When Everything That Counts Can’t Be Counted
thereformedbroker.com
thereformedbroker.com
It comes from the people who can't get a fixed rate home loan or HELOC that get screwed when the economy tanks and their interest rises above 7% and they lose their home.
It comes from the people paying 30% interest on credit cards or 400+% on payday loans.
It comes from workers in China and India that get paid pennies on the dollar and can't get a loan over $1000 so have to work themselves to death for the West's ambition.
To see the world's capital potential squandered on new locator/ride share/service apps with valuations larger than the industries they're replacing is..
OBSCENE
The only thing propping this mobile/social bubble up is that unemployment is so low that people are too busy to realize how badly they're getting screwed by Wall Street.
Ever the problem with government and social science - government is dependent on social science to conduct studies that provide that tax dollars are well spent, and then also required to convince the electorate of the value of that expenditure. It's a tough problem with no easy answers. Effective politicians tend to create public sentiment and then find evidence. Effective outcomes would dictate the order be reversed.
It's really stunning when you consider that blowing a trillion dollars on a new fighter jet needed essentially zero popular support, but funding education is somehow so loony that it requires a solid political majority to even think about.
Whenever people start sayin "what if [cyclical bad thing] actually never happens again and the happy times are permanent because of [tenuous reasoning]" loudly and in public then it's inevitable that we're about to see the problems currently being created in secret by people who've had that delusional point of view for awhile.
I think this is bullshit. Uber may be worth more than auto makers, but this is a bubble and will not last (unless uber manages to create an autonomous taxi service in the next few years). They were just lucky and intelligent enough to get around regulations, but regulations are catching them.
Uber's tech is simple and easily replicable. The moment they raise their prices, they loose their market share. There is no network effect in this market.
It is simply obvious that Uber provides much less added value than any automaker.
In summary, the article argues that some platforms, such as Uber, benefit far less than others (such as Amazon, AirBnB) from network effects due to the fact that their userbases are clustered over multiple locations :
> Drivers in Boston care mostly about the number of riders in Boston, and riders in Boston care mostly about drivers in Boston. Except for frequent travelers, no one in Boston cares much about the number of drivers and riders in, say, San Francisco. This makes it easy for another ride-sharing service to reach critical mass in a local market and take off through a differentiated offer such as a lower price.
The article raises others points and is quite an interesting read in itself. Strongly recommended.
For Amazon, their Network effect is huge because they have a huge delivery and storage facility network. The barrier to entry is huge.
For Airbnb, it might be closer to what this article is saying. But also it's less convenient for home owners to have their location on multiple sites (need to sync calendars, the subscription takes much longer...). So they pick one, which is Airbnb.
I disagree that there is no network effect. When one travels to another country it is much easier to use Uber rather than to find what local brew of 'carpooling' service is available, create an account, put in credit card info etc.
Their tech is easily replicable but their global presence is not.
I've been in lots of places - pre Uber - where I didn't even speak the local language. Even then finding a taxi was not taxing. If Uber can't make a profit on local traffic it is going to be a mighty feat if they make money off non-local traffic.
Driver took advantage of their complicated fare system to add supplement charges that didn’t apply: charged us the baggage supplement for our backpacks that we carried in the car, and charged us a supplement for going to the train station, which should only apply from the train station.
The local taxi authority requires us to complain by post with an original receipt.
The postage costs of sending that with tracking defeats the purpose.
Most people wouldn’t even realize they were overcharged, after all, we paid what was on the meter. And issuing receipts is only by request.
We don’t have enough data to determine if the driver was excellently skilled or suicidal.
Meanwhile with Uber, you get a fancy receipt emailed to you listing route/charges, a sensible (if unregulated) complaints process, and ratings from other riders.
Lyft is also around, and it seems that there is very little friction for both drivers and riders to choose/arbitrage.
I think smart money in Uber recognizes their position as a gamble.
Regularly you hear about hundreds of millions being poured into companies like Uber and self driving tech companies. At least one of those companies is going to win big, and investors don't want to miss out.
Your answer is good. I agree. The stock market is Vegas. The stock market fueled by cheap money, is Vegas times a billion.
I find the article lacking. And I'm being polite.
Their bet is on Uber reaching autonomous taxi service. Without this Uber stands no chance in the long term.
Ppl said the same about Facebook in 2006-2012. "Anyone can make a social network." Yes, the technology can be replicated but the network and market-share cannot.
Of course a social network has by definition a network effect, no one argued this.
Uber is definitely not a social network. Maybe they plan to become one, but they are not yet.
No network effect here.
The same can be said for web shops like Amazon. The tech is nothing special, but the brand and network are. The promise of Uber is in becoming a trusted brand, with capacity everywhere, and convenient enough that you don't bother looking to the competition. That said, whether they can actually become this is another question.
Prime lock-in is not innovative or valuable as a concept in itself, it's just a way of capitalising on the loyalty of their customers, which would not work for many other retailers.
I don't think I would ever buy a car that was described as a "physical mobility app" as it would imply to me that the people running that company had forgotten what it was they were actually manufacturing.
>Capital is Now Free, Have Fun
lol what. Credit card interest is higher than ever. Small business loans are still expensive. Yeah, maybe capital is cheap if you're a multinational or the us govt. but it's still expensive for most. Treasury bonds yields are not a proxy of how much business lending costs. Rather, a better estimate would be junk bond yields.
Trend following is great; you have to sell at the right time though.
That same money in the hands of those who are currently barely scraping by—or not even scraping by, homeless or heading that way—would make a real difference in their lives, and would be spent on truly useful and absolutely mundane things.
This is basically the deal with MMT too. We talk about the defacto status quo reality like it's a hypothetical and not actually describing current unstated practice. "What happens" is what's happening right before our eyes. The question, as always, is for how long it will last. It's been >20 years of saying "this isn't normal," so when is it?
The author is asking "where is value [or asset] investing?". I think the question begging to be asked here is " how has the definition of _value_ changed?" We should instead be engaged in an investigation of how value and it's perception has changed.
This is poetry.