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Most people railing against "fake markets" haven't considered the fact. Grubhub has long been profitable, same with Seamless. People still think that their uber

Most people railing against "fake markets" haven't considered the fact. Grubhub has long been profitable, same with Seamless. People still think that their uber rides are being subsidized on every ride, but uber now makes profit on every ride (at least in the us, not sure about abroad). For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money.

Skunkleton 6y ago
I personally don't have the data to support or refute the "fake market" claim. I would point out however that it is not enough to be cash-flow positive for individual transactions. Sure Uber now makes money on every ride, is the business as a whole poised to make money? Will that be stable in light of likely regulations? Like I said, I don't know. I don't think the questions can be dismissed just by assuming that VCs know what they are doing. Edit: I went and looked at GrubHubs 2019 Q4 results [1]. They operated at a $30M loss. Most of the expenses were "operations" related. I'm not sure if that includes engineering, but I guess it doesn't. [1] https://investors.grubhub.com/investors/press-releases/press-release-details/2020/Grubhub-Reports-Fourth-Quarter-And-Full-Year-2019-Results/default.aspx https://investors.grubhub.com/investors/press-releases/press...
- s1artibartfast 6y ago
  That is why I said until 2019 in the parent thread. I suspect losses in 2019 were related to increased competition from UBER EATs, Ect. Net income for prior years were: 2019: -18M 2018: +78M 2017: +99M 2016: +49M 2015: +38M 2014: +24M 2013: +7M 2012: +8M 2011: +15M
john_moscow 6y ago
>For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. They are not. But they are banking on the general public to buy shares without scrutinizing the business sustainability and be left holding the bag.
- deleted 6y ago
  [deleted]
- adventured 6y ago
  Which bags were the public left holding? There have been a lot of very easy wins for investors picking up VC-backed companies in the public market. If all you did is just spray around some diversification at prominent tech IPOs, you've done extraordinarily well over time. Since IPO: Shopify? $28 to $754 ServiceNow? $25 to $361 Alibaba? $93 to $199 Splunk? $36 to $149 DocuSign? $39 to $119 Teladoc? $28 to $188 Atlassian? $27 to $175 MongoDB? $30 to $194 Square? $12 to $73 Twilio? $26 to $187 Workday? $48 to $153 Veeva? $44 to $195 Zoom? $62 to $167 Facebook? $38 to $205 Palo Alto Networks? $53 to $215 Okta? $23 to $177 Wix? $17 to $166 Wayfair? $32 to $183 The Trade Desk? $27 to $292 Coupa? $29 to $205 RingCentral? $18 to $283 Zendesk? $15 to $73 Zscaler? $33 to $75 PayPal? $34 to $143 CyberArk? $30 to $96 Proofpoint? $13 to $115 Qualys? $13 to $101 Smartsheet? $19 to $52 JD.com? $20 to $47 Anaplan? $24 to $40 Zillow? $26 to $46 Roku? $26 to $117 Or more recently: CrowdStrike? $58 to $76 Cloudflare? $18 to $27 Fastly? $24 to $36 Maybe they're holding one of the older bags. Fortinet? $8 to $137 Tesla? $20 to $790 Salesforce? $4 to $169 Baidu? $8 to $95 Netflix? $1 to $438 Google? $50 to $1,349 Oh the horror.
  - novia 6y ago
    blue apron?
  - grogenaut 6y ago
    Groupon, Singulex, etc. you're survivor biasing on those who actually did well.
  - ggm 6y ago
    Several of these sucked the lifeblood out of other income streams, which is just money redistributed not value added. Several broke regulated public utility or near utility functions like housing and transport. Some are just scofflaws (uber, Airbnb) Many are extra territorial trans national tax avoidance These left and right columns distort the actual net effect on the economy. Sure: my pension fund will be in all of them
code4tee 6y ago
The whole “Uber makes a profit on the ride” stat is broadly just creative accounting that counts the revenue and ignores most of the costs including the huge back office operation to build and support the app, marketing, admin, etc etc. Yes it’s good that they charge the customer more than they pay the driver, but that doesn’t translate into a “profitable transaction” from a business standpoint. If it takes $X millions in engineering costs to build and maintain an app required for that ride to have occurred then one needs to prorate that cost across each ride as a cost and so on. There are lots of examples of these creative “our transactions are profitable” claims like WeWork’s much ridiculed “Community Adjusted EBITDA” metric. The fancier your metrics need to be to show you are “profitable” the bigger the red flag should be that all is not well in Oz.
SkyMarshal 6y ago
> For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. Well sometimes they are, sometimes they aren't. Softbank Vision Fund justifies at least questioning some VC strategies.
pbourke 6y ago
> For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. Some of us think they're hypebeasts in search of a greater fool.
draw_down 6y ago
Remember that revenue is a fact, profit is an opinion!

Skunkleton 6y ago

I personally don't have the data to support or refute the "fake market" claim. I would point out however that it is not enough to be cash-flow positive for individual transactions. Sure Uber now makes money on every ride, is the business as a whole poised to make money? Will that be stable in light of likely regulations? Like I said, I don't know. I don't think the questions can be dismissed just by assuming that VCs know what they are doing. Edit: I went and looked at GrubHubs 2019 Q4 results [1]. They operated at a $30M loss. Most of the expenses were "operations" related. I'm not sure if that includes engineering, but I guess it doesn't. [1] https://investors.grubhub.com/investors/press-releases/press-release-details/2020/Grubhub-Reports-Fourth-Quarter-And-Full-Year-2019-Results/default.aspx https://investors.grubhub.com/investors/press-releases/press...

s1artibartfast 6y ago
That is why I said until 2019 in the parent thread. I suspect losses in 2019 were related to increased competition from UBER EATs, Ect. Net income for prior years were: 2019: -18M 2018: +78M 2017: +99M 2016: +49M 2015: +38M 2014: +24M 2013: +7M 2012: +8M 2011: +15M

john_moscow 6y ago

>For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. They are not. But they are banking on the general public to buy shares without scrutinizing the business sustainability and be left holding the bag.

deleted 6y ago
[deleted]
adventured 6y ago
Which bags were the public left holding? There have been a lot of very easy wins for investors picking up VC-backed companies in the public market. If all you did is just spray around some diversification at prominent tech IPOs, you've done extraordinarily well over time. Since IPO: Shopify? $28 to $754 ServiceNow? $25 to $361 Alibaba? $93 to $199 Splunk? $36 to $149 DocuSign? $39 to $119 Teladoc? $28 to $188 Atlassian? $27 to $175 MongoDB? $30 to $194 Square? $12 to $73 Twilio? $26 to $187 Workday? $48 to $153 Veeva? $44 to $195 Zoom? $62 to $167 Facebook? $38 to $205 Palo Alto Networks? $53 to $215 Okta? $23 to $177 Wix? $17 to $166 Wayfair? $32 to $183 The Trade Desk? $27 to $292 Coupa? $29 to $205 RingCentral? $18 to $283 Zendesk? $15 to $73 Zscaler? $33 to $75 PayPal? $34 to $143 CyberArk? $30 to $96 Proofpoint? $13 to $115 Qualys? $13 to $101 Smartsheet? $19 to $52 JD.com? $20 to $47 Anaplan? $24 to $40 Zillow? $26 to $46 Roku? $26 to $117 Or more recently: CrowdStrike? $58 to $76 Cloudflare? $18 to $27 Fastly? $24 to $36 Maybe they're holding one of the older bags. Fortinet? $8 to $137 Tesla? $20 to $790 Salesforce? $4 to $169 Baidu? $8 to $95 Netflix? $1 to $438 Google? $50 to $1,349 Oh the horror.
- novia 6y ago
  blue apron?
- grogenaut 6y ago
  Groupon, Singulex, etc. you're survivor biasing on those who actually did well.
- ggm 6y ago
  Several of these sucked the lifeblood out of other income streams, which is just money redistributed not value added. Several broke regulated public utility or near utility functions like housing and transport. Some are just scofflaws (uber, Airbnb) Many are extra territorial trans national tax avoidance These left and right columns distort the actual net effect on the economy. Sure: my pension fund will be in all of them

code4tee 6y ago

The whole “Uber makes a profit on the ride” stat is broadly just creative accounting that counts the revenue and ignores most of the costs including the huge back office operation to build and support the app, marketing, admin, etc etc. Yes it’s good that they charge the customer more than they pay the driver, but that doesn’t translate into a “profitable transaction” from a business standpoint. If it takes $X millions in engineering costs to build and maintain an app required for that ride to have occurred then one needs to prorate that cost across each ride as a cost and so on. There are lots of examples of these creative “our transactions are profitable” claims like WeWork’s much ridiculed “Community Adjusted EBITDA” metric. The fancier your metrics need to be to show you are “profitable” the bigger the red flag should be that all is not well in Oz.

SkyMarshal 6y ago

> For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. Well sometimes they are, sometimes they aren't. Softbank Vision Fund justifies at least questioning some VC strategies.

pbourke 6y ago

> For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money. Some of us think they're hypebeasts in search of a greater fool.

draw_down 6y ago

Remember that revenue is a fact, profit is an opinion!