4 ms·

> These delivery companies make plenty of money Last I checked, none were yet profitable so unless that has changed, this should probably read "These delivery

> These delivery companies make plenty of money Last I checked, none were yet profitable so unless that has changed, this should probably read "These delivery companies lose plenty of money" and we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs.

bsder 6y ago
> we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs. Then we should start accusing them of "dumping" and prosecute accordingly. Being able to drown all the small players because you have the connections to raise a Gigabuck of VC cash isn't something we should condone.
- malandrew 6y ago
  dumping is an international trade concept. For a company to be dumping, there needs to be a differential between what a company is selling for in their domestic market versus a foreign market. Even if that wasn't the test for it, my understanding is that they have unit positive economics (positive EBITDA), but are losing money because they haven't yet amortized overhead like SG&A. This is not atypical with any new venture scaling up until their positive unit economics are sufficient to dilute overhead and turn the company profitable.
  - bsder 6y ago
    "Dumping" is simply using non-local money to sell something at less than normal value. It is normally applied to international trade because such an action generally requires systemic support from a government to continue for a sufficiently long timescale. However, it can certainly be applied to local economic products and regions--Rockefeller and Standard Oil being one of the notable examples.
Bancakes 6y ago
There's a difference between profits and revenue.
- rsj_hn 6y ago
  You are fighting a losing battle trying to bring math and economic constraints into what is a parade of hand-wringing about poor workers who are being exploited by fat cat owners. Bringing up that these businesses have been losing money in Italy -- and really have no incentive to continue operating there -- goes against the narrative. After these companies close up shop, taxpayers can pay the unemployed workers who at least aren't being exploited. There is a reason why Italy historically has a huge gray market, particularly young people working under the table, as it's tough to operate legally in Italy unless you have both a monopoly and pricing power, or are at least politically connected enough to avoid many of your financial obligations, which on paper are quite burdensome. That creates a vicious circle where the government is drained of funds as income goes unreported, so they make it harder on those legal companies left, which then either need to sell out to a politically protected monopoly or themselves go into the gray market and the cycle gets worse. The problem with these delivery companies was they they tried to be legal -- only a fool or a monopolist does that in Italy. With the right connections they would have been protected. You have similar problems in Greece, for similar reasons. Both of these nations have shadow economies that are estimated to be 20% of GDP. To put that into perspective, the Government share of GDP is 50%, so of the share of GDP attributed to the private sector, 40% of that consists of unreported income. Italy ranks 137 out of 189 in terms of tax evasion, the biggest problem being unreported business income. https://www.oecd.org/tax/administration/italy-tax-administration-a-review-of-institutional-and-governance-aspects.pdf https://www.oecd.org/tax/administration/italy-tax-administra... This was before Covid. Now, who knows what state their business sector is in. It's a big mess, and no one has been unable to unravel it. Staying away from that mess, unless you know how to play the game, is a good idea.
LargoLasskhyfv 6y ago
Isn't that the same story like with Uber & Co? Anybody remembering the pictures of giant piles of bicycles at the end of 2017 in China, when many of the bikesharers went bust for some reason?

bsder 6y ago

> we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs. Then we should start accusing them of "dumping" and prosecute accordingly. Being able to drown all the small players because you have the connections to raise a Gigabuck of VC cash isn't something we should condone.

malandrew 6y ago
dumping is an international trade concept. For a company to be dumping, there needs to be a differential between what a company is selling for in their domestic market versus a foreign market. Even if that wasn't the test for it, my understanding is that they have unit positive economics (positive EBITDA), but are losing money because they haven't yet amortized overhead like SG&A. This is not atypical with any new venture scaling up until their positive unit economics are sufficient to dilute overhead and turn the company profitable.
- bsder 6y ago
  "Dumping" is simply using non-local money to sell something at less than normal value. It is normally applied to international trade because such an action generally requires systemic support from a government to continue for a sufficiently long timescale. However, it can certainly be applied to local economic products and regions--Rockefeller and Standard Oil being one of the notable examples.

Bancakes 6y ago

There's a difference between profits and revenue.

rsj_hn 6y ago
You are fighting a losing battle trying to bring math and economic constraints into what is a parade of hand-wringing about poor workers who are being exploited by fat cat owners. Bringing up that these businesses have been losing money in Italy -- and really have no incentive to continue operating there -- goes against the narrative. After these companies close up shop, taxpayers can pay the unemployed workers who at least aren't being exploited. There is a reason why Italy historically has a huge gray market, particularly young people working under the table, as it's tough to operate legally in Italy unless you have both a monopoly and pricing power, or are at least politically connected enough to avoid many of your financial obligations, which on paper are quite burdensome. That creates a vicious circle where the government is drained of funds as income goes unreported, so they make it harder on those legal companies left, which then either need to sell out to a politically protected monopoly or themselves go into the gray market and the cycle gets worse. The problem with these delivery companies was they they tried to be legal -- only a fool or a monopolist does that in Italy. With the right connections they would have been protected. You have similar problems in Greece, for similar reasons. Both of these nations have shadow economies that are estimated to be 20% of GDP. To put that into perspective, the Government share of GDP is 50%, so of the share of GDP attributed to the private sector, 40% of that consists of unreported income. Italy ranks 137 out of 189 in terms of tax evasion, the biggest problem being unreported business income. https://www.oecd.org/tax/administration/italy-tax-administration-a-review-of-institutional-and-governance-aspects.pdf https://www.oecd.org/tax/administration/italy-tax-administra... This was before Covid. Now, who knows what state their business sector is in. It's a big mess, and no one has been unable to unravel it. Staying away from that mess, unless you know how to play the game, is a good idea.

LargoLasskhyfv 6y ago

Isn't that the same story like with Uber & Co? Anybody remembering the pictures of giant piles of bicycles at the end of 2017 in China, when many of the bikesharers went bust for some reason?