Thread by @doctorow

Gig economy delivery apps claim that they're operating "two-sided markets," connecting delivery people with restaurants. Actually, they're useless, overcapitalized, predatory, money-haemorrhaging parasites.

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They raise titanic sums of money from the likes of Softbank (a front for Saudi oil money) and then pay sub-starvation wages to riders while extracting such massive commissions from restaurants (disguised as "advertising fees," etc) that they lose money on the transaction.

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The stupidest part? The gig delivery companies ARE ALSO LOSING MONEY. Like Uber, Wework and other Softbank-backed boondoggles, these companies aren't profitable and never will be. They exist solely to attain "scale" whereupon they can be sold off to suckers in an IPO.

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If the investors can keep these bleeding giants alive long enough, they can give them the appearance of durability - "If Uber's lasted a decade, it must be sustainable" - which lets them cash out.

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It's a con, and it demolishes the real businesses it preys on, the workers who do the gig work, and the investors that the con artists unload their worthless paper on.

Restaurateurs are on the verge of collapse as a result.

pluralistic.net/2020/04/18/pol…

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And it's self-reproducing. And it's spreading. It's a fucking pandemic. Restaurateurs with no way to fight the companies themselves end up taking it out on the drivers, their fellow infection-sufferers:

pluralistic.net/2020/05/14/eve…

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There's a better way. @ranjanxroy is an options trader whose pal has a small chain of non-delivery pizzerias - but that didn't stop Doordash from showing a delivery option for the restaurants, which Google added a button for in its search results.

themargins.substack.com/p/doordash-and…

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But Doordash made a mistake: they underpriced the pizzas. They were offering to sell a $24 pizza for $16. Roy and his friend cooked up a plan to exploit this arbitrage opportunity, and experimented with bulk-ordering the discounted pizzas to a confederate's house.

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Every pizza they bought this way represented "pure arbitrage profit." It got even better when the restaurateur stopped bothering to put anything on top of the crusts (which are so cheap as to be effectively free) for these orders.

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Eventually they stopped. They also learned that Doordash's "mistake" was a predatory short con where they subsidized deliveries from a prospective business to create the illusion of demand for delivery services, then used that to rope the sucker into opting into Doordash.

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But the real kicker is what Roy advised his friend about the game: "given their recent obscene fundraise, they would weirdly enough be happy to lose that money. Some regional director would be able to show top-line revenue growth."

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"I imagined their systems might even be built to discourage catching these mistakes because it would detract, or at a minimum distract, from top-line revenue."

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After all: Grubhub lost $33m on Q1 revenue of $360m.

Doordash lost $450m on $900m revenue in 2019.

Uber Eats lost $461m on Q419 revenue of $734m. IT IS UBER'S MOST PROFITABLE DIVISION!

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The world's economy is being ravaged by a pandemic and may not survive. That pandemic? Capitalism.

eof/