9 ms·

Why do companies with documented shady ethics like JustFab continue to excel?

by curiouslurker 12y ago

rhizome 12y ago
Capitalism doesn't discourage dirty tricks.
- dikaiosune 12y ago
  Unless they're illegal and you get caught and you fail to defend yourself and you lose any business due to the bad publicity.
  - ukigumo 12y ago
    That doesn't seem to be the case. Think Uber for instance.
- adventured 12y ago
  Yes it does. One very large factor in people trading with other people is reputation. Whether we're talking 1910 or 2015. See: eBay (or a dozen other obvious examples). Maybe you're smarter when it comes to business than, say, Warren Buffett. His theory is that having a good reputation is immensely important in business. Businesses suffer or die all the time in the free market due to poor reputations. You see those consequences at a small town level, and you see it at a very large level. To easily test your theory: try setting up a business in a small town. Proceed to cheat or otherwise perform dirty tricks on all of your customers. See what happens.
  - jsprogrammer 12y ago
    Free markets don't really exist. Market information and capital is highly siloed and almost exclusively used for advantage by market incumbents.
    - adventured 12y ago
      First, your premise is invalid, because your definition of a free market is wrong. The concept of a free market does not require perfectly equal distribution of knowledge or capital, such that in the absence of that said free market ceases. "Free market" != perfectly equal distribution of resources. Second, your premise is invalid because it rests on the notion that both capital and information are static quantities, when in fact they can be created and accumulated by new entrants very easily, and historically this is exactly what occurs. If you were right, the silo would act to vigorously prevent new entrants. The exact opposite proved to be true under Capitalism in the US: the US became the greatest business / startup creation engine in history precisely due to its original highly free market orientation.
      - jsprogrammer 12y ago
        Please point to the authoritative definition of "free market" so that I may appropriately rebut you.
        adventured 12y ago
        Sure, let's go with Merriam Webster, given they're a very prominent authority on definitions. We can look at other prominent resources too, since their definitions are all similar enough that you should have no problem rebutting my position: that a free market does not require equal distribution of resources among participants, and that incumbents can create their own new information and capital (ie information and capital in a free market are not static resources). http://www.merriam-webster.com/dictionary/free%20market http://www.merriam-webster.com/dictionary/free%20market "an economic market or system in which prices are based on competition among private businesses and not controlled by a government" http://www.investopedia.com/terms/f/freemarket.asp http://www.investopedia.com/terms/f/freemarket.asp "A market economy based on supply and demand with little or no government control."
        jsprogrammer 12y ago
        Ok, well now we've gone from two ill-defined terms to a handful of ill-defined terms: "economic market or system", "prices based on competition", "private businesses", "control", "government", "market economy", "supply and demand", "little". I don't think these definitions are that rigorous or well-founded, however I will accept that they represent a colloquial understanding of the terms however "incorrect" they may be. I say "incorrect" because I'm not sure you could use those definitions to point to real-life instances of what my understanding (and what I believe is implied in this thread/forum) of a "free market" is: Entities exchanging *things*, free of coercion. >you should have no problem rebutting my position Ok, so you've already signaled defeat... > that a free market does not require equal distribution of resources among participants To be clear, I never claimed that it does. I claimed that free markets don't really exist. It is actually very easy to disprove my claim, it merely requires one to produce a counter-example, that is, point to an instance of a free market. If you can provide a counter-example, I will respond, as I believe I will be able to show you a market that is (likely) rife with coercion. What I claimed is that existing markets are typically extremely asymmetrical in regard to how information and resources are distributed among the participants. Most participants in the "free market" that is the USA have comparatively no information or resources vs. the largest participants. Additionally, many of those who lack information and/or resources are survivally dependent in some way on the largest participants which is typically where the coercion is allowed (or designed) to creep in. Some research[1] has found that even seemingly small amounts of asymmetry lead to large systemic effects. In the cited case, it was found that those who update their market strategy (who to bid against and at what price) fastest will cyclically be able to achieve much higher values of money than those who update their strategies at a slower rate. When you map these results to their real-world analogues, it is established participants (corporations) that are able to update their strategies faster (analytics, espionage, acquisitions & mergers, political purchasing) while individuals are unable to update as quickly. For example, I can't really negotiate with and/or continually swap between competitors of: PG&E/AT&T/NBCComcastUniversal/TimeWarner/Verizon/etc/etc. To some extent I can swap (update my strategy), but not at the same rate that they are able to update theirs (for example, an airline can change prices on demand, multiple times per day). Typically I can't even access historical market pricing, while the incumbents have access to (and exploit) almost all historical market data. [1] http://arxiv.org/pdf/1201.3798v3.pdf http://arxiv.org/pdf/1201.3798v3.pdf Edit: If you are going to down-vote, please provide a counter-example.
  - pm90 12y ago
    Agreed. Unfortunately, today's globalized world is very unlike a small town. So, a lot of crooks can scam a whole bunch of people before they are blacklisted as such.
    - adventured 12y ago
      That has always been true. ~130 years ago, crooks went from small town to small town selling snake oil cures - and they had to promptly leave in a hurry, they were almost always run out of town by their horrible reputations. It doesn't guarantee perfect or instant protection, it drastically increases the odds of eventual consequences. The reason for that is, human knowledge (eg about someone's reputation) isn't acquired or shared instantly, it's a process requiring time. It's a 95% good enough premise, but not a 100% guarantee. Historically it works incredibly well over time. The modern examples at a large scale are plentiful as well. Costco for example has a tremendous reputation, and I would argue it has substantially aided it in, essentially, besting Sam's Club. Costco proved you can defeat even the largest of incumbent in the market by doing things better for customers and employees.
    - Kiro 12y ago
      On the other hand globalization has made it much harder to scam in many ways since information about scams spread instantly. Back in the days you could use any simple trick and people would buy it over and over again since they had never heard of it before. Nowadays the scammers need to be much more inventive.
      - billmalarky 12y ago
        Multi-level marketing scams beg to differ.
        Kiro 12y ago
        I don't know if I agree. MLM companies need to put some serious effort into combating all the bad press they get on the internet (efforts which are inventive indeed!). Without globalization it would be a walk in the park.
  - hrktb 12y ago
    It's valid until you find a solution to this problem. A solution can be to accept to suffer and die abruptly after making a load of money in a short spark. Or you can get a maximum of money and influence in a very short spike and use your position then to block concurrents from catching up while your reputation goes down the hill. Or you can grow the company responsible on good bases, make sure you won't get displaced/disrupted, and then go full shady. Or you go full shady from the start but have some entity protect you from the consequences and let you grow untouched. A good reputation is a business advantage, but it's just one among others, and you can compensate for it if you have other strong cards to play.
    - jacques_chester 12y ago
      > It's valid until you find a solution to this problem. The balance between predatory and counter-predatory behaviour is the story of life on earth and human civilisation. There will never be "a" solution.
  - rhizome 12y ago
    Plaxo is still in business, as are any number of dark-pattern-using and outright user-hostile companies who do not have good reputations among people who are not their customers. Certain dirty tricks may also enjoy a perverse incentive in that they don't directly affect their customers, but market share or other B2B forces. Surely a good reputation is better than a bad one, and Mr. Buffett is successful in light of the reputations in which he invests, but this is not the sum total of companies enjoying capital success. This is what I mean by capitalism not discouraging dirty tricks: it may encourage not using dirty tricks, but using dirty tricks is not a disqualifier for success, nor do dirty tricks always result in a universally poor reputation that would kill companies in other contexts.
AVTizzle 12y ago
For context (since I had to look it up myself as well...) - http://valleywag.gawker.com/the-biggest-scam-in-online-fashion-1410935207 http://valleywag.gawker.com/the-biggest-scam-in-online-fashi... - https://news.ycombinator.com/item?id=6455391 https://news.ycombinator.com/item?id=6455391
sgustard 12y ago
In the case of JustFab, they excel because they fixed the problems, and they are running a profitable service their customers want. That article is from two years ago, and they've clarified their checkout process since then. I just tried it and there's a big "VIP Membership Program" checkbox which you can un-check to buy a single item, or check to buy a subscription, which explains that you'll be shipped and charged for an item every month. There's a 24/7 phone to cancel. It's all above the fold and doesn't come across as shady. In any case, step back and think. Deceiving your customer base might work for the short term, but wouldn't for the long term.

Why do companies with documented shady ethics like JustFab continue to excel?

rhizome 12y ago

Capitalism doesn't discourage dirty tricks.

dikaiosune 12y ago
Unless they're illegal and you get caught and you fail to defend yourself and you lose any business due to the bad publicity.
- ukigumo 12y ago
  That doesn't seem to be the case. Think Uber for instance.
adventured 12y ago
Yes it does. One very large factor in people trading with other people is reputation. Whether we're talking 1910 or 2015. See: eBay (or a dozen other obvious examples). Maybe you're smarter when it comes to business than, say, Warren Buffett. His theory is that having a good reputation is immensely important in business. Businesses suffer or die all the time in the free market due to poor reputations. You see those consequences at a small town level, and you see it at a very large level. To easily test your theory: try setting up a business in a small town. Proceed to cheat or otherwise perform dirty tricks on all of your customers. See what happens.
- jsprogrammer 12y ago
  Free markets don't really exist. Market information and capital is highly siloed and almost exclusively used for advantage by market incumbents.
  - adventured 12y ago
    First, your premise is invalid, because your definition of a free market is wrong. The concept of a free market does not require perfectly equal distribution of knowledge or capital, such that in the absence of that said free market ceases. "Free market" != perfectly equal distribution of resources. Second, your premise is invalid because it rests on the notion that both capital and information are static quantities, when in fact they can be created and accumulated by new entrants very easily, and historically this is exactly what occurs. If you were right, the silo would act to vigorously prevent new entrants. The exact opposite proved to be true under Capitalism in the US: the US became the greatest business / startup creation engine in history precisely due to its original highly free market orientation.
    - jsprogrammer 12y ago
      Please point to the authoritative definition of "free market" so that I may appropriately rebut you.
      - adventured 12y ago
        Sure, let's go with Merriam Webster, given they're a very prominent authority on definitions. We can look at other prominent resources too, since their definitions are all similar enough that you should have no problem rebutting my position: that a free market does not require equal distribution of resources among participants, and that incumbents can create their own new information and capital (ie information and capital in a free market are not static resources). http://www.merriam-webster.com/dictionary/free%20market http://www.merriam-webster.com/dictionary/free%20market "an economic market or system in which prices are based on competition among private businesses and not controlled by a government" http://www.investopedia.com/terms/f/freemarket.asp http://www.investopedia.com/terms/f/freemarket.asp "A market economy based on supply and demand with little or no government control."
        jsprogrammer 12y ago
        Ok, well now we've gone from two ill-defined terms to a handful of ill-defined terms: "economic market or system", "prices based on competition", "private businesses", "control", "government", "market economy", "supply and demand", "little". I don't think these definitions are that rigorous or well-founded, however I will accept that they represent a colloquial understanding of the terms however "incorrect" they may be. I say "incorrect" because I'm not sure you could use those definitions to point to real-life instances of what my understanding (and what I believe is implied in this thread/forum) of a "free market" is: Entities exchanging *things*, free of coercion. >you should have no problem rebutting my position Ok, so you've already signaled defeat... > that a free market does not require equal distribution of resources among participants To be clear, I never claimed that it does. I claimed that free markets don't really exist. It is actually very easy to disprove my claim, it merely requires one to produce a counter-example, that is, point to an instance of a free market. If you can provide a counter-example, I will respond, as I believe I will be able to show you a market that is (likely) rife with coercion. What I claimed is that existing markets are typically extremely asymmetrical in regard to how information and resources are distributed among the participants. Most participants in the "free market" that is the USA have comparatively no information or resources vs. the largest participants. Additionally, many of those who lack information and/or resources are survivally dependent in some way on the largest participants which is typically where the coercion is allowed (or designed) to creep in. Some research[1] has found that even seemingly small amounts of asymmetry lead to large systemic effects. In the cited case, it was found that those who update their market strategy (who to bid against and at what price) fastest will cyclically be able to achieve much higher values of money than those who update their strategies at a slower rate. When you map these results to their real-world analogues, it is established participants (corporations) that are able to update their strategies faster (analytics, espionage, acquisitions & mergers, political purchasing) while individuals are unable to update as quickly. For example, I can't really negotiate with and/or continually swap between competitors of: PG&E/AT&T/NBCComcastUniversal/TimeWarner/Verizon/etc/etc. To some extent I can swap (update my strategy), but not at the same rate that they are able to update theirs (for example, an airline can change prices on demand, multiple times per day). Typically I can't even access historical market pricing, while the incumbents have access to (and exploit) almost all historical market data. [1] http://arxiv.org/pdf/1201.3798v3.pdf http://arxiv.org/pdf/1201.3798v3.pdf Edit: If you are going to down-vote, please provide a counter-example.
- pm90 12y ago
  Agreed. Unfortunately, today's globalized world is very unlike a small town. So, a lot of crooks can scam a whole bunch of people before they are blacklisted as such.
  - adventured 12y ago
    That has always been true. ~130 years ago, crooks went from small town to small town selling snake oil cures - and they had to promptly leave in a hurry, they were almost always run out of town by their horrible reputations. It doesn't guarantee perfect or instant protection, it drastically increases the odds of eventual consequences. The reason for that is, human knowledge (eg about someone's reputation) isn't acquired or shared instantly, it's a process requiring time. It's a 95% good enough premise, but not a 100% guarantee. Historically it works incredibly well over time. The modern examples at a large scale are plentiful as well. Costco for example has a tremendous reputation, and I would argue it has substantially aided it in, essentially, besting Sam's Club. Costco proved you can defeat even the largest of incumbent in the market by doing things better for customers and employees.
  - Kiro 12y ago
    On the other hand globalization has made it much harder to scam in many ways since information about scams spread instantly. Back in the days you could use any simple trick and people would buy it over and over again since they had never heard of it before. Nowadays the scammers need to be much more inventive.
    - billmalarky 12y ago
      Multi-level marketing scams beg to differ.
      - Kiro 12y ago
        I don't know if I agree. MLM companies need to put some serious effort into combating all the bad press they get on the internet (efforts which are inventive indeed!). Without globalization it would be a walk in the park.
- hrktb 12y ago
  It's valid until you find a solution to this problem. A solution can be to accept to suffer and die abruptly after making a load of money in a short spark. Or you can get a maximum of money and influence in a very short spike and use your position then to block concurrents from catching up while your reputation goes down the hill. Or you can grow the company responsible on good bases, make sure you won't get displaced/disrupted, and then go full shady. Or you go full shady from the start but have some entity protect you from the consequences and let you grow untouched. A good reputation is a business advantage, but it's just one among others, and you can compensate for it if you have other strong cards to play.
  - jacques_chester 12y ago
    > It's valid until you find a solution to this problem. The balance between predatory and counter-predatory behaviour is the story of life on earth and human civilisation. There will never be "a" solution.
- rhizome 12y ago
  Plaxo is still in business, as are any number of dark-pattern-using and outright user-hostile companies who do not have good reputations among people who are not their customers. Certain dirty tricks may also enjoy a perverse incentive in that they don't directly affect their customers, but market share or other B2B forces. Surely a good reputation is better than a bad one, and Mr. Buffett is successful in light of the reputations in which he invests, but this is not the sum total of companies enjoying capital success. This is what I mean by capitalism not discouraging dirty tricks: it may encourage not using dirty tricks, but using dirty tricks is not a disqualifier for success, nor do dirty tricks always result in a universally poor reputation that would kill companies in other contexts.

AVTizzle 12y ago

For context (since I had to look it up myself as well...) - http://valleywag.gawker.com/the-biggest-scam-in-online-fashion-1410935207 http://valleywag.gawker.com/the-biggest-scam-in-online-fashi... - https://news.ycombinator.com/item?id=6455391 https://news.ycombinator.com/item?id=6455391

sgustard 12y ago

In the case of JustFab, they excel because they fixed the problems, and they are running a profitable service their customers want. That article is from two years ago, and they've clarified their checkout process since then. I just tried it and there's a big "VIP Membership Program" checkbox which you can un-check to buy a single item, or check to buy a subscription, which explains that you'll be shipped and charged for an item every month. There's a 24/7 phone to cancel. It's all above the fold and doesn't come across as shady. In any case, step back and think. Deceiving your customer base might work for the short term, but wouldn't for the long term.