch.
- sschueller 7y agoWe can, stop using and supporting these predatory companies. Never use Uber, Lyft, Doordash, Uber Eats, AirBnB etc. No exception irregardless how easy or cheap it may be. It's a small sacrifice but can and will make a difference. Using these services to me is like asking a waiter to pay for part of my meal. When it comes around to paying the bill are you able to face someone and ask them to pay for part of what they just served you knowing that they are barely making a living?
- jopsen 7y agoTaxis, restaurants, relocation assistants, fast food, online shopping, ... If you live in the US, you have to give up a lot of services if you don't want to buy from people who are underpaid..
- hocuspocus 7y ago> relocation assistants Does this mean something completely different in the US compared to the rest of the world? How is anyone in this business being underpaid?!
- mjevans 7y agoThey're talking about the labor for moving things, and yeah, it's a "service" job so it too is owned by someone else who takes most of the profits.
- hocuspocus 7y agoGot it, that's a funny way to call movers. Relocation agents (employed or freelancing) can easily bill $1000/day over here so I was a bit confused.
- jopsen 7y agoI recall the relocation agent I was setup with when hubting apartments in SF.. She was freelancing and looking forward to Obamacare -- having not had healthcare in 15 years. I took note of that, because to me not having health insurance seemed completely unreasonable. I almost left the continent when HR tried to convince me I should trust "retroactive" insurance -- and I would get the policy after 30 days, lol.. maybe in just paranoid :)
- shanemlk 7y agohttps://feedflight.com/ https://feedflight.com/
- maxerickson 7y agoWhich first principle is opposed to taking VC bucks? Because that's the model. Let's make a story good enough to be funded and then pay ourselves with that money. The business just has to appear to be a good enough bet to sell it to the money.
- mlrtime 7y agoSure, and get rid of tips everywhere.
- asah 7y agocompetition.
- dboreham 7y agoBecause humans love them some Faustian bargain.
- Nextgrid 7y agoBut what about "move fast and break things"? What about early employee's equity? What about the billion dollar valuations? What about justifying 500k/year engineers' salaries to over-engineer things you can do with a boring web framework and a handful of servers? Why would you ever consider running a legitimate, profitable, down-to-earth business when you can do the above instead? This is also why I quit the startup scene and despise most of them (including some that I used to work at). I try my best to focus on local, real businesses. They might be legacy, you might find "uncool" technologies but most of them at least have a real product they sell at a profit without screwing anybody and the work-life balance is often better.
- macspoofing 7y ago>Why can’t we have normal businesses where you employ your workers and charge your customers the real cost of the transaction ? You have those. What's wrong with trying alternatives? There are good reasons to contract out services. If you're building widgets maybe it doesn't make sense for you to also employee cleaning crews or maintain your own transportation infrastructure - why not contract out these non-core services? On a side note, the kind of question you raised typically can be reduced to "I don't understand why anyone would do something different, therefore they shouldn't do something different" ... it's in the same spirit as a UFO consipracy theorist who may say "This light in the sky isn't Venus, isn't a satellite or a plane and isn't anything else I'm familiar with, therefore it must be aliens". You have to be careful with setting constraints on innovation because YOU can't envision why it makes sense.
- dmode 7y agoThat’s not what I am saying at all. What I am saying is that if your business is only viable by shafting employees, that’s not a business at all