Comment by mlthoughts2018
6 years ago
The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity.
Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors.
This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery.
It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors.
GrubHub / DoorDash / etc., are just more of the same.
You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are.
Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.
It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet.
It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.
Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.
You should probably read the articles the parent cited on nakedcapitalism.com.
> the tech to spin up a competitor is extremely cheap and commodity.
This is the part that makes me the most mad. The delivery companies have almost no value as business entities, all of their value is in the technology, and the technology is not complicated at all.
The job that's being done by doordash and grubhub and all of them would be accomplished much more affordably, sustainably, and ethically with a marketing co-op, which is already pretty common in the food industry in America (Blue Diamond, Land o Lakes, Ocean Spray, Sunkist, Sun-maid, Tillamook, Welch's, etc). There's no need for a separate VC-backed for-profit here, a simple confederation of restauranteurs would work fine and be just as effective and way better for the whole marketplace.
How about public transport? It makes a substantial difference that I can pull up the route suggestion and station timetable from my pocket always-on always-connected supercomputer to know to the minute when I need to start tieing my shoes to get where I'm going. You're basically arguing that adding telepathic conscioussness to a service provides less than zero value.
It's not that these services don't provide value, it's that they don't make money. These are two quite different things.