code4tee

The whole “Uber makes a profit on the ride” stat is broadly just creative accounting that counts the revenue and ignores most of the costs including the huge back office operation to build and support the app, marketing, admin, etc etc.

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.

If Instacart was able to pivot to full end to end food delivery with their own distribution chain it could have long term viability. Their current model of just having people shop in normal stores is problematic for many reasons, not the least of which because normal stores are BY DESIGN slow and inefficient for picking up a list of items.

Instacart had early advantage because full scale grocery delivery infrastructure was broadly in its infancy but if and when the likes of Amazon, Wal-Mart and others go full scale on their own offerings then structurally it would seem impossible for Instacart to compete with that.

This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash.

Food delivery is hardly a new idea. By basically just having VC’s pay for everyone’s food delivery you can create this great market and app ecosystem that people use. Is this a remotely sustainable business model that could stand on its own? That appears very unlikely at scale.

Hyper-local collaboration between restaurants in delivery that kicks out the app company “middle man” could become a thing. I’ve already seen this sort of thing work well in local markets that basically out-competed Uber etc by just getting their act together and hiring a few developers to build a basic app.

Offices won’t go away, but the idea that there is a physical space permanently set aside for you in an office and that you use that space most workdays will largely be seen as a quaint relic of the past for many.

It’s not a question of if there is about to be a bloodbath in commercial real estate, just how bad it’s going to be.

If there’s a plus side smart developers could quickly repurpose commercial spaces into residential and quickly fill needed housing shortages in many cities.

Sadly there are few in leadership positions willing to step up and do something today to help with a long term problem that’s not obviously going to matter in the very short term.

Climate change and crumbling infrastructure are other examples of this. It’s easy to just ignore it until later... until later is today. CEO focus on the next quarter over longer term impacts is another common issue with this “short term gain for long term pain” mindset.

Real leaders know how to take the flak today to tackle the hard problems of tomorrow. Sadly such leaders are rare.

A true global pandemic was never a question of if, just when. The world had several clear warning shots across the bow (SARS, Ebola, ...)

Maybe we need to give anyone seeking a leadership role the “marshmallow test” (look it up)

Many real estate investments are highly leveraged—-you need people renting your property to pay back the loan you used to buy the property.

If a family owns a vacation property outright and they’re going to miss out on some extra income then things are annoying but not terrible.

Those that bought in a leveraged scenario (and worse did so on multiple properties) are heading into a really bad situation and thus it’s understandable they’ll want to offload the property ASAP.

IT support friend of mine told me a story how the place where he worked (major US bank) basically took its whole email infrastructure offline when the company essentially DDOSed itself with a single email.

Someone in IT was testing an email distribution list for the whole company (CEO announcements, that sort of thing) and sent out a test email to the effect of “Hello, did this work?”.

Two problems.

1. They had emailed the whole company for real, not the test list they thought they emailed

2. The list was setup such that anyone in the company could email it and also send a message to all other employees in the bank.

Within about 5 minutes everyone in the bank had hundreds of emails turning up. Initially this was people saying “Yes I got it”. Before long people were emailing to say “Please stop sending all these emails” which in turn got sent to the whole company.

Of course some people then started replying all to tell people to stop replying which only added fuel to the fire. The exponential traffic growth effectively brought the email system to halt for many hours until the mess could be cleaned up.

The markets already know the figures are terrible and that’s priced in already. Unless the numbers come out worse than what the market was expecting there’s no reason for the market to go down on announcement.

Often the market will go up on bad news because the market had been expecting the news to be even worse. This sometimes happens when companies have a bad quarter that was less terrible than people had feared and the stock goes up quite a bit.

Yes. This is applicable to most automation, machine learning and AI. These technologies are generally really bad at sense checking their results.

At the end of the day they match patterns that are mathematically the “most correct” pattern even if it’s obviously not the correct answer. This is the Achilles heel of these technologies that is very hard to overcome and why any real applications generally still have a human in the loop.

See Facebook’s “chatbot” experiment where they called it off after realizing the only way to have it work in practice was to have an army of humans behind the scenes sense checking answers. The grand AI engine that takes over for humans is still a pipe dream for most applications.

Even all these “neutrality flags” are generally nothing more than a keyword search. Put words like COVID-19 or Coronavirus in your post and Medium puts a banner at the top saying the article hasn’t been fact checked.

Apple’s move is more about tax optimization. Yes they have all this cash but it’s sitting in accounts all around the globe. They’d have to pay hefty taxes to repatriate it and then pay it out as dividends. It’s “cheaper” for them and better for shareholders to take out a loan (bond) in the US and then take that cash and give it to shareholders than it is to bring the money from around the world into the US and pay it to shareholders.

This is why Apple keeps asking for a “tax holiday” to bring all this money back home to the US.

It’s often been said that VCs invest in people not products and there’s certainly some truth to that.

That said, having a realistic plan on how your idea turns into a sustainable business is certainly key too. That’s even more important with the economy we’re heading into where startups that are not financially stable are not long for this earth.

The office isn’t dead, but it is also clear that the office won’t come back to levels we saw before.

Commercial real estate is very expensive. In many companies the biggest expense after salaries is the cost of their office space. That cost is going to be challenged very heavily moving forward. Many companies that were against work from home because “it won’t work for our company” have been in near 100% WFM mode for a while now. After some initial stumbles most haven’t imploded and many quite like the new model.

I suspect that hybrid will become the new norm and that many fewer people will spend every workday at the office. That in turn drastically reduces the square footage required by many companies.

The implications of all this for the commercial real estate market are quite severe. Expect to see developers quickly try to pivot some of their commercial space into residential ASAP before they find themselves sitting on empty floors with plunging value.

Most STEM PhDs (and especially in the hard sciences) are funded from mostly government sources. It’s seen as the country making an investment in top talent.

Nobody (who is any good) in the USA pays money for a STEM PhD. You get paid to do these degrees, albeit not a lot but a lot better than paying yourself!

The higher education bubble has been building for a long time. It follows a similar trend to the housing bubble: high prices fueled by loans that are too easy to get and too hard to repay.

The current situation is likely going to force a hard reset for the industry. Administrative bloat and other expenses will need to be addressed as colleges get back to basics and focus on delivering education under a more sustainable economic model.

A 10% decline in enrollment (much higher is realistic for many colleges) would devastate the finances of most institutions. These will be an interesting next few years.

When the final lifeline for your company is suing your primary investor over competing definitions of just how terrible the company is performing then I’m not sure it’s worth much for either party!

WeWork is effectively worth nothing at this point.

Their revenue surely has tanked given everything and won’t just magically return to normal. They’re sitting on massive liabilities with all the leases and capital they invested in locations. Yes leases could be renegotiated etc. but given WeWork’s woes that long predate COVID-19 it’s very unclear how they survive much longer beyond perhaps being sold for scrap in some sort of fire sale.

It’s crazy to remember that less than a year ago there was serious movement towards a WeWork IPO.

What you describe is often part of the problem. Companies are often far to quick to chase after every feature request and endlessly customize product for each customer.

Finding the balance between meeting true feature needs and ending up with a mess designed by committee is the ultimate art in product development.

I like the post but it does somewhat miss the point of these comments when they’re made. It’s not usually someone saying they could rebuild the whole site / product / company in a weekend but rather challenging the value that everything beyond MVP is adding and all the staff that go into supporting everything beyond MVP.

Companies tend to vastly over-complicate things and to support that end up having ever growing teams to support the ever growing over-complexity and feature bloat.

I can’t tell you the number of times a team has said it takes so long to deliver something with 3x the number of engineers because they need more testing, backend and such but meanwhile the core product features that customers care about are delayed and not materializing. It’s not that these other things don’t matter but all the “other stuff” shouldn’t take priority over having a lean and mean product that works and people use.

Thus it’s less “why does this company have 100 engineers” and more “why does this company not just exist as a far simpler and leaner product?”

What’s happening now is very analogous to the 2000 dot.com crash. The economy overall will recover, albeit slowly. However companies are questioning why they need 100 engineers instead of 50. That doesn’t just reverse itself overnight. As the OP said those that weren’t around the last time might find it hard to believe that tech jobs really just disappear for years.

tl;dr: Basically everyone will decide this summer.

We used this with our youngest. It’s a decent product but now it’s turning into a brick at the end of next month when they kill the app. Guess we need to figure something else out.

It’s a tough market because there’s really no inventory. At least some produce can be kept in storage for a little while. When the flowers are ready they either need to be sold or they go bad.

Then of course all the “regulars” have stopped buying. In big cities like NYC the big office buildings usually all have fresh flowers deferred weekly for the lobby but that’s all stopped. Weddings, galas and other events are all canceled.

Interesting story, but wouldn’t be surprised if the real play here was to get his source code so they could get some bad guys to use a modified version that the NSA could crack. Put a back door in and then intercept traffic trying to download the encryption app to download the back-doored version.

The fact that the NSA has to call him in the middle of the night to learn that the free version didn’t use strong encryption (a fact that seems to have been a selling point for the non-free version) just sounds a bit dubious, but that’s just my sense. Nice mug regardless.

I do enjoy being in the office sometimes but not every day. After this is all over I imagine many companies will go “remote work” for at least part of the time. There we’re many naysayer companies that were forced into doing it and now realize work still gets done.

Longer term this whole experience will likely be a step-change in what “office work” looks like moving forward and that probably means a lot less commercial office space needed.

GoPro has been struggling for a while but like a lot of companies they will likely use the present situation as cover to make some changes.

It’s a lot easier for executives to say “there was this terrible Coronavirus thing that forced us to downsize” vs “the business strategy I was in charge of wasn’t performing well and we have to downsize.” That’s happening a lot at the moment.

How does that pair off against the reports that YouTube channels are seeing their ad earnings cut in half as digital ad spend drops?

Don’t doubt there are companies going against the tide but seems clear as spend has declined. Clearly an opportunity to get good rates for those looking to spend.

A lot of companies are cutting back big time on advertising spend and that’s Google’s sacred cow of revenue so this isn’t a surprise.

Nice article. People sometimes dismiss Django but it’s been around for a while and is certainly the fastest framework for building out new ideas that I’ve seen. It’s my goto framework for prototyping.

I find too many teams are so focused on using the latest fancy frameworks that they spend way more effort to build something using “new stuff” that could have been done in half or a quarter of the time with something like Django. For most projects, simple that’s built and works beats fancy that’s still being built.

Sometimes VCs are a bit like hedge fund traders. They have a lot of terrible investments but one great one that made them some money and made more people want to invest. Often though there is little indication the initial one success was much more than just luck and they then proceed to lose a bunch of money for the investors that came in based on their “great track record.”

There are of course those that truly do have a great record over a long period of time but they are much less common. We’re coming off a period where VCs and others could probably have thrown darts at the wall and made a half decent return. Now that’s all changed so we’ll see who gets washed out and who can stand on their results long term.

As I think it was Warren Buffet once said, when the tide goes out is when you get to see who wasn’t wearing any pants.

Most executives are very short term thinkers and thus while your logic makes sense it’s generally not how most people think. They need cash now so they cut first and think later.

You’re right that some smart execs will run into the fire as everyone is fleeing, buying up cheap adverts for a long term investment. There are some signs of this with a few companies seemingly increasing spend to take advantage of the cheap prices. Purely anecdotally I noticed a lot more adverts from Scott’s on lawn care products. Their pitch is basically “hey so the lawn care guy is on lockdown... go to our site and we’ll ship you fertilizer and tell you how to apply it.”