Gig workers are not the only losers.<p>Any small business which doesn't receive VC funding is also disadvantaged because they aren't able to give consumers the same kinds of deals that these consumers have gotten used to.<p>What some of those big VCs have been doing is criminal and has been hurting both workers and value-producers for over a decade.
I hope that they'll end up in jail after it all goes belly up because this is very serious.<p>It's not hard to see what's really happening; VCs are shoving investors' money into each others' pockets and then dumping the bi-product on the public market so that the public foots the bill... A lot of which ends up taking a chunk out of regular people's retirement funds.<p>The crime is made even worse by the fact that many of those who end up footing the bill don't even have a choice. If I have a compulsory retirement fund like 401k or Superannuation, then I often don't have much say about where my money is invested... Maybe it goes to an index fund; part of which goes to big corps like Google which then use the money to acquire worthless VC startups from people who are friends with executives.
Remember that we've been here before: Groupon actually ended up BEING a straight-up ponzi scheme that is now worth a small % of what it IPO'd for as a conglomerate of all of its competitors (LivingSocial, etc.).<p>And do not forget that some % of folks driving for Lyft and Uber are doing so in cars that are financed with subprime debt.<p><a href="https://usa.streetsblog.org/2019/02/13/americas-car-centric-transportation-policies-are-driving-us-to-ruin/" rel="nofollow">https://usa.streetsblog.org/2019/02/13/americas-car-centric-...</a><p>$1-1.5 T in auto debt is not 2008 subprime mortgage debt, but it's important to remember that a real tie-in to the publicly-chartered banking system exists here beyond whatever LPs put into VC funds.<p>How I see this playing out, post-ipos:<p>Wall Street will demand profits, Uber/Lyft will raise fares because it's the only thing they can do, fewer riders will use the apps, causing fewer drivers to drive -- they will have to walk away from their car loans.<p>GMAC will need to be bailed out again.
I genuinely don't understand the argument that tech companies are hurting society by providing lower paying gig-economy jobs.<p>By providing more jobs, these companies are increasing options for workers looking for jobs. No one is forcing Uber drivers to drive passengers.<p>If there is a shortage of labor, then the prices paid to workers will increase due to market forces. If there is not a shortage of labor, then people that need jobs are finding them.
Money Quote:<p>> I once read a tongue-in-cheek description of San Francisco as “an assisted-living community for tech workers in their thirties”. This snide jab pokes fun at the wave of Silicon Valley startups creating services and products for a stereotypical technology worker in the city. Nowhere to park your car? Uber and Lyft can get you around. Too busy working to cook and do grocery shopping? Postmates can deliver your lunch and dinner. Living in an apartment too small for a laundry room? Rinse can do your washing.
So, in the end, the analogy breaks: turns out, the companies found out a way to procure $10 bills for ~$6 and then (after initial growth phase) to get it as low as ~$3-4 and finally make a profit.<p>Now, the logical question is to ask, why is anyone willing to provide this $10 bill for such a low price to begin with? Or, to switch from the analogy back to the subject matter, why are people singing up for the gig economy jobs? The author puts the blame on the unicorns - but they did not create the environment in which a gig worker is willing to accept such a job.
I get the author's point that they don't like investing in companies that hoover up investment dollars, but the selling $10 for $5 example annoys me. Any GAAP-based income statement starts off total income minus cost of that income equals gross income. Check out the income statement for Amazon...<p><a href="https://finance.yahoo.com/quote/amzn/financials/" rel="nofollow">https://finance.yahoo.com/quote/amzn/financials/</a><p>Amazon lost money for a bazillion years, and they continued to get investment dollars. What is one reason that Amazon could do this? Because they were selling things for less than it cost to make or acquire these things. If Amazon's business model was to buy a book for $10 at Barnes & Noble and sell that book for $5 on Amazon.com, they would never have gotten off the ground.<p>None of the companies in this article buy something in this spend $10 make something they sell for $5.<p>Interesting article. Bad example.
Wouldn't this scheme be akin to a ponzi one, in some way?<p>This holds true for startups as well: foster interest in the company, launch it with some initial inertia (VC funds), collect investors' (stock holders) money, and see the stock skyrocket. Little risk for everyone involved (but the buyers).<p>Of course, that's only a pyramid scheme if the business isn't intended to turn profitable (VC firms do not care), and stock holders are placing a bet.<p>But I wonder: if one were to look at the whole stock market, wouldn't it also look like a big pyramid scheme, if squinting a bit?
Aside: I'd suggest removing the -webkit-hyphens:auto property from the title. When I load the page in Safari it appears as:<p><pre><code> The Engineering Man-
ager</code></pre>
I wonder what the answer is to these two questions:<p>- Once we've driven out the competition, what prevents some other VC-backed firm from playing the same trick? If customers go for the cheapest thing -and let's face it, taxi and food delivery are not differentiable- won't there always be another disruptor?<p>- If there's a monopoly that lets us make huge profits, wouldn't the government come and do something about that?
TL;DR:<p>The traditional VC backed tech startup growth curve is an exercise in giving something away for less than it's worth, such as selling a $10 bill for $5. This is done to dominate the market. You will become very popular very quickly and dominate the $10 bull market by selling them for $5. After dominating the market you must find some way to become profitable. Often when a company tries to raise prices and become profitable they find that the market evaporates, you won't sell many $10 bills for $11 even if you run a managed service that makes it convenient. For "gig-economy" startups this screws the workers because their jobs evaporate with the market. The article ends with a call to action.