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As an investor, I worry about churn. Year 2...N customers are more profitable. Great. But what happens when <New Startup X> throws billions into blitzscaling th
by JMTQp8lwXL 6y ago
As an investor, I worry about churn. Year 2...N customers are more profitable. Great. But what happens when <New Startup X> throws billions into blitzscaling their new delivery app? There goes your most profitable cohort, to the next (temporarily cheaper) delivery platform. And food delivery apps aren't a classically 'sticky' business: it's centered on ephemeral transactions.
- nipponese 6y agoDon't you think it depends on the existing players' cash horde after an IPO? I am very interested to hear a successful VC's response to "I want to go against Uber, DD, and GrubHub. Money plz!"
- JMTQp8lwXL 6y agoThere's far too much cash sloshing around, lots of malinvestment since too many dollars are looking for returns. You worry about the entrepreneur who asks the Venture Capitalist, and their MO is 'take on <DoorDash/etc>'. Instead of worrying about our hypothetical entrepreneur with a lousy funding rationale, I worry about the structure of the market proving it's 100% inevitable someone will try and undercut them, by virtue of the magnitude of malinvestment present today.
- kleer001 6y agoAnd you're right to be. Every consumer cohort has first year drop out. Like Universities, like festival goers, like any iterated system it shows a Pareto distribution.
- ng12 6y agoThis is what I don't get. GRUB has been public for five years. What's the difference between them and Doordash?