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Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so t

Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.

MattGaiser 6y ago
>rather having a large majority of other orders coming from these services. DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.
- mlthoughts2018 6y ago
  Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.
  - MattGaiser 6y ago
    True, but then on to the next delivery startup :). I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.
  - spurdoman77 6y ago
    If prices rice on doordash the restaurant can just offer takeout cheaper.
  - jrockway 6y ago
    I am guessing that DoorDash will succeed in the very long term. Eventually they will not need independent restaurants, they can just start their own (and cut ingredient costs to whatever they need to make a profit). And eventually deliveries will be done by robots, so no workers to pay. I'm not saying this will happen tomorrow, but think 20 years out -- there is a lot of money to be made. I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)
    - AlexandrB 6y ago
      You’re describing a restaurant chain. Why isn’t Swiss Chalet valued at billions of dollars? They fit your description exactly.
      - jrockway 6y ago
        McDonalds is valued at billions of dollars. And this one doesn't rely on being located somewhere convenient; they bring the food to you. I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.
  - gorbachev 6y ago
    If anything, the market has shown that there's always a VC with too much money to spin up a new one of these every now and then. I'm not sure if it'll last forever, but I'd be willing to bet I will be dead before that cycle ends.
mlthoughts2018 6y ago
The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity. Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors. This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery. It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors. GrubHub / DoorDash / etc., are just more of the same. You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are. Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.
- trixie_ 6y ago
  It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet. It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
  - almost_usual 6y ago
    Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.
    - trixie_ 6y ago
      Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.
_bxg1 6y ago
What's amazing to me is that they can all so brazenly pursue a strategy of "monopoly or bust" without any fear of regulatory action once they reach that endgame. I'm not sure whether it speaks more to the foolishness of VCs, or to the corruption of regulatory institutions.
- legolas2412 6y ago
  I'm afraid that soon any regulation action will be seen as a death knell for the stock market, and all the monopolies will be judged "too big to fail". Then we'll have regulations not controlling, but cementing these monopolies

MattGaiser 6y ago

>rather having a large majority of other orders coming from these services. DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.

mlthoughts2018 6y ago
Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.
- MattGaiser 6y ago
  True, but then on to the next delivery startup :). I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.
- spurdoman77 6y ago
  If prices rice on doordash the restaurant can just offer takeout cheaper.
- jrockway 6y ago
  I am guessing that DoorDash will succeed in the very long term. Eventually they will not need independent restaurants, they can just start their own (and cut ingredient costs to whatever they need to make a profit). And eventually deliveries will be done by robots, so no workers to pay. I'm not saying this will happen tomorrow, but think 20 years out -- there is a lot of money to be made. I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)
  - AlexandrB 6y ago
    You’re describing a restaurant chain. Why isn’t Swiss Chalet valued at billions of dollars? They fit your description exactly.
    - jrockway 6y ago
      McDonalds is valued at billions of dollars. And this one doesn't rely on being located somewhere convenient; they bring the food to you. I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.
- gorbachev 6y ago
  If anything, the market has shown that there's always a VC with too much money to spin up a new one of these every now and then. I'm not sure if it'll last forever, but I'd be willing to bet I will be dead before that cycle ends.

mlthoughts2018 6y ago

The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity. Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors. This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery. It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors. GrubHub / DoorDash / etc., are just more of the same. You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are. Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.

trixie_ 6y ago
It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet. It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
- almost_usual 6y ago
  Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.
  - trixie_ 6y ago
    Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.

_bxg1 6y ago

What's amazing to me is that they can all so brazenly pursue a strategy of "monopoly or bust" without any fear of regulatory action once they reach that endgame. I'm not sure whether it speaks more to the foolishness of VCs, or to the corruption of regulatory institutions.

legolas2412 6y ago
I'm afraid that soon any regulation action will be seen as a death knell for the stock market, and all the monopolies will be judged "too big to fail". Then we'll have regulations not controlling, but cementing these monopolies