For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money.
Yes it’s good that they charge the customer more than they pay the driver, but that doesn’t translate into a “profitable transaction” from a business standpoint. If it takes $X millions in engineering costs to build and maintain an app required for that ride to have occurred then one needs to prorate that cost across each ride as a cost and so on. There are lots of examples of these creative “our transactions are profitable” claims like WeWork’s much ridiculed “Community Adjusted EBITDA” metric.
The fancier your metrics need to be to show you are “profitable” the bigger the red flag should be that all is not well in Oz.
Like I said, I don't know. I don't think the questions can be dismissed just by assuming that VCs know what they are doing.
Edit: I went and looked at GrubHubs 2019 Q4 results [1]. They operated at a $30M loss. Most of the expenses were "operations" related. I'm not sure if that includes engineering, but I guess it doesn't.
[1] https://investors.grubhub.com/investors/press-releases/press...
2019: -18M
2018: +78M
2017: +99M
2016: +49M
2015: +38M
2014: +24M
2013: +7M
2012: +8M
2011: +15M
They are not. But they are banking on the general public to buy shares without scrutinizing the business sustainability and be left holding the bag.
Since IPO:
Shopify? $28 to $754
ServiceNow? $25 to $361
Alibaba? $93 to $199
Splunk? $36 to $149
DocuSign? $39 to $119
Teladoc? $28 to $188
Atlassian? $27 to $175
MongoDB? $30 to $194
Square? $12 to $73
Twilio? $26 to $187
Workday? $48 to $153
Veeva? $44 to $195
Zoom? $62 to $167
Facebook? $38 to $205
Palo Alto Networks? $53 to $215
Okta? $23 to $177
Wix? $17 to $166
Wayfair? $32 to $183
The Trade Desk? $27 to $292
Coupa? $29 to $205
RingCentral? $18 to $283
Zendesk? $15 to $73
Zscaler? $33 to $75
PayPal? $34 to $143
CyberArk? $30 to $96
Proofpoint? $13 to $115
Qualys? $13 to $101
Smartsheet? $19 to $52
JD.com? $20 to $47
Anaplan? $24 to $40
Zillow? $26 to $46
Roku? $26 to $117
Or more recently:
CrowdStrike? $58 to $76
Cloudflare? $18 to $27
Fastly? $24 to $36
Maybe they're holding one of the older bags.
Fortinet? $8 to $137
Tesla? $20 to $790
Salesforce? $4 to $169
Baidu? $8 to $95
Netflix? $1 to $438
Google? $50 to $1,349
Oh the horror.
Several broke regulated public utility or near utility functions like housing and transport.
Some are just scofflaws (uber, Airbnb)
Many are extra territorial trans national tax avoidance
These left and right columns distort the actual net effect on the economy.
Sure: my pension fund will be in all of them
Some of us think they're hypebeasts in search of a greater fool.
Well sometimes they are, sometimes they aren't. Softbank Vision Fund justifies at least questioning some VC strategies.