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Comment by bogota | Hacker News Reader

Please explain what you think a ponzi scheme is. Because losing money on something isn’t close to the definition

I think they mean it is sort of a ponzi scheme for those invested. It requires more and more investor money to operate and will eventually collapse leaving the last round of investors holding the bag while those that got in early may get out fine. I think the ponzi scheme is more an apt metaphor than the actual structure of the company?

A Ponzi scheme requires an element of fraud. Very difficult to tell me that building a global fleet of ride hailing and being transparent with the financials is a Ponzi scheme. The outcome might be similar (later investors bearing most of the losses) but that's more of an investor problem and not fraud.

They probably mean a Pyramid scheme. In regular use, Ponzi and Pyramid schemes are interchangeable terms because you need new money to stay afloat. Legally they're different because a Ponzi scheme requires lying about where the returns are coming from, but a Pyramid scheme can be entirely truthful about the finances.

Pyramid scheme is system where income is derived from recruitment of new investors. Ponzi scheme is centralized system where profits of old ones is paid with money of new ones.

VC start-up burning money to make things or subsidise customers in attempt to acquire them is neither.

I'm really starting to hate when these terms that have rather specific and well understood meanings are thrown at anything. If you want to call it something just say it is big scam. Scam really could be anything. Not specific thing.

It's more of a funnel system where they take investor $$ and channel that to employees and in discounts to customers.

It seems plausible that those leading the company thought there was no chance to turn a profit but we'll never really know. They have a vested interest in saying "everything is going great and the future looks great" no matter what.

In Ponzi scheme there is profits given out or at least reinvested... Start-ups just burning money and finding greater fool really isn't such scheme.

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