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This method has 2 parts: lose money while creating a monopoly, then jack prices once consumers have no choice. However, none of the Uber style businesses have

This method has 2 parts: lose money while creating a monopoly, then jack prices once consumers have no choice. However, none of the Uber style businesses have an actual moat, so they can never implement part 2. This whole set of investments is one big subsidy to consumers. The fact that businesses get destroyed by a cheaper or free alternative is not a bad thing unless that consolidation leads to higher prices in the long run. Github is a great example in saas area. Utterly trivial for most customers to switch away or self host. They have no moat so they can't really jack prices. Now there are political issues with... essentially private companies creating public goods(see google search, social media, github to some extent, youtube/Twitch). However these are governance issues, rather than economic ones.

mschuster91 4y ago
> However, none of the Uber style businesses have an actual moat, so they can never implement part 2. This whole set of investments is one big subsidy to consumers. The big bet on Uber was against the ability of the governments to fight back against predatory bullshit - and for a while, it did seem like the big coffers of Uber cash would win over the established system of taxi regulations and employment laws. And at that point, they'd have the moat to crush the competition.
mym1990 4y ago
All of the Uber style businesses are also based around convenience, and as a consumer my elasticity for convenience is not very elastic(I don't know if this is the same for the general population). Pre-Uber, I can almost count on one hand the number of times I took a taxi somewhere but Uber made it cheap and fairly frictionless, so why not! Now it is still fairly frictionless but more expensive, and is just not worth it as much.
asciimike 4y ago
(Disclosure, I worked at GitHub at one point) > Github is a great example in saas area. Utterly trivial for most customers to switch away or self host. They have no moat so they can't really jack prices. I'm not sure I agree with this. It may be true for single developer code hosting, but GitHub as a business is much more than just that. GitHub makes money off three things, only one of which is the "core" code hosting business and two of which have solid moats: - GitHub Enterprise {Cloud, Server} - Actions (Azure compute minutes) - Advanced Security (code scanning, secret scanning, etc.) For customers operating in this environment, it's _extremely difficult_ to move because the latter features are built in to their business process (e.g. a compliance requirement that there are no known vulnerabilities dictates the use of GHAS, and they've already gotten signed off so switching to a different provider requires going through a more stringent audit in the future). GitHub doesn't have to raise prices, they just slowly add new functionality that boosts the usage of Actions, GHAS, etc. which both provide actual benefit to those customer segments and increase revenue (and eventually get new, larger customers on board). That large scale usage also offsets the cost for their free tiers, which in turn keeps the single developers hosting their code on GitHub. Even though it's fairly easy for them to move their repos elsewhere, the halo of other features plus the community (which is really the asset) keeps developers on the platform.
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mschuster91 4y ago

> However, none of the Uber style businesses have an actual moat, so they can never implement part 2. This whole set of investments is one big subsidy to consumers. The big bet on Uber was against the ability of the governments to fight back against predatory bullshit - and for a while, it did seem like the big coffers of Uber cash would win over the established system of taxi regulations and employment laws. And at that point, they'd have the moat to crush the competition.

mym1990 4y ago

All of the Uber style businesses are also based around convenience, and as a consumer my elasticity for convenience is not very elastic(I don't know if this is the same for the general population). Pre-Uber, I can almost count on one hand the number of times I took a taxi somewhere but Uber made it cheap and fairly frictionless, so why not! Now it is still fairly frictionless but more expensive, and is just not worth it as much.

asciimike 4y ago

(Disclosure, I worked at GitHub at one point) > Github is a great example in saas area. Utterly trivial for most customers to switch away or self host. They have no moat so they can't really jack prices. I'm not sure I agree with this. It may be true for single developer code hosting, but GitHub as a business is much more than just that. GitHub makes money off three things, only one of which is the "core" code hosting business and two of which have solid moats: - GitHub Enterprise {Cloud, Server} - Actions (Azure compute minutes) - Advanced Security (code scanning, secret scanning, etc.) For customers operating in this environment, it's _extremely difficult_ to move because the latter features are built in to their business process (e.g. a compliance requirement that there are no known vulnerabilities dictates the use of GHAS, and they've already gotten signed off so switching to a different provider requires going through a more stringent audit in the future). GitHub doesn't have to raise prices, they just slowly add new functionality that boosts the usage of Actions, GHAS, etc. which both provide actual benefit to those customer segments and increase revenue (and eventually get new, larger customers on board). That large scale usage also offsets the cost for their free tiers, which in turn keeps the single developers hosting their code on GitHub. Even though it's fairly easy for them to move their repos elsewhere, the halo of other features plus the community (which is really the asset) keeps developers on the platform.

deleted 4y ago
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