4 ms·

I've wondered if part of the discrepancy between the stock market and the broader economy, is that the pandemic is going to disproportionately crush small / pri

I've wondered if part of the discrepancy between the stock market and the broader economy, is that the pandemic is going to disproportionately crush small / private / not-publicly-traded businesses who don't have any financial buffer to weather a downturn. Like, maybe Starbucks traffic is down 20% or whatever, but if 50% of their competition (independent coffeeshops) permanently close, they'll be better set up for success in the 5 years to come, and this accounts for their current relatively strong valuation. (obviously even stronger in the case of AMZN, but even Target and Wal-Mart are benefitting from being allowed to stay open, while a lot of their competition was shut down -- speciality stores like salons and clothing stores were closed, but big-box stores selling everything stayed open)

chii 6y ago
> if 50% of their competition (independent coffeeshops) permanently close indie coffee shops will come again. Starbucks coffee is basically the mcdonalds of restaurants - no real flavour and too much sugar imho. It's good, consistent, but not top notch quality. Indie coffee shops are usually run by people who are passionate about making the best cup. This downturn will kill some of them - but i'm sure they will eventually return.
- bpodgursky 6y ago
  Sure, nothing is forever. But starting a business takes a lot of time and energy. 5 years or so of minimal competition gives Starbucks an edge, time to retrench or pull in a profit.
- dehrmann 6y ago
  > indie coffee shops will come again. Old data, but a decade ago, I saw an independent coffee shop for sale for around $50k. Obviously, not everyone can afford to open one, but the barrier to entry is relatively low. Boeing and Airbus are too big to fail for the same reason: they're strategically important, no one else has the knowledge and expertise to build large passenger jets (Embraer and Bombardier might be able to do it in a pinch), and redeveloping this would take too long.
  - ben_w 6y ago
    > Boeing and Airbus are too big to fail That… feels like a better explanation of Boeing’s recent quality issues than the other excuses I’ve heard on HN.
  - hadlock 6y ago
    I think my retirement project is to start a traditional bread bakery somewhere, with a coffee shop in the front of the house. Bakeries typically peak hours are 4-7am and then coffee shops are 6-9am with a steady trickle of business 9am-7pm. You're right, to run a coffee shop you need a table, two chairs, a cash register and an espresso machine. While traveling I ran across a coffee shop in an outdoor market that was just a wood-fired espresso machine on a cart hauled around with a donkey. The donkey didn't look super happy but the owner looked like they were doing ok for themselves.
- baby 6y ago
  I never have sugar in my drinks at starbucks. You can customize everything
- searchableguy 6y ago
  Why does this not apply to internet then? Big businesses can increase their efficiency through lobbying, scale, money, and political favors. Most people in a broken economy will look for the cheapest than the best value. This will surely kill many indie businesses - just not completely destroy the term.
  - dclowd9901 6y ago
    Not everyone though. It will always be easier to find a starbucks than a local coffee shop, but there will still be local coffee shops, because some people are always willing to pay a bit more for a heightened experience.
  - chii 6y ago
    > Most people in a broken economy will look for the cheapest than the best value. This will surely kill many indie businesses if the indie business has no value proposition, then market forces says they can't exist. It's not as if they are entitled to exist just because they are "indie". As for coffee shops, if they can't make a latte better than starbucks, then they weren't going to survive anyway.
    - deleted 6y ago
      [deleted]

chii 6y ago

> if 50% of their competition (independent coffeeshops) permanently close indie coffee shops will come again. Starbucks coffee is basically the mcdonalds of restaurants - no real flavour and too much sugar imho. It's good, consistent, but not top notch quality. Indie coffee shops are usually run by people who are passionate about making the best cup. This downturn will kill some of them - but i'm sure they will eventually return.

bpodgursky 6y ago
Sure, nothing is forever. But starting a business takes a lot of time and energy. 5 years or so of minimal competition gives Starbucks an edge, time to retrench or pull in a profit.
dehrmann 6y ago
> indie coffee shops will come again. Old data, but a decade ago, I saw an independent coffee shop for sale for around $50k. Obviously, not everyone can afford to open one, but the barrier to entry is relatively low. Boeing and Airbus are too big to fail for the same reason: they're strategically important, no one else has the knowledge and expertise to build large passenger jets (Embraer and Bombardier might be able to do it in a pinch), and redeveloping this would take too long.
- ben_w 6y ago
  > Boeing and Airbus are too big to fail That… feels like a better explanation of Boeing’s recent quality issues than the other excuses I’ve heard on HN.
- hadlock 6y ago
  I think my retirement project is to start a traditional bread bakery somewhere, with a coffee shop in the front of the house. Bakeries typically peak hours are 4-7am and then coffee shops are 6-9am with a steady trickle of business 9am-7pm. You're right, to run a coffee shop you need a table, two chairs, a cash register and an espresso machine. While traveling I ran across a coffee shop in an outdoor market that was just a wood-fired espresso machine on a cart hauled around with a donkey. The donkey didn't look super happy but the owner looked like they were doing ok for themselves.
baby 6y ago
I never have sugar in my drinks at starbucks. You can customize everything
searchableguy 6y ago
Why does this not apply to internet then? Big businesses can increase their efficiency through lobbying, scale, money, and political favors. Most people in a broken economy will look for the cheapest than the best value. This will surely kill many indie businesses - just not completely destroy the term.
- dclowd9901 6y ago
  Not everyone though. It will always be easier to find a starbucks than a local coffee shop, but there will still be local coffee shops, because some people are always willing to pay a bit more for a heightened experience.
- chii 6y ago
  > Most people in a broken economy will look for the cheapest than the best value. This will surely kill many indie businesses if the indie business has no value proposition, then market forces says they can't exist. It's not as if they are entitled to exist just because they are "indie". As for coffee shops, if they can't make a latte better than starbucks, then they weren't going to survive anyway.
  - deleted 6y ago
    [deleted]