Good Products and Bad Businesses


In the last 15 years, smart digital ideas have captured the imagination, changed habits and reshaped industries and economies.

It may seem surprising, then, that so many great digital products in this generation have come from bad businesses.

Spotify has reshaped music, but the company is still trying to figure out how to make a steady profit. Uber has changed cities and has become a way of life for some drivers and drivers. The company also spent much more cash than it brought in during its 13-year life.

DoorDash, Instacart and similar app companies gopuff we’ve hooked some Americans on deliveries of restaurant meals, groceries, or convenience products, but no company that delivers fresh food to our door has been financially viable. Robinhood helped make investing accessible and enjoyable, but it did not make free stock trading profitable. Twitter is a cultural force, but has never been a good company.

There are some tech stars who are (arguably) great businesses, including Facebook, Airbnb, and Zoom Video. But how did so many companies with transformative technologies break the rule that a business that couldn’t balance its checkbook would die?

The optimistic view is that we want companies like Uber and Robinhood to have the time and money to develop their products, grab as many customers as possible, and settle their money tangles later. And some of these digital stars are profitable, depending on how you define “profit”.

The vagrant view is that we may be living in a tech mirage and the insistence of businesses that shouldn’t survive is depriving us of real, lasting innovation. Let’s hash:

maybe this is is what a revolution it looks like.

Last year, Uber spent almost half a billion dollars more cash than it generates – and that was a big improvement. If Uber was a family business, it would probably be long gone. The belief that the disruption in technology was just beginning and the hopes of investors to profit from it kept Uber going.

The company’s backers say Uber is a leaky canoe of choice. Instead of going slowly, Uber expanded to many cities and countries at the same time and took advantage of its popularity. a hub for transportation and distribute food groceries, drink and other goods to our door.

The hope is that this is Step 1 on Uber’s journey to something bigger, better for all and profitable. A similar transformation is happening with Spotify, which is trying to circumvent the ugly math of streaming music by making it potentially lucrative. podcasts. Wants Instacart cease to be a grocery delivery vehicle also selling software to supermarkets to manage their businesses. (Software tends to be very profitable. Grocery delivery is not.)

In many ways, this is exactly what we should want. Because investors believe in business plans, companies with good ideas have the time and money to dream big, expand and how to give customers what they want and eventually make real profits.

Amazon is a famous example of a company that spends more cash in its early years than it brings in – a temporary situation until it has both a good product and a great job. Until the last few years, Netflix had to keep borrowing money to stay afloat. Some companies, including DoorDash and Spotify, are unprofitable under traditional accounting measures but bring in more cash than they spend.

Or maybe hope obscured common sense.

The other possibility is that these digital ideas never made any economic sense in the first place and were supported by the false hopes of investors. According to this view, this generation “Snow? What profit?” digital companies are like a home owner trying to grow a house with a flimsy foundation.

In margins In the news release, finance writer Ranjan Roy and his colleague Can Duruk have repeatedly argued that the digital ideas that have won over the past decade are not necessarily the smartest ones, but those who have the most money to try (and keep trying).

“With so much capital focused on the wrong idea, we may never find the right idea collectively,” Roy said. “It is a perversion of capitalism.”

What opportunities do we miss, Roy asked, To explore alternative restaurant delivery business models that might work better for restaurateurs, restaurant owners, couriers, and delivery companies? Maybe Uber both burned other people’s money and wiped out other businesses and governments’ chances of improving transportation. Instead of Spotify adopting a payment model that didn’t work for most musicians, alternative approaches could have been successful.

Unable to find a way to financially operate their products, these companies became like a forest free of dead trees and shrubs. New life has no oxygen to thrive.

I find it confusing that it has entered a period of profound digital change for over a decade now, it is still unclear how the history books will reflect this moment. Are we at the beginning of permanent technology turbocharged changes in the world around us? Or was it all just a well-funded dream?


  • How Elon Musk makes business decisions: The richest person in the world and soon to be the owner of Twitter is driven largely by “whim, fantasy, and 100 percent certainty that he’s right” my colleagues reportedBased on interviews with people who have worked with Musk.

  • China’s censors can’t keep up: Bloomberg Business Week Writer Citizens’ online complaints about the Chinese government’s Covid-19 policies appear to have crushed legions of government censors tasked with cleaning up critical posts from popular apps. (Subscription may be required.)

  • “You’re about to find out what Twitter is.” A local TV news episode from the early days of Twitter explains this strange new online addiction. Twitter started in 2006, so this segment wasn’t that long ago!

Say Hello to these surprisingly fast platypuses.


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