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It is possible to do this profitably. However the app companies are more interested in spending marketing dollars on discounts with the end goal of becoming a m
by kqvamxurcagg 6y ago
It is possible to do this profitably. However the app companies are more interested in spending marketing dollars on discounts with the end goal of becoming a monopoly over the market. The end goal is to restrict customer and restaurant choice so they can charge both parties and take their cut.
They will spend big over the next couple of years to see which markets they become dominant in. Once the land has settled they will do deals with competitors to exit certain markets so each can extract margin from that geography.
- stefan_ 6y agoDing ding ding. It isn't even just the app companies; there were a ton of S-1 postings on HN this and last year of companies with cost of revenue a multiple of revenue. They were spending $3 to get $1 in revenue and claiming customer lifetime would make up for it.
- kqvamxurcagg 6y agoFor things like SaaS I don't see that as too harmful to society. However when the goal of spending more than revenue (funded by VC or PE) is to achieve a monopoly over that market by driving out competitors it sounds like a case for regulatory intervention.