‘The Unicorns Fell Into a Ditch’

Matt Levine, in his excellent Money Stuff column for Bloomberg:

If restaurants and drivers complained about DoorDash but DoorDash was raking in juicy profits, you could be like “what do you want, innovate or die, the market has spoken.” But in fact restaurants and drivers complain about DoorDash, and it lost $450 million in 2019 on about $1 billion of revenue. Arguably the market has spoken and said “stop it, come on, this is dumb.”

In the old economy of price signals, you tried to build a product that people would want, and the way you knew it worked is that people would pay you more than it cost. You were adding value to the world, and you could tell because you made money. In the new economy of user growth, you don’t have to worry about making a product that people want because you can just pay them to use it, so you might end up with companies losing money to give people things that they don’t want and driving out the things they do want.

That sounds like a joke but it’s not even an exaggeration.

Bonus burn on counterfeit capitalism poster child MoviePass:

Meanwhile MoviePass itself is up for auction in its Chapter 7 bankruptcy, with bids due next month. Naively I would think that a pandemic would be good for MoviePass: If your business is buying movie tickets for $14 and selling them for $10 a month, months when all the movie theaters are shut down should be relatively profitable.

★ Thursday, 28 May 2020