[bsbechtel]

>>That's called a gross margin and it's incredibly low.

I've wondered this about every single XX-as-a-service startup. I've heard Uber is 20%, but the overhead to manage a ride-sharing service that is doing tens of thousands of dollars a day in a medium-sized city is significantly less than what is required for other XX-as-a-service startups. The only other sector I can think of where the economics even come remotely close is food delivery. All other sectors - cleaning, home repair, lawn care, painting, etc - require significantly higher marketing spend/customer for a much lower volume of transaction. In addition, as discussed here, the overhead required to ensure quality and customer satisfaction is much higher as well.

[mbesto]

Exactly. And in typical SV fashion with the "winner takes all mentality", it's as if we can apply a Uber/Airbnb persona to seemingly any industry without understanding it's respective nuances and sociodynamics.

[techtivist]

Winner will take all. Uber will be the Uber for X (for everything) and AirBnB (potentially) AirBnB for everything. Low margin markets are usually zero sum in the long-term.

[bsbechtel]

My and mbesto's point was that making an app to get any service on demand doesn't really work except for a few high-volume, low margin markets such as ride sharing and maybe food delivery. The businesses that can be disrupted are the ones where low margins are made up by massive volume. Most service businesses actually operate the opposite way - high quality, high margin. Uber, Google, and pretty much anyone else who wants to try won't be able to successfully disrupt the majority of service business markets unless they radically alter the economics associated with the overhead costs required to maintain quality in these businesses. Slapping software with a 5 star ratings system on the consumer front end to expose your business to millions of more customers is not a radical alteration of the business fundamentals associated with many of these types of businesses.

[jclune]

Sorry to comment on a super dead post, but I like this comment "unless they radically alter the economics associated with the overhead costs required to maintain quality." That is my focus, but it's really challenging. The margin is comfortably high in Japan, but ignoring quality kills retention and maintaining quality brings overhead costs back up to the level of existing franchise-model businesses.

[techtivist]

I think we all agree with the same statement then :)