pg (and many, many other entrepreneurs and investors) disagree vehemently, positing that startups are about wealth _creation_. if wealth isn't created, how has humanity's global standard of living so radically improved?
Imagine I create a new shoe factory right next door to an existing shoe factory. After 10 years we find...
1) I failed, I lost all the investors money and had to close down. I destroyed the investors wealth.
2) I win, the next door factory has closed down and now I have all of their business. But I have exactly the same costs, sales, staff and so forth. So the profits come to me from now on instead of the neighbor. I have supplanted them, but consumers and the economy as a whole is no better off. Wealth is transferred to me as ongoing profits that would otherwise have gone next door.
3) I win, the next door factory has closed down and now I have all of their business. I produce the same output as they did but with less staff and lower costs. So consumers benefit from lower prices, the money they saved can be spent on other things, creating demand elsewhere. Wealth is transferred to me as ongoing profits that would otherwise have gone next door. Everyone wins except I employ less people than the neighbor so there is less employment. But the extra demand for other goods because of my lower prices means they get employment at other businesses!
Number 3 is why the UK, which used to employ 90% of people in agriculture before the industrial revolution, does not have 90% unemployment today, the people released from agriculture because of better productivity are freed to work in other sectors instead.
Isn't there also at least a fourth and firth scenario, one where the new shoe factory wins but has larger costs than the old one (better marketing but worse cost control), and another scenario where both shoe factories thrive? What about one where they merge, or a holding company buys both and operates them both to produce different lines.
For any startup that subsidizes its products below its costs it is possible for it to destroy value. If they produce something for $10 dollars then sell it for $8 to someone who derives $9 of value out of it, then they have transferred $1 of wealth to their customer and have destroyed $1 of wealth.