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The main reason for that is that scaling works so differently. A purely web based company that hits on a really good operating* model can potentially scale whol
by Mvandenbergh 14y ago
The main reason for that is that scaling works so differently. A purely web based company that hits on a really good operating* model can potentially scale whole orders of magnitude in a short period with relatively limited additional investment.
ZipCar can't do that because their growth is constrained by the need for expensive assets (cars). Even if they were popular enough to expand by a whole order of magnitude over the course of a year they would require a huge injection of additional cash from additional equity sales or lending.
As a result, it just isn't really possible for ZipCar undergo the huge upside that a web-only company can.
- Mvandenbergh 14y ago(*) I wouldn't call an operating model that doesn't produce revenue a business model
- ollysb 14y agoThe problem is they scale down just as quickly. Currently they're sold with valuations that speculate about the potential profits according to their level of engagement. In many cases they'll scale down before they ever deliver on the kinds of profits that would justify their price tag.
- dasil003 14y agoTrue, but it will take a few more decades before the market gets as comfortable valuing web companies as they are at valuing rental car companies. A big part of the valuation is simply unknown upside of the web in general and business models that will emerge. We like to laugh at the excesses of the dotcom boom, but the uncertainties that drove the insane valuations are still at play on a smaller scale.
- sliverstorm 14y agoThis all fits perfectly fine. High reward, high risk.