5 ms·

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. G

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. Genuine question, what are some examples of companies in that "hiking the price" camp? I can think of tons of tech companies that sold or sell stuff at a loss for growth, but struggling to find examples where the companies then are able to turn dominant market share into higher prices. To be clear, I'm definitely not implying they are not out there, just looking for examples.

loganfrederick 3y ago
Uber, Netflix and the online content streaming services. These are probably the most prominent examples from this recent 2010s era.
spacebanana7 3y ago
The Google Maps API price hike of 2018 [1] is a relevant example. [1] https://kobedigital.com/google-maps-api-changes https://kobedigital.com/google-maps-api-changes
beezlebroxxxxxx 3y ago
Uber is probably the biggest pure example. When I was in uni when they first spread, Uber's entire business model was flood the market with hilariously low prices and steep discounts. People overnight started using them like crazy. They were practically giving away their product. Now, they're as expensive, if not sometimes more expensive, than any other taxi or ridesharing service in my area. One thing I'll add is that it's not always that this ends with higher prices in an absolute sense, but that the tech company is able to essentially cut the knees out of their competitors until they're a shell of their former selves. Then when the prices go "up", they're in a way a return to the "norm", only they have a larger and dominant market share because of their crazy pricing in the early stages.
- wkat4242 3y ago
  Yeah I kinda wonder why people even use them anymore. I've long gone back to real taxis because their cheaper and I don't have to book them, I can just grab one on the street. Much more efficient than waiting for slowly watching my driver edge his way to me from 3 kilometers away.
  - jdminhbg 3y ago
    The number of places where you can reliably walk out onto the street and hail a taxi is pretty small. Everywhere else, the relevant decision is whether calling a dispatcher or using a taxi company's app is faster/cheaper/more reliable than Uber/Lyft.
    - pests 3y ago
      Living in the Detroit Metro area seeing that interaction in movies always blew my mind. Just walk outside and get a taxi? Crazy talk.
      - wkat4242 3y ago
        Here in Barcelona it works like that. 2-3 free taxis pass my place per minute or so. Just wave and you've got one. They're also very cheap. But yeah the movie thing is not at all unrealistic here. Though at night I usually wave the torch on my phone to attract attention because they don't always see a raised hand.
    - wkat4242 3y ago
      Here in Barcelona it's great, I really never have to call one. It's always faster just waiting. At the busiest time it's a bit harder but at that time the ride-sharing services are also overloaded so it's still faster to just wait for a green light (free taxi). We don't get Uber as far as I know but we do have a similar thing called Cabify. But it's useless if you need something quick and they've put the prices up too much. I now only use them for scheduled stuff like airport dropoffs.
    - Turing_Machine 3y ago
- golergka 3y ago
  "Uber/Airbnb is expensive now" is an entirely american phenomena. In Europe and Latin America, both are still cheaper than alternative (comparable hotels and yellow cabs). Most likely in other parts of the world too.
mikpanko 3y ago
- Uber/Lyft increased prices significantly (and partially transition it into longer wait times) since they got into profitability mode - Google is showing more and more ads over time to power high revenue growth YoY - Unity has just tried to increase its prices
- jaredklewis 3y ago
  I think Google fits more in the "extract as much value from your users" bucket more than the price hiking one. Uber/Lyft did raise prices, but interestingly (at least to me) is that if the strategy was the smother the competition with low prices, it didn't seem to work. Unity is interesting too, though I'm not sure it would make a good poster child for this playbook. It raised prices but seems to be suffering for it.
  - HillRat 3y ago
    Everyone's in "show your profits" mode, as befitting a mature market with smaller growth potential relative to the last few decades. Some of what we're talking about here is just what happens when a company tries to use investment capital to build a moat but fails (the Uber/Lyft issue you mentioned -- there's no obvious moat to ride-hailing, as with many software and app domains). My theory is that, going forward, we're going to see a much lower ceiling on revenue coupled with lots of competition in the market as VC investments cool off and companies can't spend their way into ephemeral market dominance. As for Unity, they're certainly dealing with a bunch of underperforming PE and IPO-enabled M&A on the one hand (really should have considered that AppLovin offer, folks), but also just a failure to extract reasonable income from their flagship product on the other; I don't think their problems come from raising prices per se (game devs pay for a lot already, an engine fee is nothing new to them) as much as how they chose to do it and the original pricing model they tried to force on their clients. What they chose to do and the way they handled it wasn't just bad, it was "HBS case study bad."
dboreham 3y ago
VMWare, Docker.
Bukhmanizer 3y ago
I was most thinking of Uber and AirBnB for price hiking and Google and Facebook for extracting value.
polski-g 3y ago
Unity. Atlassian. Jetbrains. Elastic.

loganfrederick 3y ago

Uber, Netflix and the online content streaming services. These are probably the most prominent examples from this recent 2010s era.

spacebanana7 3y ago

The Google Maps API price hike of 2018 [1] is a relevant example. [1] https://kobedigital.com/google-maps-api-changes https://kobedigital.com/google-maps-api-changes

beezlebroxxxxxx 3y ago

Uber is probably the biggest pure example. When I was in uni when they first spread, Uber's entire business model was flood the market with hilariously low prices and steep discounts. People overnight started using them like crazy. They were practically giving away their product. Now, they're as expensive, if not sometimes more expensive, than any other taxi or ridesharing service in my area. One thing I'll add is that it's not always that this ends with higher prices in an absolute sense, but that the tech company is able to essentially cut the knees out of their competitors until they're a shell of their former selves. Then when the prices go "up", they're in a way a return to the "norm", only they have a larger and dominant market share because of their crazy pricing in the early stages.

wkat4242 3y ago
Yeah I kinda wonder why people even use them anymore. I've long gone back to real taxis because their cheaper and I don't have to book them, I can just grab one on the street. Much more efficient than waiting for slowly watching my driver edge his way to me from 3 kilometers away.
- jdminhbg 3y ago
  The number of places where you can reliably walk out onto the street and hail a taxi is pretty small. Everywhere else, the relevant decision is whether calling a dispatcher or using a taxi company's app is faster/cheaper/more reliable than Uber/Lyft.
  - pests 3y ago
    Living in the Detroit Metro area seeing that interaction in movies always blew my mind. Just walk outside and get a taxi? Crazy talk.
    - wkat4242 3y ago
      Here in Barcelona it works like that. 2-3 free taxis pass my place per minute or so. Just wave and you've got one. They're also very cheap. But yeah the movie thing is not at all unrealistic here. Though at night I usually wave the torch on my phone to attract attention because they don't always see a raised hand.
  - wkat4242 3y ago
    Here in Barcelona it's great, I really never have to call one. It's always faster just waiting. At the busiest time it's a bit harder but at that time the ride-sharing services are also overloaded so it's still faster to just wait for a green light (free taxi). We don't get Uber as far as I know but we do have a similar thing called Cabify. But it's useless if you need something quick and they've put the prices up too much. I now only use them for scheduled stuff like airport dropoffs.
  - Turing_Machine 3y ago
golergka 3y ago
"Uber/Airbnb is expensive now" is an entirely american phenomena. In Europe and Latin America, both are still cheaper than alternative (comparable hotels and yellow cabs). Most likely in other parts of the world too.

mikpanko 3y ago

- Uber/Lyft increased prices significantly (and partially transition it into longer wait times) since they got into profitability mode - Google is showing more and more ads over time to power high revenue growth YoY - Unity has just tried to increase its prices

jaredklewis 3y ago
I think Google fits more in the "extract as much value from your users" bucket more than the price hiking one. Uber/Lyft did raise prices, but interestingly (at least to me) is that if the strategy was the smother the competition with low prices, it didn't seem to work. Unity is interesting too, though I'm not sure it would make a good poster child for this playbook. It raised prices but seems to be suffering for it.
- HillRat 3y ago
  Everyone's in "show your profits" mode, as befitting a mature market with smaller growth potential relative to the last few decades. Some of what we're talking about here is just what happens when a company tries to use investment capital to build a moat but fails (the Uber/Lyft issue you mentioned -- there's no obvious moat to ride-hailing, as with many software and app domains). My theory is that, going forward, we're going to see a much lower ceiling on revenue coupled with lots of competition in the market as VC investments cool off and companies can't spend their way into ephemeral market dominance. As for Unity, they're certainly dealing with a bunch of underperforming PE and IPO-enabled M&A on the one hand (really should have considered that AppLovin offer, folks), but also just a failure to extract reasonable income from their flagship product on the other; I don't think their problems come from raising prices per se (game devs pay for a lot already, an engine fee is nothing new to them) as much as how they chose to do it and the original pricing model they tried to force on their clients. What they chose to do and the way they handled it wasn't just bad, it was "HBS case study bad."

dboreham 3y ago

VMWare, Docker.

Bukhmanizer 3y ago

I was most thinking of Uber and AirBnB for price hiking and Google and Facebook for extracting value.

polski-g 3y ago

Unity. Atlassian. Jetbrains. Elastic.