[wyuenho]

1. DoorDash, GrubHub, Uber, are all massive money losing business, and all lost money last year. In fact, all of the share econ companies are massive money losers, this includes Lyft, AirBnB, and a whole bunch of others I've missed in Europe and Asia. Investors invest in them expecting growth, not dividends at IPOs.

2. You might have a very different definition of asset than everyone else's. Please explain.

3. The barrier to entry? Absolutely massive initial capital requirement.

4. Yes, just like every other sharing econ companies, unless you are operating exclusively out of California.

[rich_sasha]

Without questioning it, I never understood how “sharing economy” companies lose money. Are they subsidising their “partners”? My base assumption was always that eg Uber passes costs and revenue to the riders. Or is it their bloated central operations, needed to justify the VC valuations?

[cehrlich]

I don't know if this is still true, but a few years ago Uber was losing money on every trip [1]. They also, five years ago, had 6000 employees, of which 2000 were engineers [2]. Apologies for the outdated links, there's probably more precise data out there.

[1] https://nymag.com/intelligencer/2019/04/ubers-plan-to-lose-m... [2] http://highscalability.com/blog/2016/10/12/lessons-learned-f....

[rich_sasha]

I read the top article, it’s good. The pertinent bit to my question seems to be, they do subsidise drivers. Apart from fixed costs, they have “driver incentives” to shape supply and demand. Ie give out cash to subsidise trips when needed.

[keenreed]

I just had a job interview with Deliveroo. There is over 100 programmers in central office, they pay better than some banks. I dont think problem they solve is that difficult.

[fakedang]

Most of it is marketing, fighting legal issues and attrition of goods delivered / compensation. And also the insane discounts they have to provide to stay ahead of the competition. Airbnb is somewhat immune, since their only major competitors are old school hotels.

[rich_sasha]

Right, so “discount” implies they subsidise drivers for the journeys? Eg Uber charges $1 per mile but driver receives $1.1 or sth?

The org bloat is quite staggering for what is effectively a taxi app.

[fakedang]

No no. I meant that the effective cost of a ride (paying contractor + tech costs + employee costs + marketing per ride) is $1 a mile, but they give a discount that makes it effectively $0.9 a mile, and doing this on scale is effectively making them run operations at a loss unless they have market monopoly. Even a duopoly situation is unfavorable for them.

[johannes1234321]

As they got cheap money from investors they typically go big in expanding. This means paying lots of marketing, competing with low prices, having localized phone hotlines, be generous to customers (not suppliers!) when handling disputes, ...

[lottin]

Investors care about profits, not growth. Growth can lead to profits, but it can also lead to bigger losses, particularly in a company without large fixed costs. Also, there are reasons to think that the market for food delivery has already peaked. Where I live it's full of "riders" everywhere, it's quite annoying. I don't know if there's any room for more growth.

[wyuenho]

Deliveroo is not a food delivery company, it's a food company. Both DoorDash in the US and Deliveroo in the UK are now operating ghost kitchens that are restaurants owned exclusively by the "delivery companies". These are brands and restaurants that only deliver, and the quality of the offering are extremely high. In addition, the profit margins are even higher as these ghost kitchens share the same resources and operate out of areas with super low rent and centrally located among a wide delivery area. These companies are now moving up the food chain to become restaurant groups themselves, and soon, grocery, ingredient and meal prep delivery.

We may have reached peak food delivery, but we are nowhere close to peak food and peak delivery.

Disclaimer: I'm a Deliveroo shareholder.