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Comment by forinti | Hacker News Reader

> You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?

Inequality is driving this. We have let money become so accumulated, that the owners of the capital are being silly with it at the same time that workers are having a hard time. We have to tax this capital and make it work for everyone.

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Isn't this a problem that fixes itself? People have lots of money and throw it at stupid businesses and lose it.

They aren't building libraries with it, but sustaining an underpaid workforce. Someone loses a million, a million gets a few cents.

So, direct wealth transfer is happening from the rich to the poor.

The only flaw with this is that people have to work economically inefficient jobs delivering food, instead of the wealth transfer occurring through taxes on the rich and funding something like basic sciences.

It's equivalent to "broken window" spending.

Yes, breaking a window allows you to generate economic activity by paying the manufacturer to create a new one and paying an installer to install it, but it's not socially useful economic activity. You could have spent the same money building excess renewable energy resources, or on basic science research, or a million other things that might be equally "inefficient" from an investment standpoint but at least have a chance of providing benefit to society.

It's a serious flaw and not one that can be waved off as easily as you do.

I disagree with that.

In the case of food delivery, there's socially and economically useful work of getting food from where it can be efficiently created (restaurants) to where it can be efficiently consumed (hungry people's location). In the absence of that work, the hungry people would be making their own food (less efficient, generally, than restaurant cooking which can do larger batches) or going to get their own food (less efficient, at least plausibly, because a delivery worker can make multiple deliveries on one drive rather than a strict out and back trip that people would take).

The thing that makes fixing a broken window "fake" economic growth is that it is arguing that destruction is economically useful because of the work to fix it, but nothing's being broken in this case. People are naturally hungry on a pretty regular basis, and the production and transportation of food is economically and socially useful work, which in this case was being subsidized by capital.

Is it curing cancer? No, but it's not digging holes and filling them up again either.

It's completely ruined pizza delivery, which used to actually be a pleasant and affordable experience.

How do you figure? I still order pizza, pay a small delivery fee and tip, and receive my order in around 30-45 minutes. I haven’t noticed a change other than I no longer call a store to order and I can get pizza delivery from places that didn’t deliver before.

I've never seen a DoorDasher show up with a proper insulated bag. The pizzas are cold. They've been on who knows what route delivering orders from who knows how many restaurants. They slide around, aren't kept level.

I had an order where only 1 out of 5 pizzas showed up. The driver didn't speak English, but it wouldn't matter if he'd been able to. Because the driver isn't empowered to help in any way. They don't represent the restaurant, and everything has to go through DoorDash customer service.

Getting my refund took 4 phone calls, multiple online chats, and 30 days.

Here's the part that breaks down:

If restaurants were more efficient, then why are restaurants (1) more expensive, (2) using worse ingredients, (3) taking longer, and (4) have questionable quality.

Granted, I'd understand if in the good-fast-cheap triangle, you lose one, but with restaurants, most are questionable quality, take longer, and have gotten expensive.

I can make better food faster with better ingredients for a cheaper price at my own house for my own family, as long as we did some thi king ahead and planning. On top of that, when I make a new recipe, I learn how to make something new with new ingredients that helps me do more exotic dishes in the future.

It's not entirely clear to me restaurants are the theoretical economic efficient location that is claimed. Even if you use fast food, their prices have gotten higher and quality even more questionable on the already garbage quality they had.

It seems to me there is more efficiency in people learning to make their own food, and cooking better at home - both in the results and the discipline on the person. Sometimes decentralization is more efficient than centralization, and I think this is an example.

I will say optimizing grocery delivery makes alot more sense ro me than restaurant delivery.

>I can make better food faster with better ingredients for a cheaper price at my own house for my own family, as long as we did some thi king ahead and planning. On top of that, when I make a new recipe, I learn how to make something new with new ingredients that helps me do more exotic dishes in the future.

Can you? Are you accounting for your labor cost?

I do a lot of cooking for my family too, but when I account for the time it takes to shop for groceries, prep, cook, and clean up, I doubt I'm making even half of what I make in my job. It would be more economically efficient for me to cook only very simple things, work more hours, and have more food delivered.

There are a lot of reasons I don't do that! I agree with all your points about self-sufficiency, and health, and personal development. But I disagree that those are "efficient". Efficient is labor specialization: I spend more time writing code and hire someone to do the cooking and cleaning and transporting.

I've heard of the "broken window fallacy", and this seems an incorrect representation.

The fallacy is that breaking windows must have an inherent value (and the fallacy is that its a good thing to have vandalism). Part of the justification that it might be otherwise is the benefit of having window repairmen, and how they couldn't exist if they didn't have a steady income - and it's here that lies the fault, however the fault is one of quantification, in fact a broken window can be socially useful, just with decreasing usefulness as quantity increases, plus there are better ways to do it (e.g. insurance payment); It's still true that (in an unmanaged market) if (somehow) there aren't enough broken windows, when one breaks there might not be anyone who can repair it (economically) - I think it's the same category of problem as, donating clothes to Africa destroys its own textile biz.

No, this misses that much of the money is just circulating around the capital holders.

No, because it’s a circular economy - at no point does that wealth reach workers, it just ends up in the hands of other plutocrats.

How exactly does the money that a company like DoorDash loses end up with other plutocrats?

Isn't most of that money being paid to people working for those companies?

Am I right in thinking that if those employees save any of the money, then they accumulate wealth, but if they don't (because they don't receive enough compared to their fixed costs, or for any other reason) wealth accumulates elsewhere, probably in the hands of plutocrats?

Just because one person wastes money, it doesn't mean that someone else gets rich. If the employees spend their income on low-margin goods or services (food and clothing are quite competitive low-margin sectors with high labor costs), the money has flowed from investors mostly to laborers.

My thinking is that spending gets split between richer and poorer people. The former buy assets with it, but the latter spend it on living costs. Each time it circulates, typically some goes to richer people and stops circulating.

Various things could disrupt the resulting increase in inequality. The Black Death and World War 2 are both supposed to have done so.

Money doesn’t really get “split”, it flows, and the where it goes each time it is spent is what determines who makes how much. You’re right that some people are able to accumulate, but that’s not a default, and the money usually doesn’t stay put for long.

I think doordash drivers have to pay for things like gas and cars.

With these food delivery apps they managed to make a system where everyone loses. It’s astounding. When everyone is paying more, while earning less, I’m not sure how the problem fixes itself.

I think these apps just need to go away and business that want to offer delivery can go back to how it used to be done. It was cheaper and better.

IS it cheaper? Better, maybe, depending on the restaurant. But I can’t see how it’s cheaper when you have to hire and insure drivers, manage shifts, deal with delivery areas, fuel costs, more accounting, etc etc.

Also I live in a pretty good sized city of about 350k in our metro area, and before these delivery services only the national pizza places delivered. When I moved here from a larger city I was shocked there wasn’t a single Chinese delivery place. So I’m thinking that the costs and management were just too high.

The right model might be the Waiter on the Way model, which hires regular drivers but can offer the service turnkey. But there needs to be more of those, and there doesn’t seem to be for some reason.

I lived in a tiny town in Northern Ireland and every chinese/indian/pizza place managed to deliver food just fine. They still do I bet. UberEats/Deliveroo/DoorDash are just skimming the little profit that these operations made (and failing to be profitable)

>Also I live in a pretty good sized city of about 350k in our metro area, and before these delivery services only the national pizza places delivered. When I moved here from a larger city I was shocked there wasn’t a single Chinese delivery place. So I’m thinking that the costs and management were just too high.

This is interesting. When I was in college I could order Chinese delivery from about 5 different places, and they'd do it until about 4 or 5am. This was in a city of about 78k. After school I moved to another college town. It was double the population with a much more well known school. In this town, I don't think there was any Chinese delivery, and a vast majority of the places closed really early for a college town; maybe 8-10pm.

I wonder if smaller towns with lower rent leave more margin for extra hours and delivery, where as those with higher rents need to focus on staffing the core hours with as few people as possible to make the books balance? Just a theory, as I've never worked in these industries.

Near me, I still see Dominos doing their own delivery, with their corporate owned vehicles. I also see some local pizza places doing their own delivery as well. Jimmy Johns still does its own delivery as well, even if going through Door Dash, they just hand off the order, it doesn't go through the normal Door Dash process.

We've had scam industries like this for ages... If you're old enough there's Time shares, Amway, numerous companies that have sold fake health supplements etc... It hasn't resolves anything beyond money and work being extracted from people with no reward. Valid business, like taxi cabs, are destroyed by Uber and door dash, and the people that work for these services get ripped off. Many of these businesses are purely exploitative.

Even Dominos is using 3rd party delivery services now, instead of hiring drivers, it has made their prices skyrocket on top of already ridiculous inflation. It even prices people out of being able to afford pretty much D-class pizza. Even if the model melts down, the original (more valuable) business model may be so decimated that it won't be able to be brought back.

Our world is suffering from trust funders with bad and amateur business ideas, all trying to become market-cornering monopolies, it's long overdue to encourage them to find better and less destructive idea builders and better ideas by others to fund instead of launching poorly though out and highly exploitative profit schemes.

The market can stay silly longer than I can stay solvent

Ultimately it's driven by customer behavior. If people went to restaurants instead of expecting to be served hot food in their living room, this whole destructive business model wouldn't even exist or would be small enough as to not be negatively impactful.

People are not forced to use DoorDash, UberEats, etc. We never do and are surviving just fine.

> Ultimately it's driven by customer behavior. If people went to restaurants instead of expecting to be served hot food in their living room, this whole destructive business model wouldn't even exist or would be small enough as to not be negatively impactful.

No, you've got that backward. Customer behavior is driven by the tides of capital. Advertising is a pretty clear example but it's not the limit. I mean, how many people were ordering DoorDash before DoorDash existed? I'm not being entirely facetious - it's impossible for customers to behave in a way that's not allowed by the market.

That you are resistant to these tides is not evidence against, it's just accounted for. You're not the target audience. Nor am I. But neither of us has ever made a decision in a vacuum; we choose our purchases from what's available, according to the information we're exposed to.

> Customer behavior is driven by the tides of capital

Source?

The best argument against this is how elastic demand was when ZIRP ended. Customers responded to an underpriced product. When the price was raised to a profit-clearing level, it no longer cleared most of the market.

I don't understand your argument. It sounds like customers were reacting to their environment more than driving change.

> sounds like customers were reacting to their environment more than driving change

It sounds like customers had agency. Tides of capital gave them more or fewer options, and they chose them at their discretion when the terms were advantageous. When they weren't, ever or any longer, they didn't.

...In other words, because DoorDash is convenient and advantageous for customers, they choose to get food delivered instead of go to the restaurant. And admonishing people for choosing the advantageous option is useless, at best. Does that not follow?

You argued "customer behavior is driven by the tides of capital." That's attributing cause and effect. The tides of capital didn't cause the customer behaviour, it enabled existing behaviour to scale. Capital driving behaviour describes diamonds, not DoorDash.

I'm really confused by your reply, and it doesn't answer the question I posed, so maybe that's that.

There is no doubt that advertising has a huge impact on customer behavior. But that doesn't mean that consumers are incapable of making choices that go against the grain of the market. It does take a conscious effort, and it's true that most consumers just don't care or can't be bothered with it, or are crushed by too many other things in our modern society to have the bandwidth to even consider their choices.

Everything you're saying is exactly in accord with what I posted. Individuals always have choice, but when we're looking at an entire population and seeing that large amounts of people are making a choice that we think is "bad", saying, "Well people just need to stop making bad choices. People are stupid. I make good choices." is ludicrous.

Let's assume that the answer really is to ensure individual choices are changed. Who's going to go house to house and educate everyone about why the choice to use DoorDash is problematic? Does this person have the time to customize their solutions to every family's needs? It's insanity. It's an argument that leads nowhere at all; it's an abdication of responsibility (which is totally unnecessary, because the commenter never had a responsibility to change the situation). Hell, it's a call for the audience to also abdicate responsibility they might feel. It's just a useless or harmful way of telling listeners how proud one is to be a statistical exception.

Yeah I was basically agreeing with you.

>making choices that go against the grain of the market. It does take a conscious effort, and it's true that most consumers just don't care or can't be bothered with it

No, it's not that most people are interior and follow the market, it's that the market literally is what most people do. If everyone "went against the market", they'd just have moved the market.

The delivery service in my area has no competition. You order from their version of restaurant menus on which the prices have been jacked up. Then you pay a delivery fee. Then you pay a service fee. Then you have to deal with drivers making minimum wage who can be surly if not tipped enough. It more than doubles the price of a meal, so few people use it.

Is this DoorDash's plan once they've driven their competitors out of the market? The market will shrink and it will take quite some time to recoup their expenses. Maybe that's okay in their books. Own the whole pie even if you shrink it.

Food delivery has been a thing for a very very long time.

The problem here is that there's a $45B company (doordash) in the middle of the person cooking the food and the person delivering the food instead of a high school kid in a funny hat.

Exchanging the overhead of a dining room for the overhead of unskilled labor taking food to a place is an easy win for a restaurant. Doordash and the like are taking jobs that you could train a child to do in an hour (take an order, deliver it to a place) and spending billions on the technology to do instead while still requiring unskilled labor to do the job.

This is the kind of software that needs to be a small scale distributed open source affair instead of a $45B company with several competitors at the same scale.

They started selling their product as if it were basically free by burning investor cache and now they're riding the limited rails of brand recognition and habit while trying to charge for the ridiculous amount they're doing for such a simple task.

> Food delivery has been a thing for a very very long time. > The problem here is that there's a $45B company (doordash) in the middle of the person cooking the food and the person delivering the food instead of a high school kid in a funny hat > This is the kind of software that needs to be a small scale distributed

Related: a few years back before DoorDash and the like exploded in popularity there was a local company near me who tried to start a food delivery business. They lasted one summer (busy) season and then made a post on social media about how unsustainable it was. These services (Uber/DoorDash) are only seemingly viable because of the mountain of "investor cache".

> Food delivery has been a thing for a very very long time.

But not at this scale; it was always a side offer from a more select number of restaurants catering more to pressing needs than an "immediate satisfaction" culture driven by same-day shipping.

There are food delivery companies, such as Toast and ChowNow, that seem more restaurant-oriented. As in, they sell an online-ordering-platform-as-a-service to restaurants (sometimes bundled with a POS system), rather than gunning for market dominance on the consumer side of things.

I think that's probably a viable model for the future, assuming they don't have VCs that will push them to squeeze restaurants like the big apps, at some point.

This is the biggest point. You can simply not use them. Cook your own food or walk or drive or bike to a restaurant.

There is a massive market of lazy AF people who also are terrible at personal financial management, and they are the ones complaining.

I hear this a lot but I don't think the "lazy AF people who also are terrible at personal financial management" is really fair.

I order delivery through the apps a ton, but it's not because I'm bad at financial management. Like many here, I have a well paying job that takes up a ton of my time and energy during the week, and cooking every night is simply not feasible. Takeout is expensive, sure, but if it enables me to hold down a job that let's me afford it, it's a conscious trade-off that I can make.

Could I spend more time meal-prepping and freeze meals instead? Sure. But again, time and energy.

There's also seemingly an army of judgy AF people just salivating at the chance to call other people lazy.

You know, I do go to restaurants, and DoorDash is making restaurants worse. They're becoming DoorDash focused and the dining room experience suffers.

Even picking up your own food is becoming destroyed. Orders get made with no regard to the estimated pickup times you used to be able to rely on. Your order might get made immediately and just tossed onto a pickup shelf where it sits getting cold for half an hour.

This is all because DoorDash guarantees absolute shit quality and accuracy. Cold food, wrong orders, and they've trained people to not complain by threatening to ban you from the service. So instead of the son of the owner of the pizza place rushing right out to make your order right with an apology, you just accept that an 80% correct order is OK.

A whole generation of young adults has come of age with this thanks to COVID, so we're just stuck with it now.

Won't blowing money like this redistribute it quickly, taking care of the "inequality"? It looks like this is a good way to take wealth from people who have accumulated it (the investors) and disperse it widely.

I can't make your argument make any sense.

Burn a billion dollars. Artificially pump the market value of your company by 10 billion dollars. Pizza company gets a few hundred dollars for free. "Haha, we pulled one over on the man!" Go public or sell. Founders and initial investors (likely already wealthy) get billions. Other people take the hit.

No, this does not distribute wealth down. It's a ploy to gin up enough excitement that people who are already wealthy can expand that wealth dramatically with weak business offerings while leaving other people (smaller investors, employees, customers, other businesses, the government, the public at large) to hold the bag.

Not every start-up is like this, but a lot of 'em sure are!

Who the hell cares? When I pay for things I have no interest in thinking about where things are trickling or not. If ten years later DoorDash/other delivery services still have people willing to pay for the service and people willing to deliver the orders for what they are being paid, then the business seems reasonably viable to me.

Any “redistribution” is in the form of wages, so it’s income based in the exact opposite direction of what people want from wealth redistribution, or think of when they say “wealth redistribution”.

C suite gets giant cuts, office workers get medium-large cuts based on career, gig workers just have a new type of low-wage part-time labor to fill their hours with.

Money technically changes hands, but calling the existence of a company with status-quo wages “wealth redistribution” is really taking the term too literally.

>We have let money become so accumulated, that the owners of the capital are being silly with it

Is that not just an inherent part of the debt cycle that we are at the tail end of?

Taxes are not the answer, let the free market figure it out

…which seems to be going poorly?

But the whole point is that in this case the money is not accumulated. Lots of different companies are each spending a lot of money in the hopes that they will be the last standing, at which point they will get to accumulate the money.

It's possible that if one company does end up with a monopoly, they will treat their employees better. Because then they will finally be able to charge higher prices to the customers without losing those customers to the other more exploitative businesses.

The money they’re spending didn’t poof into existence, it’s coming from private equity and investors that accumulated it.

Right, they must have accumulated the money beforehand. But what they are doing right now with it is the opposite of accumulating it. They are taking the money that they previously accumulated and spending it on lots of random bullshit.

Suppose you were to discourage accumulation, with a tax for example. Wouldn't that lead to investors investing in even more random bullshit?

plausibly the money was just printed rather than being accumulated. the article is from the zero interest rate epoch

> It's possible that if one company does end up with a monopoly, they will treat their employees better.

If they can get away with paying employees so little, why would they voluntarily pay more as a monopoly? (Presumably they wouldn't have a monopoly in the labour market, in which case I would expect pay to remain the same, rather than worsen.)

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