The doses of Delusionol(tm) required to believe “this time it’s different” are becoming dangerous.
Here we go again, another tech bubble is expanding like a supernova and the financial media is declaring (as it does during every bubble) “this time it’s different.”
File Tech Bubble 2.0 under memories are getting shorter or this time is never different: The “Uber of dog-walkers” is worth a cool $1 billion pre-IPO. Or maybe it’s the
A scooter-rental company in a very crowded field of never-will-be-profitable scooter start-ups is worth a cool $1 billion–but heading to a $10 billion valuation because… well, it’s the Uber of scooters.
Meanwhile, Uber and Lyft will never be profitable because their market is already commoditized. Companies only generate billions of dollars of profit when they scale up within a moated sector to become a quasi-monopoly with pricing power and the ability to buy up or crush any competitors. Without a defensible quasi-monopoly, margins are low and pricing power is zero. The truth is neither Uber nor Lyft will ever be profitable: their fixed cost structure is high, their pricing power is essentially zero and there is no way to establish a quasi-monopoly in a sector with a wide range of commoditized competing transportation options. The cost of operating a very complex vehicle will never be near-zero, and neither will the liability. Many other transport options will always be available to customers, starting with walking, public transport, biking, arranging a ride with a friend and the “black market” ride-sharing options that are inevitably arising to cut out Uber’s fee.
1. The “services” Apple is entering are commoditized and
2. Many competitors are well-funded and experienced in
3. Commoditized products and services have
4. The content creation and delivery sector
Laughably, the financial media is claiming “this time it’s different” because the companies doing IPOs are “older and bigger.” Right, which means their losses are correspondingly gargantuan and if
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