Stop The JerkTech
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Startups like this don't create value. They just shift the value around. In the case of these startups, they shift the value to rich people while pocketing the cash. They are essentially parasitic.
Not only is that a dick move, it's dumb for a startup. Google can earn $60 billion in revenue per year because they create even more value than that for its users and customers. Startups that don't create much value have very limited opportunities for capturing value. As the parking app show, regulators are perfectly happy to ban things that don't create value, especially when they have obvious negative externalities. That's what happened to the entire telemarketing industry for example.
So please, people: focus on creating value, not just on whatever bullshit will bring a few dollars through the door.
However, is it that simple to qualify when you're creating value? If I had read the article before HN's comments, I'd have thought the startup is cool (admittedly trivial and silly, but we have a lot of those nowadays), rather than parasitic. I'd have thought it's just a clever hack in helping more efficient distribution - in the true spirit of capitalism. Yes, while it would shift the value to rich people, it also free up the rich people's time, so they (rich people) can create more value. Assuming that rich people is richer because society decides that their time is more valuable, they can create more value in the same amount of times of some other poorer people.
Of course, that might be not morally justifiable. But creating value and being morally correct is orthogonal.
I'm not living in SF the SV area, but I've a few friends there. Every time they talked to me about startup ideas, I've always felt off about those ideas. I kept telling myself that trivial value is still value, and potentially if it can help many people, the net gain would still be large. How do I know where to draw the line?
Edit: it seems like quite a few people have problem with my post, so let me rephrase the middle paragraph a bit:
Ignoring the mentioning of rich/ poor, parking spot is a commodity. And just like other commodity in life, everyone values it differently. What's wrong in letting people paying for what they think it's worth for? The rich will always have advantage in buying commodity, and that's a fundamental issue in our society, but that's an entirely separate problem to fix, and the solution isn't telling people to stop producing commodity, or distributing them. In this specific case of parking lot, it's bad either way because a private company is skimming profit from public space.
I don't think it's that hard if you look at it systemically. If the problem is parking, none of the JerkTech startups are solving the problem, they're just shifting the burden. And they're probably making the problem worse, as now they've created a financial incentive for people to occupy hot parking spaces so they can get paid to leave.
On the other hand, if the problem is "rich people don't have enough time", then there are plenty of ways to solve that. Indeed, Uber basically set out to solve the problem of "rich people don't have enough time and/or feel important enough". Thus the fleet of fancy cars. That created value.
I think solving small problems across a large number of people is fine. Look at entertainment. There are plenty of video games that created value one quarter at a time. Or today, $0.99 per. It's not like it cures cancer, but as long as people end up having fun and are happier, that seems fine to me. However, in my view that excludes operations like Las Vegas and Zynga, which create very little fun and a lot of compulsion, which they then use to extract cash.
I think the hypothesis that rich people generate more value given more time is... unproven. There are plenty of people who are rich because of their cash-extraction skills, not their value-generation skills. Many of them do it in ways that are negative sum. For those people, the best thing you could do for the world is to waste their time.
are you fucking kidding me? why would you assume that?
Parking spot is a commodity. And just like other commodity in life, everyone values it differently. What's wrong in letting people paying for what they think it's worth for? The rich will always have advantage in buying commodity, and that's a fundamental issue in our society, but that's an entirely separate problem to fix, and the solution isn't telling people to stop producing commodity.
In this specific case of parking lot, it's bad either way because a private company is skimming profit from public space.
its not at all an entirely separate problem to fix. society should not be structured so that rich people are always, fundamentally advantaged in every dimension. we should not commoditize everything.
restaurant reservations are not a public benefit, and I think its fine to commoditize them IF AND ONLY IF it can be done in a way that is fair to the restaurants and the customers. we shouldn't tolerate a service that is based on lying to restaurants.
In theory there's no difference between theory and practice. In practice, there is.
No, that's a person with "high hourly earned income".
Making wealth is not the only way to get rich. For most of human history it has not even been the most common. Until a few centuries ago, the main sources of wealth were mines, slaves and serfs, land, and cattle, and the only ways to acquire these rapidly were by inheritance, marriage, conquest, or confiscation. Naturally wealth had a bad reputation. - Paul Graham
As for the "bad reputation", given that most things that were written and otherwise arrived to us were composed by people of some means at least (excluding monks, etc. which are harder to classify by modern standards) - really poor folks had high illiteracy rates, little spare time to create records that we could read, and not many people that cared for their opinions enough to create permanent record of them. So, given that, how exactly Paul Graham knows what reputation the wealth had amongst folks who weren't wealthy?
So I think it's an enormous error to confuse wealth with creating lots of value per hour. Wealthy just means you control a lot of capital.
[1] http://www.cnbc.com/id/49167533#
[2] http://www.forbes.com/sites/erincarlyle/2013/09/18/how-self-...
>>> And when I look around at the rich people I'm familiar with
Anecdote is not data. I don't know where you live, but depending on it and your social circle, the minuscule number (compared to the whole nation) of people you can observe personally would be very different.
>>> Often it was a right-place, right-time thing.
It was. So what? Nobody claims billionaires are superhuman. The claim is only they deliver (or delivered) value. Did they come into position of being able to deliver the value by luck? Maybe. So what? If you per chance found a deposit of gold or discovered very valuable technology - they fact chance played role in it does not change the price of gold or the usability of technology.
>>> If Bill Gates had been born 50 years earlier, for example, it's hard to imagine him becoming a zillionaire.
Sure, so that guy everybody mentions would be called "John Walles" instead, it's no different.
So maybe you should read all the way to the the last line of my post, which explains my exact point: someone currently being a billionaire doesn't mean that they will make the world much better if they spend an hour on one thing versus another.
Ergo, kourt's point stands: somebody being wealthy is not any sort of proof that they can create more value per hour. Which is the (wrong) notion that NhanN was promoting.
If you're going to jump into a conversation in the middle, please try to pay attention to what's going on. It's frustrating to have to connect the dots for you.
It's not a proof, but it's higher probability, by the virtue that in majority of cases being reach means producing value (at least in the past, as your own links prove) - and if the person produced a lot of value in the past, there's a big chance he'll continue doing that. As for the question if it makes the world better - it's a very subjective matter, everybody has their own "better". I think it'd be better if Uber would disrupt taxi cartels, but taxi cartels and medallion investors think it'd be worse.
>>> It's frustrating to have to connect the dots for you.
That may be because the dots are connected by non-sequiturs. E.g., the question if somebody was lucky or not bears no relation to the question if he produces or ever produced value. A quote of how one could rapidly become rich three hundred years ago has little connection to how the majority of rich people slowly become rich now. Etc, etc.
> That may be because the dots are connected by non-sequiturs.
That you don't understand something doesn't mean it doesn't make sense.
You seem to be going out of your way here to be an argumentative dick, so unless you've got some actual contribution to make, I think you've passed my tolerance for JGGIFT discussion.
The assumption of a rich person being rich because of the value created may sound plausible, but is empirically falsified for at least the USA and Germany. Statistically, a rich person is rich because she inherited.
Here: http://www.forbes.com/sites/moneybuilder/2012/04/20/most-wea... it says only 6% of wealthy people are wealthy by inheritance.
Here: http://blogs.wsj.com/wealth/2008/01/14/the-decline-of-inheri... they arrive at the same conclusion (minority got wealthy by inheritance).
The forbes article you quoted is a bit problematic because the data given are voluntary answers. In studies like these there always is the problem of a potentially skewed return rate: Given a return rate of 30%, what is the wealth inheritance quota of the other 70%? My speculation would be that someone who is proud of the fruit of his own hard work (the quoted local business owner) is more likely to answer such a survey. On the other hand some rich person who found a clever way to unofficially inherit parts of the own wealth while avoiding the correlating taxes won't answer such a survey.
At least the second of the blogs.wsj.com studies is self-selected, too. I couldn't find the papers for the two other quotes because the sources were too vague.
It's better to use data sources like tax income of states. IMHO even better is the concept of social mobility (the wikipedia article is quite good: http://en.wikipedia.org/wiki/Social_mobility), as it also encompasses factors like the parents' social contacts and educational chances. The studies cited there all use official, non-self-selected data and sometimes even proper longitudinal studies. In the results presented there the USA has the the lowest intergenerational vertical social mobility of all researched OECD countries (i.v.s.m. means the probability of a child to get into a higher (or lower) class than its parents live in).
An example for Germany: The probability of a child of workers to get a degree from a university is 17 times lower than that of a child with academic parents (source: http://www.deutschlandfunk.de/geschlossene-gesellschaft-uber...).
Yes, social mobility is not the same as inherited wealth, because it's a result of a combination of inheritance and other factors. On the plus side, the empirical data it's based on is of comparibly high quality. The problem is that monetary (as opposed to social etc.) wealth is pretty hard to measure even given government data. In Germany for example the data for people having income is more or less 100% available. But the richer you are, the less probable it is for you to have income: The money then comes from capital gains, rent etc. These are way harder to measure, e.g. the capital gains could get collected by a corporation and not an individual. The corporations money only gets tapped on demand (=saved inside the corporation hull until retirement). And the child of the owner has a counsulting contract with that company. Legally, thats not inheritance at all, but practically it pretty much is.
If our example rich person does absolutely nothing except put their money in a bank, and yet earns more per hour in interest payments than our poor person, that rich person is still creating more value in the same amount of time.
Like I said, this is just the theory. One reason why we should never allow ourselves to be governed by economists ;)
I just wanted to highlight the theory that a sufficiently rich person sitting on their arse picking their nose is (in economic theory) generating more economic value than (for instance) a medical professional saving people's lives all day.
I first bumped into the absurdity of this when working on a coding contract in 1998. The project was doomed and would never complete let alone achieve its goals, we all knew it, but we'd all turn up, write our middle-layer business functions according to the project plan, and got paid a fortune for it because Y2K had pushed prices up. I met a nurse who had spent her day elbow-deep in other people's misfortune and was earning about 1/10th of what I was. The stark comparison made me rethink a lot of economics 101.
That would also provide you a lot of tax revenue for improving education and social services. Or you could just pay it out as a negative income tax or a basic income.
That wouldn't solve every problem of capitalism, but so what? No improvement makes everything perfect, but that's not a reason to argue against improvements.
[1] e.g.: http://www.forbes.com/sites/ashleaebeling/2012/12/11/buffet-...
We could just do it but we have far more savings than the majority of the uk population.
this is embarrassing.
Considering legality is a good start.
Sweetch and Money Parking induce their users to violate San Francisco's Police Code, which forbids the buying and selling of public on-street parking. The city says it will pursue Sweetch and Money Parking under California's Unfair Competition Law for facilitating these violations.
In the case of ReservationHop, I'm not an attorney but I'd venture a guess that there are a number of potential causes of action that a restaurant might be able to claim, including violations of unfair competition law.
Now, a lot of folks will complain that many of these laws and regulations are counterproductive and stifle innovation. They may be right, but a point that is often overlooked in discussions about startups that are intentionally violating the law is that you can be against foolish laws and regulations without being for the willful violation of them.
Have trickle down economics ever been proven to actually work?
Either way, my problem is this: millionaires don't care about running one-off, unique restaurants. They'd want to set up a chain, or something similarly profitable. So if we go with this "redirecting money to rich people" idea, all the restaurants that struggle to get by close and get replaced with McDonalds. Great.
Now, I think it's a very dick move for other reasons - because if it succeeds it would actually make the world a worse place - restaurants just start charging for reservations or stop taking ones remotely. They make a couple of bucks but everybody else suffers a lot. It's despicable.
This is a very old hypothesis, and you are shadowing Marx in decrying parasitic middlemen. Value is such a indeterminate notion that anyone could be said to be creating it, but so many activities we take for granted (and which render us service) are parasitic in some sense - taking rent, opening a store of any kind, transporting goods, paying interest, manufacturing goods are all based on taking advantage of a gap between buyer/seller or taking advantage of an inherent advantage of scale/capital (ownership of the means of production if you like). I think it's ok not to add any value other than getting a service/product to someone who wants it and doesn't want to spend energy looking for it. That's not what makes these companies regrettable.
Google can earn $60 billion in revenue per year because they create even more value than that for its users and customers.
Google is, strictly speaking, a middleman just like the companies above, it doesn't create significant value for end users with advertising (its primary source of revenue), that might even be a negative for customers. Google lives in the interstices between customers/customer data and advertisers and the value they create is mostly incidental to their main revenue stream (it is in services like gmail, gmaps, android etc), and designed carefully to ring-fence customers or guide them toward being the end product of advertising streams. Again, I don't think that's bad, but it's important to recognise that and its similarity to the activities of these other companies or others like Amazon or Apple which provide useful services at the same time as making money as middlemen. They could easily earn $60 billion a year by being evil, and we might not even notice if they were at first because we're too busy enjoying the nice free presents.
The problem with the companies in this article I think, and any other company gone bad, is that the interests of consumer and customer become misaligned to such an extent that the company no longer serves its customers in the sense of seeing to their needs, but in the sense of serving them up to others.
Google operates a legal business. It sells advertising on a service that it owns. Period.
The parking companies in the article are knowingly inducing their "customers" to violate local laws that forbid the buying and selling of on-street public parking. These companies seek to profit from this and as a result are now in legal hot water themselves. As for ReservationHop, I believe restaurants may have legal recourse. California's unfair competition laws are fairly broad and I think an argument could be made that intentionally booking fake reservations for the purpose of advertising and reselling them would constitute an unfair and perhaps even fraudulent business practice.
It doesn't? Google ads fund YouTube, Gmail, Docs, Chrome, Android, and lots of other hit Google services that are Google produced products/content, not a middle-man service between content producer and advertiser.
(If some other organization got the profits Google was making as an advertising middleman, who's to say they wouldn't produce equally good products/content?)
I think you're wrong about Google. They create enormous value through the services they provide. They then monetize that mainly through advertising. They could monetize it other ways; if advertising were illegal, Google would still be raking in cash.
But their search-related advertising, unlike traditional display advertising, actually creates value for both advertiser and viewer because it's relevant to what people are searching for. In user tests, a former colleague was having people do Google searches related to shopping. One guy, unprompted, said, "Hey, you want to know the secret for Google? ignore the stuff in the middle. The really good links are over here on the right." That is, he found the ads more valuable than the normal web content.
Turning back to the companies mentioned, I think they are serving their customers well. The problem is that they are all creating negative externalities by forcing other parties to become unwitting free suppliers of goods they are selling. For the parking apps, it's the cities providing the public parking. For the reservation app, it's the restaurants.
Re Google, I wasn't saying they don't create value, far from it, I was saying they don't create value for readers with advertising. I concede this is a debatable point though for the reasons you mentioned, and it is really a subjective. Personally I don't find their advertising useful, and if anything think it targets me mostly with sites I've already engaged with and wastes the money of advertisers. There is a tension in their services because they depend on advertising, and the temptation (which thy have increasingly given in to on their search service recently) is to favour advertisers (the real customers) over end users - a classic problem in a two-sided market.
To be clear though, I was not saying google are evil, but that just shifting the value around is what businesses do and what Google does - creating value is a very slippery and subjective concept and I'd argue their services which create value (mail etc) are funded by those that don't (advertising). So I would not use that particular behaviour as a criticism of the companies mentioned in the article - they might be objectionable, immoral or even illegal (I'd say probably all three) but they are not easy to distinguish from normal businesses in terms of how they shift value around.
I believe that value is subjective, in that it's value to humans, but it's not particularly slippery. I also believe that for almost all businesses value creation is separate from cash extraction. My ISP's internet connection, for example, delivers a lot of value to me, but getting a bill from them doesn't. Google Search delivers a lot of value to me, but having ads on the page often doesn't. However, Google Search ads do deliver value to advertisers, and sometimes they deliver value to users when they discover novel products that are helpful to them.
I think the value analysis for Sweetch and Monkey Parking is pretty clear. People want to park quickly and easily near wherever they're going. Monkey Parking makes that easier for some people, which appears to create value on the per-customer level. But it only does that by making parking harder for other people, so the app delivers no net gain in value. Indeed, by in effect paying people hang out in parking spaces until somebody pays them to leave, they are probably making the parking problem worse, resulting in a net destruction of value.
I think the analysis for the restaurant reservation thing is similar. For each person they get in, they are excluding somebody else who would have had a table. Net value gain: zero. Or possibly negative given that squatting on reservations means that some will go unfilled.
So in both cases, they seem to be parasites on the actual creators of value. This can be easier to see if you contrast them with the parking startups that do make parking easier: https://news.ycombinator.com/item?id=7986950
The good ones are people who just haven't thought it through. They've found some sort of demand, and they're doing the standard hack-the-system thing that the startup culture trains them to do. Once it's rolling, it's like Mencken said: "It is difficult to get a man to understand something when his salary depends upon his not understanding it."
The bad ones are the sort of entitled douchebags that would have previously gone into investment banking or some other industry where the money's great and ethics aren't emphasized. But now startups are the high-status, high-money thing, so that's what they're after.
Because nearly every internet business gets it's revenue from advertising, a lot of good people jump through hoops to convince themselves that they have not made a deal with the devil. The downvotes[1] come fast when I point out this moral and cognitive dissonance, usually without any counter argument since they just want me to go away.
When I talk to anyone who's livelihood doesn't rely on advertising or marketing, there is near unanimous agreement that advertising is fundamentally manipulative and dishonest.
Besides the social cost of Advertising, there many other costs[2]. The idea that advertising gives us free web content and services is utter bullshit.
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[1] The cowardly downvotes with no counter argument have already started. Upton Sinclair is the actual source of the quote at the top. A wise man who got a bunch of downvotes in his time.
Citation please? There are many "internet businesses" that don't derive their revenue from advertising, e.g., AWS, Dropbox, Netflix. Spotify derives some revenue from advertising, but their core business is subscriptions. ad nauseum
Also, those paid-for services you mention are of such high quality (to you, not advertisers) because you pay for them. You are the customer not the product, as they say.
Many people pay for Hulu and many other services, and still get ads, how are they not the product?
That cliché can't die soon enough.
Hulu is an example which mixes both approaches - clearly an $8/mo premium subscription isn't enough to support their business model, so it has to be supplemented with ads. Not sure why this needs explaining. TV is obviously an industry very tightly coupled with ads, making it more difficult to disrupt with a fully ad-free approach.
Hulu's just funny to me. You're paying to be a product. It means the business decision makers will respect you a little, but how much depends on how much of the revenue you're bringing in and what sort of industry it is.
The cliché is an excellent guide to the situation. So many people don't seem to understand why ad-supported businesses work they way they do, and in particular why they don't seem to have the customer's best interests in mind.
So it's not "if you're not paying for it; you're the product", it's "if you're not paying and the provider is a business, you're the product". And then we're just missing a truckload of exceptions, instead of two truckloads.
Hulu's just funny to me. You're paying to be a product. It means the business decision makers will respect you a little, but how much depends on how much of the revenue you're bringing in and what sort of industry it is.
People pay a lot to Comcast every month, does that mean they get plenty of respect?
Comcast is a fine example of something where you're the product even if you're paying for it. (Note that "if you're not paying for it you're the product" doesn't have anything to say about the case where you are paying.) Monopolies and oligopolies basically get to treat customers like property, because they know the customers don't have much real choice. Comcast is exactly what I had in mind when I said it depends on the industry.
There's nothing wrong with free, as long as it's truly free. Ad-supported services have huge costs that we all pay for as I explain in detail in my linked comment.
Also, do you not understand that entities buying and selling advertising are currently in a Nash equilibrium and no amount of internet whining will change that.
Mostly consequentialist. Such should be evident from what I wrote above and in the linked comment.
Even if I were to grant your point about a Nash equilibrium (you fail to convince, but succeed to condescend), buyers and sellers of advertising are not the only players involved. You also beg the question by assuming everyone is driven purely by self-interest.
Such as? Keen to hear. :)
Also, what would you propose in lieu of the current advertising supported model that is dominant today?
I'm implicitly proposing that people pay directly for the products they use. Be the customer, not the product. Reward businesses that put the user first, with no advertiser conflict of interest. We need to evolve a way to do this efficiently, since people aren't going to pull out their credit card for every different site they use, especially not the one-offs.
The best minds of my generation are thinking about how to make people click ads. That sucks. – Jeff Hammerbacher, fmr. Manager of Facebook Data Team, founder of Cloudera
If we can redirect just a fraction of those best minds at coming up with a micropayment system for the web, it won't take long to solve. Some people make themselves feel better about advertising by saying it helps the poor (who can't, presumably, afford to pay for Gmail or Facebook or whatever online journalism they read). These same people conveniently forget that the poor spend a greater share of their income on goods, thus a greater share goes to advertising costs, which could mean that the ad-supported web model we have today is regressive (as in regressive tax).
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Actual smart humans waste their entire lives doing something that adds zero net value the system. When I think of my friends in advertising, it always makes me a little sad. What good things could they have done with their lives?
The project I subsequently started operates on a very simple $5/mo pausable subscription with a 30-day free trial. I'm _much_ happier with this model than anything I've ever worked on which is ad-based - it feels like a completely fair and fulfilling exchange of value.
I, too, feel like if the web was free from advertising, and instead was home to services supported by paying customers and/or donations, it would be a much better place and have far-reaching benefits. This is something I genuinely want to make a difference on, so feel free to get in touch if you want to see if we can combine our efforts in some way (contact details in profile).
Like I said, "When I talk to anyone who's livelihood doesn't rely on advertising or marketing, there is near unanimous agreement that advertising is fundamentally manipulative and dishonest."
People can be stupid. People can be manipulated. Propaganda works. Take political ads. Which ones work best, the ones that manipulate your perceptions and emotions and ignorance, or the ones that "respect [your] time and intelligence" with the honest whole truth?
I never said there isn't such a thing as manipulative advertising, what I said was that advertising is not inherently manipulative and dishonest. It's a tool for communicating, and in my experience in general people see though manipulation tactics, such like they do when you try to sell them something by bullshitting them. Well written Google ads, well written marketing for websites, etc, all generally flow from a central theme of communicating clearly and honestly to the reader what value you are offering, and giving them reasons to want to pursue your business. It's salesmenship, and I guess only if you think salesmanship is inherently dishonest and manipulative then you'd think advertising is too.
(whether that's by definition a bad thing is another issue, though)
They spend $4 billion per year not to inform people of the value they provide, but to manipulate people into purchasing more Coca Cola. And it works.
If they stop, then Pepsi will spend more, capture Coca Cola customers, and Coke will shrink. Or people will say, "Hey, maybe I should drink something more healthy," and stop buying sugar-water altogether. Can't have that! So Coke will keep burning money on manipulating people.
H.L. Mencken?
The Internet appears to ascribe that quote to Upton Sinclair.
"To be honest, I haven’t spent a lot of time thinking through these questions." http://brianmayer.com/2014/07/how-i-became-the-most-hated-pe...
The difference is Zurvu actually partners with the restaurants, helping them move empty tables. They may request a certain number of tables be free per night, but because they partner with the restaurants (that they prominently display), that presumably comes with kickbacks to the restaurant in question.
And Killer Rezzy's goal is to allow restaurants to monetize reservations. While this may suck for those of us who don't want to pay an entrance fee to eat, it's certainly not harming the businesses they depend on.
"If somebody is willing to pay for it, is it really unethical?"
There we go - if there's a paying market for something, it's totally ethical. Off I go to found assasins.io - murder for hire disrupted.
- the original ticket purchaser is happier with the cash received than with the ticket they had before
- the final ticket purchaser is happier with the ticket than with the cash they paid
- the scalper is happy with his/her profit
- the promoter's/venue's revenue is unaffected
So, three people are better off. Value has been created.
What original ticket purchaser? Scalpers aren't like eBay. They have bought up the tickets from the venue at certain amount, depriving others of a limited resource at that same value, and now offering it a higher value to people who didn't have the means to buy it as fast as the scalper.
The disruption the scalper is introducing into an existing system benefits nobody but themselves.
There are rich people who are willing to pay up to 4x face value. They are very happy to pay 2x face value and get to go to every show they want. Without scalpers, they would pay less per show, but would totally miss out on some shows.
The scalper benefits those guys, at the expense of guys like me. It's not true that the scalper benefits nobody but themselves.
Value is added to the rich. Further offending my socialist dream. ;)
Supply isn't set in stone. If scalpers buy up tickets early on then they take on the risk that a show won't sell out, and that allows the promoters to move to a bigger venue (as happened in this case), add more nights, or even raise prices. So the promoter benefits too.
It's no different from any other middleman: find someone who's selling at price x, find someone who's buying at y > x, connect them together and take your cut. Which is what makes capitalism works.
Come on, this is obvious.
But in my example, he wouldn't have gotten the ticket at all. The ticket would have been had by someone like me, who was barely willing to pay the face value, but was lucky enough to get one of the limited supply of tickets when they were released for sale.
and/or the venue or promoter would have been happier with the extra money that is instead taken by the scalper
But in my example the venue or promoter has already set the price lower than the market-clearing price. If s/he hadn't done that, then the scalper would not have popped into existence, as the market would already have cleared.
In a world without scalpers, person A and B both have a 50% of buying the ticket at price $X. However, the ticket is worth more to B than it is to A (in terms of real utility, not monetary value). There is real value created by increasing the chances of B getting the ticket. The most effective mechanism we have found to maximize the chances that B gets the ticket in this situation is market pricing, which is what scalpers enable.
That's the situation I was imagining when I wrote my post.
My original post has as many comments as downvotes, which I take to mean it wasn't a useless post, but that people disagree that scalpers add value. The funny thing is, I would prefer a world without scalpers, and in which I had an equal chance to buy underpriced tickets. If I were rich, I would probably prefer the current situation, or one in which tickets were priced dynamically, like plane tickets are now.
When I think of the best concerts I've seen, the ones I really loved, they were mostly when I was young and broke. Now that I'm older and have money I can afford to go more concerts, but I generally care less. I could well be pushing out very passionate fans.
I suspect a better mechanism in this case is making people pay in a currency in which we are all more or less equal: time. If the venue just started selling tickets in one spot at a particular time, the people in line first would be the very passionate fans, the ones who dropped everything to get in line early.
Kid Rock and his team are reserving the first two rows for die-hard fans
only. No matter how much money you've got, you can't buy your way into them.
"They are not for sale, " Kid Rock says. "I'm tired of seeing the old
rich guy in the front row with the hot girlfriend. And the hot girlfriend,
you know, with her boobs hanging out,with her beer in the air, just screaming
the whole time. The old rich guy is standing there like he could[n't] care
less. It's a very common theme at Kid Rock concerts."
True, but follow that logic, and replace 'create' with 'revoke/destroy'. These apps are proposing a tiering system that favours people willing to trade money for convenience, and _simultaneously depriving those how aren't willing or can't_. So this pay to use system is scalping limited resources at a cost to others, and profiting middle men piggybacking of existing infrastructure. I think the article made a clear argument for why this is not okay.
The proposal that you can require a credit card for each reservation escalates the situation, because now in order to stop scalpers from operating, the bar for entry is raised. If people are independently abusing the system, then this is the logical way to combat the problem. But if it is a parasitic entity then regulation is sensible way to protect the business and its customers (eg. some who might not have credit cards).
Often when these arguments are raised people argue as back and forth as if economics and law are the only considerations. What about considerations towards decency?
How annoyed would you be if you tried going to a restaurant, saw empty car spaces installed by your local council, but people standing in them holding signs saying "Reserved. Yours for $4". Finally, you arrive at the restaurant but get told that is is full. A guy out the front waves you down, 'psst. I have 10 reservations - want one? $5 bucks.' Not only that, the guy is part of an organization that has done it to all the other restaurants in the area.
And how, exactly, would that do anything to prevent reservation scalping without adversely affecting the user experience of making a reservation or making life even easier for reservation scalpers? Probably it will be easy to use and easy for scalpers to screen scrape, or the UX will be a some kind of CAPTCHA-filled monstrosity.
Now that I think about it, forget about restaurants and reservation scalpers; if you could develop a truly superior CAPTCHA replacement, that would be orders of magnitude more valuable.
In my experience, the problem is not the 30 seconds call, it's the minutes of waiting to get someone free to answer. Most restaurants can't exactly afford a call center.
There was a story recently on HN of a restaurant who did just that successfully: https://news.ycombinator.com/item?id=7853786
Why wait for the future?
If some startup thinks that selling reservations at restaurant X is profitable, they should be partnering with restaurant X right now to sell their reservations. They should be sharing in the potential downside with the restaurant -- if they book reservations they don't sell, and the restaurant has to turn down paying customers, the startup should pay some cost for that.
"Because doing the right thing is too hard" is not a valid reason for doing the wrong thing.
"Let me do the wrong thing, I promise (disclaimer: not a real promise) to do the right thing once I've gained sufficient profit" is even less of a reason.
There's often no other option and the ends in fact do justify the means if the net result is a more efficient market for both parties once it has been bootstrapped up "in the small." Of course, this requires you to not be an evil scumbag and be honest with yourself, but I see no reason to assume a path of execution is inherently evil, the intent and overall strategy greatly matters.
"Yes, my name is Eduardo ArrayIndexOutOfBoundsException, it is a proud family name, we are far better than the scum of House Segmentation Fault".
They also take advantage by paying staff less the minimum wage and relying on tips to make a living - a campaign for a living wage for restaurant workers would be a better use of "josh" and those like him time.
If foxcon treated their staff in the way the average restaurants did there would be an outcry
As for parking, the sooner cities get rid of hidden car subsidies the better. Artificially low priced street parking and building codes mandating garages are some of the more insidious subsidies that make everyone pay for those who drive. If the spots went for market rate, these apps wouldn't exist and the extra money could be used to improve public transit.
The restaurant one is dodgy though. I could approve of a system where they've paid the restaurant in order to sell on a reservation (so the restaurant gets something even if there are no takers) but as it stands it's just a con.
They do, however, expect it to be free. It's not a normal market.
Note that the same is true about love and sex. Most people value those things highly, but you won't discover that by looking at what they pay for it.
That's a great analogy in general, thanks!
Because a restaurant with a long waiting list for reservations gives the place a cachet of popularity, which can be more important than optimizing available reservations.
I don't really like the idea that restaurant owners should be forced to raise their prices just to avoid being screwed by clever startups. What if you just want to keep your prices affordable even though you have a lot of success? I guess you can always ask for an ID and check if it matches the reservation, but I'm not a great fan of that either.
Firstly, a Virgin Mobile (no contract) Android phone is $30. Gas is well over $3 a gallon near SF. If you can afford to drive a car (even assuming it was given to you and you therefore have no payments), you can definitely afford a smartphone.
Secondly, the company rep was quoted as saying that the highest price ever paid for a spot was $15. Is this is steep price to pay for a couple hours parking? Sure. Is it only for the wealthy? No, I'm thinking not.
The reservation thing is much more of a "jerktech" startup because of the potential harm to the restaurant[1], but the parking startup seems like a win, all considered: people who care more can purchase certainty, and people who don't care as much couldn't be certain of getting a parking spot even before this, so...
[1] though they could just require showing photo ID in the reserved name to effectively combat this, at least for a while.
But that's not the reason it's jerktech, it's because the parking space was already paid for with taxes. What monkey parking's doing isn't much better than brigands setting up in front of a bridge and demanding a toll from anyone who wants to cross it.
(edited for grammar)
This is a weird opinion. This kind of resale is common in markets where producers would rather guarantee selling their entire product at a certain price as opposed to risking overpricing. Same reason many farmers sell off crops immediately to middlemen instead of trying to maximize price selling directly. They aren't being exploited, they're hedging risk. I would imagine that centralized ticket websites like StubHub also improve the venue's distribution in this case. If venues don't like resellers, they can follow Louis CK's actions[1].
[1] http://thenextweb.com/media/2012/07/03/louis-c-k-sees-ticket...
It's pretty antisocial to snap up as many tickets as possible and then relist them at double the price within seconds. If you can't go, fine, but if you're just profiteering then you're inserting yourself into a transaction where you're not wanted.
It's the shows that sell out in seconds that these guys try to get in on, so there's no risk to the venue or the act anyway, scalpers are just basically extortionists at that point.
It seems very polite that they're going after sites like Monkey Parking instead of simply reserving spots for $5 or $10 and then busting the sellers at $300 a pop.
I suppose that in that case, Monkey Parking would just become a component in an entirely different sort of ecology.
The city of San Francisco should be fighting Sweetch and Monkey Parking by cutting out the middleman and drastically raising their parking fees.
Unfortunately they stopped providing sensor data about half a year ago with the end of the pilot program. But the sensors are still physically around, and SFMTA (hopefully) are looking into improving sensor technology to upgrade, and seeing if it makes sense to release this data again.
Personally between that availability info and that SFMTA has not been afraid to tinker with pricing changes - definitely a big FU to Monkey Parking et al. Not sure why they didn't work with private lots and home garages or something instead - that would make a lot more sense than messing with something that's already in the works.
And anyway, this could be a temporary spike in demand. Once places like ZipCar and Uber get ahold of self-driving cars, I expect there will be a big decrease in car ownership.
If they put connected meters on all the news spots, we could also give people who live nearby income-based discounts.
Where I live, residents can get a small sign from the municipality that they can put in their car to avoid parking fees (when parked near their home). Seems like a simple solution.
"Extortion"
"Well, it is a time-proven way of making money; and you may go to jail, so I can see you are not afraid of risk... like a true entrepreneur!"
If you actually want to go down the road that has been selected as the most appropriate place to loiter... too bad for you.
The first one, Reservation Hop, is simply indefensible because it relies on fraud. It's deceiving restaurants into thinking the person asking for a reservation is a real person. Not only does it involve lying, but it's fundamentally different from scalping a ticket because if no one "buys" the reservation, the restaurant gets nothing and was perhaps force to turn down legit customers, whereas the scalper actually paid for the ticket (though it may have been inefficiently priced, see below for more on that). It also creates no-value-added intermediary in the process. It's just a dick move all around. I do suspect that a trade group for the restaurants could get Reservation Hop cease-and-desisted, but the general solution here is for restaurants to take a credit card as part of the reservation process.
The parking ones are a bit different, in that they're taking advantage of inefficiently priced parking. Ever notice how it's really hard to find a spot on a street full of first-come-first-serve, inexpensive parking? It's for the same reason there are long lines and empty gas pumps before a storm with anti-gouging rules in effect, or in stories about the Soviet Union. You can park there for long periods of time even though you may not have a pressing need for the spot, whereas people who have such a need can't get one. Normally we manage such supply and demand issues through prices, so if you need a spot badly enough you might be willing to pay for it and one will be available because most people aren't. [1] What happens almost inevitably when you have an inefficiently distributed good is a secondary market or some sort of cultural mos, both of which are usually ethically dubious. In Boston, people "reserve" spots by putting cones or lawn chairs in "their" spots and expect you to respect it less you get your car keyed, thus compounding the inefficiency. There are places where you can pay for people to "hold" your spot, and I've had someone try to sell me theirs once. These companies are filling in exactly there, except with technology. To be clear, I think these companies are pretty crummy. But my point is that they're the almost inevitable consequence of a pretty terrible system for allocating resources. I.e. if we want to fix this, the best way to do it is to fix the underlying problem rather than shaming businesses like this. EDIT: to be clear, I'm not against shaming them if it makes you feel good; I just think it's not the solution to the problem.
Even though that description overlaps in places with the article, I like my framing a lot better. The article is coming from this place where entrepreneurs are expected to be these angels descended to Earth to fix all the "common man's" problem through innovation. Then we immolate ourselves because the community/scene turns out to be full of non-special people who are sometimes kinda shady and take advantage of bad policy and lax enforcement to make money, just like people in all other walks of life. (In an age where so much relies on technology, I don't even think it's reasonable to think of "startup tech stuff" as a scene or a space or a community at all.) Maybe it's fun to wring your hands about it and I can see a publication like TC likes to see things through that lens, but I don't think it's a very helpful way of approaching these problems if your real goal is to solve them.
[1] An important question here, given the context, is doesn't this just help the rich get parking at the expense of poor people? Well, yes, it kind of does. On the other hand, if you can't find a spot, it doesn't help poor people much, except insomuch as poor people may be willing to spend a longer time trying to park (in which case, we're making them pay for it with their time, which doesn't seem good either). But more importantly, if we want to make things easier for poor people, we should give them money so that they can do what they want with it (including parking!). That's way better than making parking artificially cheap, because a) it's a lot more flexible from the poor person's perspective and b) it distorts the allocation of resources way less.
http://latimesblogs.latimes.com/lanow/2012/05/smart-parking-...
edit: tl;dr the extra time gets wiped out when your car leaves the spot.
This is not really relevant in the context of San Francisco. The city has been running a pilot program since 2010 to change meter pricing based on demand. Interested startups could have worked within this program and with SFMTA to help. All Monkey Parking et al. have been doing is screwing with this program which has been actively adjusting prices and rolling out to more areas.
The gross thing about some of these startups was that they were looking for people to hire to squat on parking spaces. Not just the one-off space, but literally, your job was squatting until someone paid for the space. It's unbelievable. I hate parking here but not enough to screw around with other people looking for a parking space or to pay for a service like that. I would not shed a single tear if cops started using the apps in question to write the people selling spaces $300 tickets for breaking local laws.
Really not sure why all these "disruptors" can't just channel their energy into improving public transit and working on better (but slower and still imperfect) approaches to the parking problem just like sfpark. "Let's find you an available space and let's make it frictionless for you to pay for parking" if not just "let's fix the problems you have with taking Muni" is better in the long term than "let's create an app to auction off _public_ parking spaces".
I'm not even going to approach reservationhop because I also own a restaurant. I could write a wall of text about that....
edited in: [1] So I addressed this in other comments, but the sfpark program also involved installing per-spot sensors in over 8k meters in the city (along with credit card-supporting meters and remote pay). There was an official app (and third party dev access!) that showed you which _exact spaces_ were available near you. Imagine the ability to just discover that there's a space open 2 blocks away at half the price of the area you were searching in. Now that's the kind of technology I could get behind that would have a chance of destroying Monkey Parking and the likes on its own. I'm hoping SFMTA brings that back soon.
Are people actually using these "jerkTech" services though? If you've got the SFPark app, why would you bother with Monkey Parking? I get the feeling that they're all enjoying the free hype/hate which is being doled out right now as it's probably steering more users their way.
Ultimately though there is no way any of these services will be viable. If you face a $300 fine for renting out your parking space (as is the case in SF) and Monkey Parking makes it easy for law enforcement to track you down with their app, not a lot of people are going to want to bother.
It's a similar thing for making restaurant reservations. If restaurants start getting hit with a ton of no shows to the point where they're losing money, it doesn't take long to figure out that it's listed and file a cease-and-desist order.
> It's a similar thing for making restaurant reservations. If restaurants start getting hit with a ton of no shows to the point where they're losing money, it doesn't take long to figure out that it's listed and file a cease-and-desist order.
Trying so hard not to rage here. I own a restaurant. Reservationhop guy could have spent literally a few more seconds taking his idea to the logical conclusion that he should work with restaurants - just like EVERY OTHER service involved including the ones in his defensive blog post. Nope. It's like all he saw was "oh, something like ticket scalpers for concerts!" and ended there.
Not sure why they jumped to the stupidest option possible instead of taking a look at seriously starting something in the big, generic, terribly done to date foodservice needs area (everything from reservations to POS systems) or becoming the Airbnb of privately owned parking spaces. You'd think they'd see the nonviability of their ideas sooner.
Here's an idea, slightly based on Alinea's ticket system:
Charge a relatively low deposit. Say if I make a reservation you charge my credit card with 20$ (or whatever). If I cancel (it does happen) up to three hours (or 6, or 24, or whatever) in advance the charge is reversed and the transaction is at no cost to me.
If I show up the 20$ are fully credited and deducted from the bill.
This would certainly only work for restaurants that can generate the necessary demand. Then again those are also the victims of those DoucheScalpers.
As a patron I really wouldn't mind guaranteeing my reservation with a small, up front payment. Especially when I can cancel within a reasonable time frame, no hassle and get fully refunded.
On a off topic side note: I actually cancel reservations if I don't need them. It seems to me just common courtesy and the right thing to do. It may enable somebody else to use the table and I strongly suspect that it doesn't hurt my karma with the restaurant for next time I want to book a table.
The reason parking is priced the way it is is because it is a public good. The only thing "efficient" pricing would do is give wealthy people a massive advantage over the consumption of that good. You might like to live in a world where only rich people can afford public parking - I don't.
That's exactly why the SF government is taking an issue with these startups: they skew the game in favor of those who have money. For the usage of private property, such as houses, this may not be a huge deal. But public parking by definition belongs to the public: everyone should have an equal chance at consuming it. Fairness trumps inefficiency.
Sadly it doesn't work right now because the program ended, but while it existed, realtime data was even accessible to third party developers. The potential was huge.
http://sfpark.org/how-it-works/the-sensors/
If someone wants to disrupt something, it should be by helping the SFMTA to bring sensors back along with upgrading the rest of the city's meters to the smart, credit card accepting, remote pay enabled, pricing-based-on-demand system that only some of the meters use.
The point isn't that it can't be solved, the point is that if it need solving, it's probably a problem, and companies are supposed to solve problem, not to deport them from their paying customers to non-paying third-party.
I can't really see how these services are not just the exploitation of services for the public good. Pretty disgusting behaviour.
For example, if we had sufficient parking in the city, these startups would never even cause a blip. Someone must have been driving around for half an hour looking for parking and then thought to themselves that, at that point, they would pay someone good money to just be able to find a spot - and suddenly the idea for a business was born...
In contrast, there are plenty of startups that are actually making the parking problem better. City CarShare and ZipCar are reducing the number of cars in the city by having cars available on demand. GetAround and RelayRides are upping the number of drivers per car. Uber and Lyft (and taxis and transit) let you get somewhere without having to park at all. Parking Panda and Park Circa are turning unused private parking spaces into publicly available inventory. Even Amazon is helping: part of what makes happy to do without a car is the fact that they will make almost anything I want show up in a couple of days.
Or did NIBY residents stop any such developments.
Good that someone finally publicly named those companies.
The reason these companies are made of young people is because they're tech startups.
Furthermore, an ID check isn't as painless and easy to implement as you say. Often, other guests arrive before the person who made the reservation. Public figures make reservations under assumed names. And the name on someone's ID may not match the name they typically use (read patio11's brilliant piece http://www.kalzumeus.com/2010/06/17/falsehoods-programmers-b...).
And then there's just the offensiveness of requiring people to carry ID in the first place.
The point of the ID suggestion (which was only one idea) would be to somehow identify users of the app, let them travel all the way to the restaurant with their date or client, and reject their reservation. This will kill the app faster than begging the developer to be less of a jerk.
And the restaurant industry for one, while very competitive, is also a fairly tight-knit community (due to the rigours and stress involved in the business), and word gets around fast. I'm sure cities will also crack down on auctioning public parking spots, to the extent that it will be an unprofitable exercise.
EDIT: Probably down voted because of length, but I'm pointing out that this is an opinion lots of people have, and there's a reason it exists as a truism. If you pass a law against apps like this, how could you possibly enforce it? The seller's car is already in the spot, and police can't get a real time notification that he's using the app. By the time they realize what happened (if ever) the spot has been sold.
[0]: https://en.wikipedia.org/wiki/Thought-terminating_clich%C3%A...
This could only be a problem if people start parking cars they would never use in the city, just to profit from these services.
This is not not deeply interesting anymore, and as such I am flagging it. I hope others will do the same.
It's an interesting experiment. Should it be literally turned into a business, as-is? No, because it requires a) lying on the phone and b) leaves the possibility open that restaurants are going to leave money on the table, so beyond being unethical you probably don't want to make enemies of the people who are providing the service your customers are paying for. It's not viable, and it's both dumb and unethical to form a serious venture around as-is. But let's admit it, he's found something interesting that perhaps with some tweaks could be turned into something disruptive. In the startups I've worked stuff we ran small stuff like this all the time: things that we'd never try to scale since we were breaking the rules a bit, but we were trying to learn something and knew the way we were executing on it "in the small" did not cause any real harm.
But if we are going to just hang people out to dry immediately for releasing small experiments to test gaps in the market or test boundaries, then we've lost what it means to be a hacker. I don't like the idea that my entire reputation can be ruined if I launch a weekend hack that ends up on valleywag and starts a hate train fueled by wider hatred around the tech industry. Part of the reason startups work is because you can bend the rules a bit while you are small and under the radar while you look around at the edges for the opportunity for a real business you can stand behind. But with Twitter and the tech press even single individuals no longer seem to be able to stay off the radar if their experiment will drive clicks from angry readers and re-enforce their stereotypes about the tech scene.
They are parasitic, arguable, but so what if they are? People dislike that, so what?
What is the story here exactly? It seems to me it's just link bait with everyone agreeing they dislike these apps.
It's an article saying being rude is bad. I don't see why people think this article has value other than they get to throw in a me too.
And at the end of the day, I'd imaging most people here are also working for parasitic companies who just hide it a bit better. i.e. Advertising including SEO. This to me is more of a real story.