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I sort of agree? If Son was succeeding with this strategy I would totally agree that it's a huge problem. But he utterly failed. All he did was redistribute in

I sort of agree? If Son was succeeding with this strategy I would totally agree that it's a huge problem. But he utterly failed. All he did was redistribute investor money into consumer pockets(and weirdly distort some markets in ways that are difficult to understand). It seems like Softbank is a story of would-be monopolists losing their shirts and consumers(and even employees in those sectors) benefitting from the competition.

A4ET8a8uTh0 4y ago
It is only a relatively small problem, because the guy at the helm appears to be not sufficiently successful with his approach. That said, he did have some notable wins ( Alibaba comes to mind ), so whether we discount is as luck or something else, the approach mirrors venture's unicorn search ( 19 will be busts, but one will be a massive payoff ). Separately, just because Son is losing a lot does not mean that a better equipped investor won't try to do the same, but better. At that point, this strategy would absolutely be an impediment to regular consumer.
mschuster91 4y ago
> But he utterly failed. All he did was redistribute investor money into consumer pockets(and weirdly distort some markets in ways that are difficult to understand). One might argue that the effects of "gig economy" and similar "modern tech" companies on local economies are damaging as well, beyond "weird distortions": - residents suffering from noise and rising rents thanks to AirBnB and copycats - taxis going out of business because they can't compete with Uber leading to people depending on regulated, discrimination-prevented taxis having issues, and to people in "high demand" situations like airports or event venues being squeezed for their money - restaurants, many of which were already at the edge of financial survivability prior to COVID, facing extortion by delivery apps - either use them and depend on them, or having the delivery apps simply subsidize your competition until you go broke - employees of all these companies who end up with down-pressure on their wages, and city governments with funding issues because employment tax income collapses as well, and as a result of that everyone else because governmental services degrade Someone will always pay for the supposed "inefficiencies" that cut-throat capitalism "identifies" - and in almost all cases it is those at the lowest rungs of society that bear the worst load.
arrosenberg 4y ago
I would not minimize the amount of damage done to transportation, hospitality and dining, considering the importance of those industries in a lot of cities. Softbank radically destabilized several economic sectors in an attempt to monopolize them. That kind of thing used to be a crime, and it should be again.
- mbil 4y ago
  As a consumer, Uber was superior to taxis in a number of ways: clearer pricing, competitive pricing, ride sharing, transparent routing, digital history and receipts, integrating with other apps, etc. What damage do you think was done to transportation?
  - TazeTSchnitzel 4y ago
    There's research out there showing Uber has increased congestion on public roads, and I think also driven up carbon footprint per passenger. In part this is because it's cheaper than it should be. Incentivising less people per vehicle (taxis versus e.g. busses) is bad for society at large.
    - whywhywhydude 4y ago
      Is there a research on how many DUI deaths and accidents Uber has prevented? How about people who didn’t buy cars because Ubering is much easier?
      - arrosenberg 4y ago
        6% or ~500 lives per year according to this article (though it notes an increase in vehicle related deaths, so some of that may be cancelled by the additional road traffic) - https://qz.com/2038153/drunk-driving-deaths-dropped-as-more-americans-used-uber/ https://qz.com/2038153/drunk-driving-deaths-dropped-as-more-... Not a bad result, but probably not worth the problems that their current business model entails. There's clearly opportunities for better transportation options, they just need to make economic sense.
phil21 4y ago
> But he utterly failed. Maybe. If so, we're talking about a single investor out of at least hundreds that have similar, if not so insane, models. They work out fine, many of those posting here work for a company funded by such back in those days. In the late 90's/early 00's it was interesting to see which sites took off and which did not. I owned a hosting company and was fairly active in the community. It was an open secret that the giant sites of today were simply losing money on a monthly basis due to infrastructure costs with rich investors picking up the tab. Other competing bootstrapped companies with regular Joe founders simply could not keep up when their competitors could simply burn $100k/mo in bandwidth and server bills while instead they needed to be responsible with sustainable growth. I had more than a handful of founders/company owners who had previously perfectly sustainable models built up over half a decade only to be crushed by loss-making VC money. I often wonder how much different the Internet would look like if a startup remained a startup, and not some high finance big business industry that took over the title.
epvgwwqe 4y ago
That's not all. Softbank's oversized investments into hype machine companies drove investors away from funding legitimate companies in those spaces. The approach of throwing huge sums of money at dubious companies is a huge tax on innovation.
mym1990 4y ago
I believe Son has succeeded with this strategy if the bar for success is him getting rich and getting others rich. In the early 2000s he came from nothing, made a fortune, lost it all, and then remade it again. But at the end of the day, his strategy essentially hypes a company which then IPOs and he offloads his risk to the general public. He might be a good example of survivorship bias, how many have tried this very same thing only to fail miserably?
m3047 4y ago
> and weirdly distort some markets in ways that are difficult to understand The hypocrisy of social engineers presently touting outcome-based economic management policy generally (doesn't apply here apparently, or maybe that's HN selection bias), and the general lack of antitrust enforcement post Nixon don't have something to do with it?
spaetzleesser 4y ago
It’s a huge problem in the sense that these companies destroy a lot of otherwise viable businesses.
capableweb 4y ago
It shouldn't matter if they were successful or not, the method is, as parent wrote, sustainable and has no place in a supposedly stable economy. Just like a robbery is illegal no matter if it was successful or not. Plenty of other companies employ the same tactic but within one company and calling products "loss-leaders". Microsoft can run GitHub without making any profits with GitHub itself, as they can spend money earned elsewhere on running GitHub as a "loss-leader", just in order to push out any competitor that doesn't have a huge corporate behind them.
- camjw 4y ago
  But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in the door, for example.
  - hugh-avherald 4y ago
    Loss leaders are fine, but it should be illegal to run at a loss in order to drive out competition. (And, I believe, it already is.)
    - hhmc 4y ago
      Presumably determining if a loss leader exists to destroy competitors is tricky though? Like, MS aren’t going to come out and say “we want to bury gitlab”, even if that was the intended goal. there’s always going to be some vague brand building excuse to hide behind. (I don’t think this is the case for GitHub, but to illustrate the point)
      - PeterisP 4y ago
        It is somewhat tricky, but sometimes it can be (and has been) proven; people do say all kinds of things while doing illegal stuff, and sometimes even write it down or send it as an email.
        4y ago

A4ET8a8uTh0 4y ago

It is only a relatively small problem, because the guy at the helm appears to be not sufficiently successful with his approach. That said, he did have some notable wins ( Alibaba comes to mind ), so whether we discount is as luck or something else, the approach mirrors venture's unicorn search ( 19 will be busts, but one will be a massive payoff ). Separately, just because Son is losing a lot does not mean that a better equipped investor won't try to do the same, but better. At that point, this strategy would absolutely be an impediment to regular consumer.

mschuster91 4y ago

> But he utterly failed. All he did was redistribute investor money into consumer pockets(and weirdly distort some markets in ways that are difficult to understand). One might argue that the effects of "gig economy" and similar "modern tech" companies on local economies are damaging as well, beyond "weird distortions": - residents suffering from noise and rising rents thanks to AirBnB and copycats - taxis going out of business because they can't compete with Uber leading to people depending on regulated, discrimination-prevented taxis having issues, and to people in "high demand" situations like airports or event venues being squeezed for their money - restaurants, many of which were already at the edge of financial survivability prior to COVID, facing extortion by delivery apps - either use them and depend on them, or having the delivery apps simply subsidize your competition until you go broke - employees of all these companies who end up with down-pressure on their wages, and city governments with funding issues because employment tax income collapses as well, and as a result of that everyone else because governmental services degrade Someone will always pay for the supposed "inefficiencies" that cut-throat capitalism "identifies" - and in almost all cases it is those at the lowest rungs of society that bear the worst load.

arrosenberg 4y ago

I would not minimize the amount of damage done to transportation, hospitality and dining, considering the importance of those industries in a lot of cities. Softbank radically destabilized several economic sectors in an attempt to monopolize them. That kind of thing used to be a crime, and it should be again.

mbil 4y ago
As a consumer, Uber was superior to taxis in a number of ways: clearer pricing, competitive pricing, ride sharing, transparent routing, digital history and receipts, integrating with other apps, etc. What damage do you think was done to transportation?
- TazeTSchnitzel 4y ago
  There's research out there showing Uber has increased congestion on public roads, and I think also driven up carbon footprint per passenger. In part this is because it's cheaper than it should be. Incentivising less people per vehicle (taxis versus e.g. busses) is bad for society at large.
  - whywhywhydude 4y ago
    Is there a research on how many DUI deaths and accidents Uber has prevented? How about people who didn’t buy cars because Ubering is much easier?
    - arrosenberg 4y ago
      6% or ~500 lives per year according to this article (though it notes an increase in vehicle related deaths, so some of that may be cancelled by the additional road traffic) - https://qz.com/2038153/drunk-driving-deaths-dropped-as-more-americans-used-uber/ https://qz.com/2038153/drunk-driving-deaths-dropped-as-more-... Not a bad result, but probably not worth the problems that their current business model entails. There's clearly opportunities for better transportation options, they just need to make economic sense.

phil21 4y ago

> But he utterly failed. Maybe. If so, we're talking about a single investor out of at least hundreds that have similar, if not so insane, models. They work out fine, many of those posting here work for a company funded by such back in those days. In the late 90's/early 00's it was interesting to see which sites took off and which did not. I owned a hosting company and was fairly active in the community. It was an open secret that the giant sites of today were simply losing money on a monthly basis due to infrastructure costs with rich investors picking up the tab. Other competing bootstrapped companies with regular Joe founders simply could not keep up when their competitors could simply burn $100k/mo in bandwidth and server bills while instead they needed to be responsible with sustainable growth. I had more than a handful of founders/company owners who had previously perfectly sustainable models built up over half a decade only to be crushed by loss-making VC money. I often wonder how much different the Internet would look like if a startup remained a startup, and not some high finance big business industry that took over the title.

epvgwwqe 4y ago

That's not all. Softbank's oversized investments into hype machine companies drove investors away from funding legitimate companies in those spaces. The approach of throwing huge sums of money at dubious companies is a huge tax on innovation.

mym1990 4y ago

I believe Son has succeeded with this strategy if the bar for success is him getting rich and getting others rich. In the early 2000s he came from nothing, made a fortune, lost it all, and then remade it again. But at the end of the day, his strategy essentially hypes a company which then IPOs and he offloads his risk to the general public. He might be a good example of survivorship bias, how many have tried this very same thing only to fail miserably?

m3047 4y ago

> and weirdly distort some markets in ways that are difficult to understand The hypocrisy of social engineers presently touting outcome-based economic management policy generally (doesn't apply here apparently, or maybe that's HN selection bias), and the general lack of antitrust enforcement post Nixon don't have something to do with it?

spaetzleesser 4y ago

It’s a huge problem in the sense that these companies destroy a lot of otherwise viable businesses.

capableweb 4y ago

It shouldn't matter if they were successful or not, the method is, as parent wrote, sustainable and has no place in a supposedly stable economy. Just like a robbery is illegal no matter if it was successful or not. Plenty of other companies employ the same tactic but within one company and calling products "loss-leaders". Microsoft can run GitHub without making any profits with GitHub itself, as they can spend money earned elsewhere on running GitHub as a "loss-leader", just in order to push out any competitor that doesn't have a huge corporate behind them.

camjw 4y ago
But surely the concept of loss leaders can't be problematic in itself? I have no problem with a supermarket subsidising the price of one product to get me in the door, for example.
- hugh-avherald 4y ago
  Loss leaders are fine, but it should be illegal to run at a loss in order to drive out competition. (And, I believe, it already is.)
  - hhmc 4y ago
    Presumably determining if a loss leader exists to destroy competitors is tricky though? Like, MS aren’t going to come out and say “we want to bury gitlab”, even if that was the intended goal. there’s always going to be some vague brand building excuse to hide behind. (I don’t think this is the case for GitHub, but to illustrate the point)
    - PeterisP 4y ago
      It is somewhat tricky, but sometimes it can be (and has been) proven; people do say all kinds of things while doing illegal stuff, and sometimes even write it down or send it as an email.
      - 4y ago