[Non24Throw]

Bingo.

Subsidized not only by VCs, but also by gig economy workers who genuinely don’t understand how little they’re being paid because their liabilities are complicated and often hidden/deferred.

This seems to happen a lot especially with food service startups, because of how price-sensitive that market is. Selling anything below cost or undercutting the competition by even a little bit in that industry will give you exponential growth for as long as you can sustain it, but the instant you want to turn a profit the market will turn their back on you and go somewhere else.

[csharptwdec19]

Ehh, but it's nothing new in the realm of food delivery (not saying that's -right-, mind you.)

Pizza delivery drivers have been getting the same bad deal for a long time. Most teenagers/young adults who take a delivery job have no idea that they require additional coverage on their vehicle and are one accident away from a lot of financial hardship.

You just see/hear about it much more now because rather than a small business offering the bad deal it's a (multi)national company. VC is just providing a way to scale the pain's visibility up.

[core-questions]

Thing is, for a teenager / college student, it made sense as a side job. Bang around in a shitty car, make friends you work with, get a discount on pizza for yourself, get tips under the table with no tax, and enjoy that phase in your life.

With these services, it's like as though people somehow expect gig-work - already much less certain than being an employed drivers - to be a career. License and insurance requirements, PPE, and the sheer scale of the middleman operation involved in running a huge app like this - it's nuts to think that it could be done for the same price as the conventional delivery model.

[kurthr]

And don't forget, your parents are still subsidizing your insurance... and those tickets don't show up on your record for at least 6 months, if you go to court!

[jfk13]

> it made sense as a side job

Sure... until an accident happens, you find out that your insurance didn't cover the (undeclared) use for business purposes, and you're liable for somebody's million-dollar medical bills.

[jdsully]

You can't get blood from a stone. Or in this case money from a minimum wage pizza delivery driver now without a car.

[toxik]

Curious as a non-US reader to see what your fear is in this scenario: financial problems

[lm28469]

Not sure where you're from but if you're uninsured and cause an accident in France you're basically fucked. If you injure (yourself or someone else) or destroy public/private property you will have to cover it yourself. Many people end up paying hundred of euros per months for decades if not for their entire life.

[chosenbreed37]

I'm guessing he would be more concerned about dying or sustaining irreparable physical harm...:-)

[pkaye]

In the US, we often has uninsured driver coverage. If the other driver has no insurance, our own insurance will cover us and then go after the other driver. But if they have no assets they are probably not worth going after as court cases cost money.

[toxik]

That sounds absolutely crazy. Nordic country. You may have to pay damages, but it would not be hundreds of euros for decades, that's just entirely unreasonable.

[fragmede]

How common is it for French insurance companies to find a way to get out of paying, when a driver they cover gets in an accident?

[acchow]

Which problem are you thinking of?

[olyjohn]

Has this ever actually happened? Or is this more of a fear-driven thing that everybody just says?

I'd bet money that the insurance company is still on the hook to cover it, but they'll be super quick to drop you.

[foxyv]

Happens a lot for small stuff: https://www.nbcphiladelphia.com/local/pizza_delivery_insuran...

Not so sure about someone getting saddled with someone elses medical bills.

[vageli]

You would bet money that the insurance would cover it instead of finding a way out of it? What makes you so sure about that? There are examples of homeowner's insurance not covering issues caused by renting on AirBnB, so I would be surprised if motor vehicle insurance was any different.

[irishcoffee]

So your point is, call your insurance company such that you don't commit insurance fraud? I'm struggling to see your gripe.

[dlhavema]

Most Uber drivers I know do it full time that is a side job like pizza delivery kids. The difference is I think people think Uber is a full-time job.

[throwqqq]

This only works if you have a baby boom. Currently there are very few teenagers in the west compared to the 60s or 90s.

[elhudy]

Ex pizza-delivery driver checking in. I made about $15/hr (incl tips) delivering for dominos in 2007. I drove a $2000 truck and didn't much care about coverage on it. It was the best summer job I ever had.

[WalterBright]

If you have nothing, it's highly unlikely you're going to get sued. People who sue always look for the party with the most money, and try to shift the blame to them.

[rhexs]

Not sure why this is downvoted. I’m guessing most pizza delivery drivers are basically judgement proof.

Just don’t drink and drive.

[hiram112]

That's what I made around year 2000. Though I delivered 'Better Pizza, with Better Ingredients'!

Gas was $1/gallon and we got 70¢ per delivery. I asked a friend about 2008 or so, when gas had gotten up to almost $5/gallon briefly (part of the cause of the Great Recession, I'd imagine), and he said they were still getting 70¢ per run. That sucks.

Also, only 1/10 orders used credit cards, so nobody paid taxes on tips - all cash. By 2008, I'm guessing it was 1/3 using credit, and now, with apps, it's probably 9/10 using cards.

But yeah, it was a sweet gig if you weren't the social / beautiful type to be a successful waiter or waitress / bartender. It paid more and was way more fun than making $6-$8 / hour at McDonalds or Target.

[elhudy]

What crushed us was when dominos implemented the "delivery fee". As drivers we only got ~1/4 of the ~$2 fee per run, but customers began treating it as though it was a tip.

[mullingitover]

> Pizza delivery drivers have been getting the same bad deal for a long time.

Ehh, I had a bachelor's degree and did tech support for a fortune 500 company, and I was earning half what my friend made as a pizza delivery driver.

s/Pizza delivery drivers/everyone

[acdha]

I think there's more than just visibility: the pizza driver at least has a fixed rate which doesn't change all of the time and there isn't a third party hiding part of the billing. Most of the gig apps try to obscure their share of the money, especially from the customer and driver, and anything which has the concept of surge pricing can add noise which makes it harder to understand the impact of changes.

[hardtke]

Former pizza delivery person (long time ago). Pizza works better economically because it transports better (stays hot longer) and has higher volume. I used to load up 5+ deliveries for the same small area of town. The dispatchers were hopefully good at grouping deliveries.

[heavyset_go]

> but also by gig economy workers who genuinely don’t understand how little they’re being paid because their liabilities are complicated and often hidden/deferred.

After talking to several gig economy workers, and many of them understand in very concrete terms that they are trading the value their vehicle for cash now. It's a logical short-term choice when they have bills that need to be paid today, and have a vehicle they can stretch out for a few years.

[amelius]

Good VCs don't support selling below cost. Only evil and stupid ones do.

In some countries it is even illegal.

[tengbretson]

The line between being unprofitable and selling at a loss can be very blurry. What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success".

[amelius]

> What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success".

Can you explain why this should not be viewed as anti-competitive behavior? How would you call it if it's not predatory pricing/undercutting?

[WalterBright]

There are 3 prices you can set:

1. above the competition - gouging, profiteering

2. below the competition - predatory pricing, unfair competition, dumping

3. same as the competition - price fixing, collusion

All are illegal!

[compiler-guy]

All of those price points in the first column are _necessary_ for the legal consequences in the second column, but not sufficient by any stretch.

[gbear605]

Alternatively, set your prices based on the actual supply and demand and your costs, not by trying to manipulate the market :)

[fosk]

But why? Just let the market do its thing:

- if a market player wants to sell goods or services at a loss, let them do it and it benefits the consumer

- if the competition goes out of business and the prices are raised, somebody else will see the opportunity to enter the market at a lower cost.

Rinse and repeat. The consumers benefit from it either way.

[amelius]

This isn't about pricing relative to the competition, but relative to the cost of production.

[bpodgursky]

It's not anti-competitive if you're a relatively small player or trying to build a market.

Comparison: when a new restaurant opens, it's very common to hand out coupons in the neighborhood for discounts or free meals. Those free meals will be sold at a loss, with the goal of building a customer base. Think of it as marketing.

EOD, "anti-competitive" is evaluated on the outcome -- does the success of the company running the discounts make the market more or less competitive if they succeed? If a company is already the dominant player in a market, it's anti-competitive to price dump to keep new entrants out.

But if the company is new and trying to disrupt established players (or trying to create a market where one didn't exist), it's very hard to argue that there's less competition due to their success.

[amelius]

> EOD, "anti-competitive" is evaluated on the outcome -- does the success of the company running the discounts make the market more or less competitive if they succeed?

This doesn't seem right. If they are price dumping then it will immediately affect the competition. No need to wait for an outcome or interpretation.

> Comparison: when a new restaurant opens, it's very common to hand out coupons in the neighborhood for discounts or free meals.

I'd say this is only acceptable because it is small scale (only few restaurants fit in a neighborhood) and the amount of money isn't endless like it (often) is with VC money. The short duration makes it possible for the competition to overcome the negative effects.

The problem with VC money is that all too often it is used to destroy competition and build monopolies.

[WalterBright]

> all too often it is used to destroy competition and build monopolies.

Case history, please.

[mtnGoat]

free trials offer something for free without charge. is that predatory?

they are taking the risk of offering free services in the hope that you will stay around and keep using the service. if you dont, they are at a loss.

[WalterBright]

That's why we have generally accepted accounting rules. An investor pitch is one thing, the books are another.

[ptudan]

What if I'm trying to expand the market for a product by offering introductory pricing (at below cost)? It's a pretty common tactic.

Purposefully creating price wars by undercutting competitors is a different story.

[ByteJockey]

Selling below marginal cost, sure.

But selling below total cost can just be a way to get infrastructure in place before market share is in place (if it ever does happen).