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^ This is a really interesting perspective. If we take this line of reasoning, then the various unicorns didn't detect and ride user behavior but used their ma

^ This is a really interesting perspective. If we take this line of reasoning, then the various unicorns didn't detect and ride user behavior but used their massive piles of cash to distort it in non-sustainable ways. Now that the cash is drying up, people are bouncing back to the old patterns and approaches. I wonder how many of those alternatives disappeared/closed in the meantime?

ivanbakel 6y ago
Which is exactly the goal of those unicorns in the first place. Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. Like ripping out Detroit's streetcars just to sell more cars.
- economicslol 6y ago
  >Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. That's the theory at least. How much can Uber realistically raise their prices before people realize that yellow cabs or driving themselves is just too much cheaper to ignore. So they'll have to massively increase prices and subsequently kill off their own userbase. It's a lose lose and I don't think any of these companies expecting to pull this off will survive.
  - qppo 6y ago
    I have never once called an Uber because it was cheaper than alternatives. It's more convenient, reliable, and except for certain times transparent about pricing. They can increase the prices significantly and I will continue to use them over cabs.
    - oezi 6y ago
      Sounds like a darn weak moat to build a 58b USD valuation on.
    - usefulcat 6y ago
      Those are all valid points, but from a business perspective the biggest problem for Uber is and always been that their product is fundamentally a commodity. Sure, economies of scale can help, but nothing they can do can change that underlying truth.
    - TheCoelacanth 6y ago
      The real question is whether you will take an Uber for $25 instead of a Lyft for $20.
- entangledqubit 6y ago
  > Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. Of course, if a company started raising prices to profitability, perhaps it would be "worthwhile" for another group of investors to come along and start the whole cycle over again with a new - excessively funded - startup.
- three_seagrass 6y ago
  That's one reason. Another reason is that the market isn't profitable except through economies of scale. Until you've captured the market you'll burn cash on user growth.
gopalv 6y ago
> Now that the cash is drying up, people are bouncing back to the old patterns and approaches. We haven't got to a place where we can measure a bounce-back to "the old". For instance, as far as I can see into the future, I'm still going to use Lyft when I travel in the US. I'm price sensitive, but the alternatives are still full of externalities if I can't hail a cab off the street easily. Of course right now, nobody is traveling outside their home cities, nobody is going to restaurants (& restaurants don't have any leverage on delivery companies), the coworking spaces are all closed, there's no parties to cleanup with taskrabbit & that beach weekend in Carmel-by-the-sea won't happen. The problem I think is that it's going to take 500+ days to get back to even finding what percentage of the economy would go back to doing things as they used to in 2019. And what percentage will just scale down everything and force the companies to skip non-recurring engineering expenses (I'd say iPhone SE is a good example here of "good enough").
- caseysoftware 6y ago
  The "bounce back" is the interesting piece to consider. If you assume that business dropped to near-zero in March and worse in April and May, what does the rest of the year look like? If things pick back up to February levels on June 1st, we're still at -25%. That's the absolute best case scenario and there's nothing that backs that up. If things start at half and ramp up to full through December, we're closer to -40%. That's more likely than the first scenario but feels unlikely. If things start start slowly in June and grow monthly for December to be at February levels, we're closer to -50%. Forget the industry, how many companies can survive losing half their revenue (not profit) for the year? (Obviously, this assumes a flat/even revenue distribution during the year. Companies that have their busy season in March-June are even worse off.)
  - Leherenn 6y ago
    Wouldn't the best case scenario be all the missed revenue in march-may are simply deferred to the following months? Of course, for a lot of business that's simply not possible (they were already at capacity), and for the rest that's very unlikely, but it seems possible for some very specific industries.
economicslol 6y ago
> the various unicorns didn't detect and ride user behavior but used their massive piles of cash to distort it in non-sustainable ways Seems likely given the ubiquity of "Pivots" where startups have already raised cash for some half baked idea and can pivot to selling something completely different to consumers by force feeding marketing down their throats.

ivanbakel 6y ago

Which is exactly the goal of those unicorns in the first place. Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. Like ripping out Detroit's streetcars just to sell more cars.

economicslol 6y ago
>Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. That's the theory at least. How much can Uber realistically raise their prices before people realize that yellow cabs or driving themselves is just too much cheaper to ignore. So they'll have to massively increase prices and subsequently kill off their own userbase. It's a lose lose and I don't think any of these companies expecting to pull this off will survive.
- qppo 6y ago
  I have never once called an Uber because it was cheaper than alternatives. It's more convenient, reliable, and except for certain times transparent about pricing. They can increase the prices significantly and I will continue to use them over cabs.
  - oezi 6y ago
    Sounds like a darn weak moat to build a 58b USD valuation on.
  - usefulcat 6y ago
    Those are all valid points, but from a business perspective the biggest problem for Uber is and always been that their product is fundamentally a commodity. Sure, economies of scale can help, but nothing they can do can change that underlying truth.
  - TheCoelacanth 6y ago
    The real question is whether you will take an Uber for $25 instead of a Lyft for $20.
entangledqubit 6y ago
> Once you've smothered the competition in investor money, you're free to raise prices to profitability and beyond. Of course, if a company started raising prices to profitability, perhaps it would be "worthwhile" for another group of investors to come along and start the whole cycle over again with a new - excessively funded - startup.
three_seagrass 6y ago
That's one reason. Another reason is that the market isn't profitable except through economies of scale. Until you've captured the market you'll burn cash on user growth.

gopalv 6y ago

> Now that the cash is drying up, people are bouncing back to the old patterns and approaches. We haven't got to a place where we can measure a bounce-back to "the old". For instance, as far as I can see into the future, I'm still going to use Lyft when I travel in the US. I'm price sensitive, but the alternatives are still full of externalities if I can't hail a cab off the street easily. Of course right now, nobody is traveling outside their home cities, nobody is going to restaurants (& restaurants don't have any leverage on delivery companies), the coworking spaces are all closed, there's no parties to cleanup with taskrabbit & that beach weekend in Carmel-by-the-sea won't happen. The problem I think is that it's going to take 500+ days to get back to even finding what percentage of the economy would go back to doing things as they used to in 2019. And what percentage will just scale down everything and force the companies to skip non-recurring engineering expenses (I'd say iPhone SE is a good example here of "good enough").

caseysoftware 6y ago
The "bounce back" is the interesting piece to consider. If you assume that business dropped to near-zero in March and worse in April and May, what does the rest of the year look like? If things pick back up to February levels on June 1st, we're still at -25%. That's the absolute best case scenario and there's nothing that backs that up. If things start at half and ramp up to full through December, we're closer to -40%. That's more likely than the first scenario but feels unlikely. If things start start slowly in June and grow monthly for December to be at February levels, we're closer to -50%. Forget the industry, how many companies can survive losing half their revenue (not profit) for the year? (Obviously, this assumes a flat/even revenue distribution during the year. Companies that have their busy season in March-June are even worse off.)
- Leherenn 6y ago
  Wouldn't the best case scenario be all the missed revenue in march-may are simply deferred to the following months? Of course, for a lot of business that's simply not possible (they were already at capacity), and for the rest that's very unlikely, but it seems possible for some very specific industries.

economicslol 6y ago

> the various unicorns didn't detect and ride user behavior but used their massive piles of cash to distort it in non-sustainable ways Seems likely given the ubiquity of "Pivots" where startups have already raised cash for some half baked idea and can pivot to selling something completely different to consumers by force feeding marketing down their throats.