[new2this]

>Build a real business. If you can't be profitable without eliminating all the competition by undercutting them then jacking up prices, then you shouldn't exist

This was a major part of the playbook of Standard Oil; I would consider them a real business.

>The business model of these so-called unicorns is effectively a Ponzi scheme

"Ponzi scheme" has been thrown around flippantly lately, and I think your comment is perfect example of that.

I think it's a safe assumption that significantly more people order food from local restaurants than they did before DoorDash existed. So they did create a real market with a real product. It's not a 'box' that SBF would be proud of.

>but the sooner gig companies like Uber and DoorDash collapse, the better.

This I agree with, but for different reasons. These apps price their services artificially low by charging high fees to restaurants, underpaying drivers (forcing them to live on tips), and by- at times- subsidizing prices with investor money to keep them artificially low.

Overall, I think it's a crappy business model that doesn't deliver much value. But that's just my opinion.

[willcipriano]

> eliminating all the competition by undercutting them then jacking up prices

Standard Oil resulted in lower prices for consumers. They had a patent on railcars designed for hauling oil so their competition had to load and unload barrels on to standard railcars and that was much more expensive to do. Any monopoly they had was explicitly enabled and enforced by the US government, via the patent office. After they were broken up, prices for consumers went up.

[banannaise]

> This was a major part of the playbook of Standard Oil; I would consider them a real business.

I also think Standard Oil shouldn't exist. In fact, so did the US government in a landmark antitrust case that you may have heard of.

(on your other points, I'm pretty much entirely in agreement)

[new2this]

>I also think Standard Oil shouldn't exist. In fact, so did the US government in a landmark antitrust case that you may have heard of.

Agreed, but "should/shouldn't exist" wasn't the argument. The initial argument was "if you use this strategy, you're not a real business" which I think is false.

Distasteful, destructive, and something that should be illegal- sure.

Ponzi scheme, doomed to fail, not a real business tactic- no.

[banannaise]

At this point we're both mostly into semantic territory. You focused on the beginning of the statement ("real business"), I focused on the end ("shouldn't exist"). I don't think a business that is only viable due to illegal pricing schemes is a real business, but that's also just semantics.

Speaking of.

> should be illegal

Predatory pricing for the sake of driving competitors out of business to establish dominant market power is illegal, setting aside that the gradual erosion of enforcement means that antitrust law functionally no longer exists in the US.

[passwordoops]

The original argument is "If you can't be profitable without eliminating all the competition by first undercutting them, then jacking up prices on users, then you shouldn't exist"

Standard oil was profitable and they were able to afford undercutting the competition. That maneuver was too gain complete control over a diverse, vibrant market. Gig economy companies have never been profitable, and the only way they can be profitable is to increase prices to the point where consumers will stop using them.

Also, unlike Standard Oil, these unicorns are a Ponzi scheme. They provide a real service, sure. But the only way they were able to provide that service was to keep increasing their private-market valuation, with the next investor saying "I'm in, because next time they raise, it'll be at a higher price". What happens after every one of these gig companies went public? The private investors cash out, and the stock collapses.

In what way is this not a Ponzi?

[passwordoops]

>This was a major part of the playbook of Standard Oil; I would consider them a real business.

True, and unlike modern VC-bacjked companies they didn't lose money in the others. BUT they were hit pretty hard with anti competitive legislation and were broken up as a result of these practices.

>Ponzi scheme" has been thrown around flippantly lately, and I think your comment is perfect example of that

We can agree to disagree, and I welcome you to a post about the subject from 2017 that pretty well explains my viewpoint (not my article) [1]. It's about Uber, but applies to all the recent IPO darlings

> it's a safe assumption that significantly more people order food from local restaurants than they did before DoorDash existed

What's your assumption based on? I figure it's either flatline or maybe had an impact on dining rooms. Either way, I have no data to back it up, but if you do I'd very interested.

>This I agree with, but for different reasons.

How is it different? They run an unprofitable business that rips off everyone involved and is subsidized by investors who were suckered into thinking this is a real business.

[1] https://www.forrester.com/blogs/ubers-unicorn-ponzi-scheme/

[new2this]

>What's your assumption based on?

Anecdotal. Seeing restaurants that no longer do sit down and only do delivery, plus the creation of the ghost kitchen market. I also have no data, so I can't really defend this point. Just an observation.

>How is it different? They run an unprofitable business that rips off everyone involved and is subsidized by investors who were suckered into thinking this is a real business.

The point I was making is that the food delivery marketplace is a real business that delivers real value, just a sucky one with unclear value. Your comment seems to outline that you think it's built on hype and sucking in future money to pay past investors.

The fact that Lyft can, at times, be profitable disproves your point.

[bogomipz]

>"Anecdotal. Seeing restaurants that no longer do sit down and only do delivery, plus the creation of the ghost kitchen market. I also have no data, so I can't really defend this point. Just an observation."

Can you say what city you are seeing restaurants that don't do sit down and only do delivery? Are these brand new restaurants? I can't imagine anyone that was already paying rent for a dining room turning people away. I also find it hard to imagine that a delivery only restaurant would be operating in a place that has good foot traffic as that is usually factored in to the rent since it means access to walk-in customers.

Lastly has the "ghost kitchen" market actually taken off? What brand recognition is there in that market?

[dvt]

> "Ponzi scheme" has been thrown around flippantly lately, and I think your comment is perfect example of that. [...] It's not a 'box' that SBF would be proud of.

Even SBF's magical box is not technically a Ponzi. Often times these scams are simply pump-and-dumps.

[bogomipz]

>"I think it's a safe assumption that significantly more people order food from local restaurants than they did before DoorDash existed."

Why is it safe to assume that? Do you have actual data that backs that up? The presence of delivery drivers says nothing about the number of people that previously picked up their orders.

>'"Ponzi scheme" has been thrown around flippantly lately, and I think your comment is perfect example of that.'

How is that a flippant comment when the article we are commenting on states:

>"Competition in the sector has only intensified and the company has spent heavily to sustain growth by expanding its footprint in non-restaurant categories like convenience store items, groceries and alcohol. Last year, DoorDash spent $8 billion to acquire Wolt to increase its international presence."

The article then further states:

>"Under generally accepted accounting principles, however, DoorDash is unprofitable. The company reported a loss of $296 million compared with $101 million a year earlier during the third quarter."

How are those sums of money sustainable? Isn't that one of the defining characteristics of a ponzi scheme is that it is not sustainable?

>"So they did create a real market with a real product."

It's increasingly looking like that "market" was created by the pandemic. From a Deutsche Bank analysis of the company:

>"Deutsche Bank says that DoorDash drivers made 44% more deliveries in an hour at the height of last year’s pandemic lockdowns compared with three years earlier."[1]

And:

>"An average DoorDash order during the pandemic cost the customer almost $36, out of which the delivery company made less than $1 in profit."[1]

I think if you consider these paper-thins margins and the eye-popping sums being spent by Doordash to "sustain" growth" all while losing hundreds of millions of dollars a years, then "ponzi" is maybe not such a flippant comment.

I'm guessing they don't have another $8 billion to spend in order to acquire more growth which is why they are doing layoffs. Current market conditions would also suggest that would have trouble getting access to that kind of capital given those numbers above.

[1] https://archive.ph/ELq0m#selection-861.0-861.139

[musk_micropenis]

> I think it's a safe assumption that significantly more people order food from local restaurants than they did before DoorDash existed.

Do you have any comprehensive evidence for this? I have very strong doubts.