Be Wary When Users go Up and Profits Go Down

Posted by Matt Birchler
— 1 min read

Derek Thompson: Why urban life suddenly got way more expensive

For the past decade, people like me—youngish, urbanish, professionalish—got a sweetheart deal from Uber, the Uber-for-X clones, and that whole mosaic of urban amenities in travel, delivery, food, and retail that vaguely pretended to be tech companies. Almost each time you or I ordered a pizza or hailed a taxi, the company behind that app lost money. In effect, these start-ups, backed by venture capital, were paying us, the consumers, to buy their products.

Listen, don't take too much business advice from me, but what's happening in tech right now has really driven home a few things:

  1. Don't bet too big on companies that lose money, even if they're very popular. The more customers you get, the more you should profit.
  2. Don't bet on companies who sell "vibes" over products. I'm looking at you, web3 and crypto.