Middlemen like airbnb,Yelp,doordash , Uber , Eventbrite etc are unsustainable in the current shape
Edit: this analysis is more for the years to come after this pandemic. But pandemic might have just hastened failing of some companies and I think this will also significantly change how some of these companies operate. We a switch companies, when you switch companies think of the next 2-5-10 years and where you want to be and then join the company, this is very important especially when you are getting married or planning to have a baby or have kids. Recent few years have seen silicon valley companies like Airbnb, Uber , Lyft etc. get some obscene valuations. It is obscene because the cut they make from the business at times is more than the actual service providers make and have a greater say in how the service is offered. The layoffs are just the economics of the business, which are built by burning cash and then sustained by more cash burning. At the heart of it, these are businesses that solve a usecase but not as worth as the they are today. Corona outbreak will be a litmus test of silicon valley companies, much like the .com crash , this will clean up a lot of dirt but probably some genuine companies as well. Some businesses I think will be changed by this tsunami, you can pretty much put every business through this lens. 1. Hotels , Lodging 2. Eventbrite , and such ilk 3. Food delivery - doordash , bitesquad etc 4. Financial services - we will see a UPI ( Indian govt provides this , extremely low cost payments) like services gaining, not Stripe , or square that make some obscene cut in transactions 5. Traveling - Expedia , Uber etc, traveling business has seen huge pruning of margins, Emirates doesn't sell tickets in any aggregator and everyone will start doing it soon. Because technology is getting easy to build and adopt 6. Streaming - Netflix etc will struggle for content, content is King . They should build the best streaming platform and offer it to people , trying to do both will make the best platform for streaming, devoid of content. Silicon valley salaries are unreasonable and don't justify the value their products provide. These platforms are costly for the actual service providers because they pay huge salaries. Lookback, the cost of hiring a cab in SF has gone down, with these low prices, can owners also pay a % to ride hailing platforms. Google,MS, FB will sustain because they add a lot of value to the consumers and then make š° off it. Not thin down the already razor thin margins for businesses. Although, one side effect of this is, building a start-up with good tech means outpaying Goog , MS and FB. Corona impact will be seen only after a couple months of ending lockdown and we start normally back again. Until then introspect and save your cash.
After spending years at FG, adding value to the consumers is the least important thing around here. The consumers are not even our paying customers.
Well, consumers pay nothing from their wallet, but they get entertainment. As much as we hate FB, if you go to the interiors of India , you will know what all kinds of problem it solves, including WhatsApp. Facebook, cheap Android phones have solved unimaginable problems without charging a dime yet making money.
@fmu Did you notice a shift after moving to Uber? I imagine itās different when the customer pays
Lol @ Google and FB āadd a lot of valueā and make money off it. Theyāre dependent on advertising budgets which is at the mercy of businesses willingness to spend on it. You canāt assume itāll be evergreen as 10-20 years from now, SEM and Display ads might not be the most efficient marketing. Regarding square and stripeās āhigh feesā, those are largely driven by VISA and MC set standards. They just bundle a cost largely passed by the network and layer a small mark up for their service add. Good luck ever hoping visa and MasterCard will lower fees.
Ads business is something to be paranoid about for Google, agree with your points. Google , fb have some of the products that have transformed the way ppl live. I look back at my village, Advent of Android and cheap Chinese phones have revolutionized and broken a lot of barriers for a poor citizen. Uber made life easy too, but by fleecing a cab driver.
How is Uber fleecing the cab driver?
We already have the best content. And the deepest catalog. If the crisis lasts more than 6 months, I think Netflix is the least thing you need to worry about. You should be worry about riot.
Insignificant sample, but still of the 15 member team, half of us , stopped our Netflix subscription recently and bought other subscriptions. Just saying, content creation is not as easy as building a great tech platform. Many have been around for years and even the best of studios and artists have ocassional success and not every year . If Netflix is wanting to own the best content created and streamed for next 10 years consistently, it will be a difficult proposition. Hope to be proved wrong but time will tell.
You are wrong. Check Google trend for a clue. People aren't giving up their main entertainment option in a pandemic. Netflix has had the most Emmy nominations and Oscar nominations. And we have only done originals for 7 yrs. It's that easy.
Wow arenāt you a genius?
TL DR; I am not getting paid enough because my company makes enough money
You meant middleperson, right?
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Ok Trudeau
How about instacart?
This is a really bad take.
Meh. Not really. Airbnb is totally fucked for a long time. And so is Uber lyft and quite a few others. But the reason is because people will be scared AF to continue using these services for a long long time.
Also heās right about the cash burning. Profitability is an afterthought, but wework changed that for a lot of you.
We're already seeing significant change at Eventbrite. Frankly, the company was bloated and I think we would have seen a significant shift regardless, but Corona certainly accelerated that. It sucked to see nearly half my coworkers/friends have to make that sacrifice in the name of change, but I'm hopeful that the company will turn it around.
āMiddle menā is the wrong word. What do you think Walmart and Amazon do?
New breed is a different kind of middlemen than WM or Amazon are. WM solves the problem of accessibility of goods and logistics very economically. Not all goods manufacturer can ship themselves or sell to the end consumers. That said , the cut Amazon makes in e-commerce site is unsustainable too and with time there are people like Shopify that will create huge problems to Amazon. Logistics, customer services etc will be like a cloud service and any seller can use it. Time tested middlemen are the one that have gone through a lot of pruning, new ones have to go through that as well and validate themselves, metamorphize themselves to act by the laws of economics. Good tech doesn't make you immune to laws of economics.
I disagree that these are a new breed. Amazon (Retail), Netflix, Uber, Rover, Zillow are all middlemen whose value is entirely determined by the number of users who partake. All of them are sustainable as long as people use them. I agree that the growth is unsustainable without a pivot such as AWS. You mention the word ālawā which is a great way to cement middlemen into sustainability. Weāve seen it with car dealers, real estate brokers/agents, insurance brokers/agents.