[liorben-david]

Losing money while you grow isn't neccesarily bad.

Venture Capital at its best allows a company to take losses until it can achieve economies of scale.

I'd say it turns predatory when even after achieving scale(Like Uber or Amazon) a company still runs an unprofitable business to choke out competitors.

How can you prove this in court? No clue. Maybe the company has to articulate the explicit economy of scale it hopes to achieve and how?

[rossdavidh]

I think the difference between legit and illegit is whether or not your competitors have to go out of business for you to become profitable. If you burn through some cash to get off the ground, eventually driving your per-unit costs down so that your prices become profitable, that's legit.

If on the other hand your current prices are never going to be profitable (looking at you, Uber), and your business plan requires that your can raise them a lot without losing sales (because your competitors are gone), that is not legit.

The third factor in all of this is that many companies like Uber weren't really ever likely to become profitable in any scenario, and this was really about taking the cheap VC money while it was cheap. Blitzscaling was just a way of pretending that you would someday become profitable.

I think higher interest rates will get rid of a lot of this.

[jwr]

It's about unit economics: losing money while you grow isn't bad, but if you lose money on every customer, it means subsidized growth. That's usually done not to get economies of scale, but to get GROWTH GROWTH GROWTH and user numbers, so that the unprofitable business can be sold to the next buyer/investor.