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In most cases it is not that their product sucked but rather it isn’t mission critical enough. It is just a vitamin compared to other things companies/people a
by AznHisoka 7y ago
In most cases it is not that their product sucked but rather it isn’t mission critical enough.
It is just a vitamin compared to other things companies/people are paying for. Nothing wrong with being a vitamin (you can be vastly successful) but it’s the first expense that is going to get cut in a recession.
- toomuchtodo 7y agoOpendoor was trying to play real estate market maker. This is easy money during an expansionary upswing, and a dangerous game to be in near the end of the credit cycle (a phrase used elsewhere in the capital markets you might apply here: "Picking up nickels in front of a steamroller"); you could suddenly be holding an enormous amount of assets on your books you can't afford the carrying costs for and have to unload them at fire sale prices. There are some business models that are attractive when capital is cheap, but not so great when the tide goes out and you suddenly have to be a real business, because capital is no longer freely available. I would propose that this is different than the discretionary businesses you describe, that are sustainable outside of extraordinary economic circumstances.
- seiferteric 7y agoI wonder why this is a problem. Maybe our problem is with the assumption that companies should last forever in the first place. If it was not so difficult and stressful to change jobs, I think it would be better if more companies only existed for as long as they were useful/initiative, but when the steam runs out they are liquidated and everyone can walk away happily.
- toomuchtodo 7y agoAnything that would make transitions between roles easier for employees during destruction of orgs sounds like good policy to support economic dynamism. A convo for another thread.
- coliveira 7y agoThese things include universal health care, decent unemployment benefits, job retraining, child care, all things that business people hate because they need to be paid (usually from taxes).
- piva00 7y agoNot only because they need to be paid but also because they give leverage to the employee. You can see this in action with the healthcare system in the US, being dependent on your employer for healthcare gives them a huge leverage over an employee, business (on average) will always fight against policies that remove their leverage towards a more equal field.
- SilasX 7y agoSorry but stupid question: why would opendoor need ever rising prices any more than a regular market maker? They just lower their bid/asks.
- toomuchtodo 7y agoIt’s not a pricing issue, it’s a liquidity issue. Same reason the Fed has stepped into everything except equities. Illiquidity can quickly lead to insolvency.
- SilasX 7y agoYeah but there are market makers on the stock market that deal in illiquid securities, and somehow manage not to die out either.
- toomuchtodo 7y agoReserves and risk/inventory management.
- SilasX 7y agoI don't feel like my understanding has changed.