- The actual nerdy economics joke there is in the second paragraph, which takes the form: Two economists are walking down the street. One of them sees a $20 bill on the ground. As she bends to pick it up, her colleague says “don’t bother, if that was a real $20 bill someone would have picked it up by now.” She replies, “no see this was left here by a consumer tech startup trying to maximize user growth; their Monthly Active Picker-Upper numbers are doubling every two months.” She picks up the $20 bill and the startup raises money at a $2 billion valuation.
The pizza arbitrage described above is basically a breakeven trade because the pizzeria has to actually make the pizzas, which costs money, but if this arb works (it does) the obvious next step is to not make the pizzas: You hand the DoorDash driver some empty boxes, he brings them to your friend’s house, your friend does not complain (because this is a purely financial transaction), you capture the entire spread and can do it at scale.
lol holy shit. kleinbl00
That graphic with the unicorn ditch is f'n hilarious. Mike Isaac had a part in his book about Uber: [...] The Chinese scam losses were tens of millions per week. This model isn't going away until hyperconcentrated VC is dead in the water. Until then, reap thyne benefits wherever you can, I guess.In new York in 2014, 20% of all revenue went to fraudulent scammers. Uber was bleeding money by the millions. Drug runs and escorts were driven around on stolen credit cards. In China, drivers and riders collided to collect the incentives, collaborating through online forums by creating fake accounts and going on fake trips together. Kalanick could not stop the incentives because he had to keep up with Didi, and did not want to make signup anything more than a name, phone and cc as it would lead to UX friction. Putting a dent in growth was not an option. People ended up making circuit boards for hundreds of sim cards to automate the process of skimming money off of Uber.
If restaurants and drivers complained about DoorDash but DoorDash was raking in juicy profits, you could be like “what do you want, innovate or die, the market has spoken.” But in fact restaurants and drivers complain about DoorDash, and it lost $450 million in 2019 on about $1 billion of revenue. Arguably the market has spoken and said “stop it, come on, this is dumb.”