I think all the 'Uber-for-X'/food delivery apps that popped up circa 2015 and went under a couple years later were actually the pets.com equivalents. That bubble popped and people didn't think much about it, because Facebook, Google et al were doing well.
WeWork is an outlier case since Softbank caused the problem by giving them all this money but will probably keep them afloat as well.
I don't think those food delivery apps are a good comparison because a few of them actually survived and the market consolidated around them. The service they offer is clearly valuable for many people. I don't think it qualifies as a proper bubble.
Well 'bubble' is not defined by whether the industry's products are valuable (or we would never have a 'housing bubble')—I would base it on whether investors were putting too much money into a type of business. There were so many Uber-for-X startups going under that former YC President Sam Altman wrote this post on unit economics: https://blog.samaltman.com/unit-economics
All the Groupon copycats largely failed too. Including Living Social. The other related companies that survived were around before and weren’t focused or only doing Groupon’s schtick (Retail Me Not, Coupons.com parent company, Slickdeals, and the cash back sites like Ebates/Rakuten). Otherwise they all died.
The gig economy startup scene was much much bigger. But it also didn’t completely die out. Airbnb is wildly successful. Apps like Taskrabbit have survived. Handy was surviving. Probably a number more that survived outside the big names.
Yeah good thinking. Maybe not sustainable at a $35B+ valuation. However it is likely sustainable as a $10B+ company.
Their marketing is largely the reason in that article. Their growth has slowed so that makes sense. Airbnb has been slightly profitable before. And unlike Dropbox who have been in the same position, they don’t have the same competition level.
Article also says they still have $3B in cash and a $1B credit line which is a good sign vs total raised amt.
Amazon was really, really good at finding cost-effective ways to grow its business and brilliant at logistics. Pets.com infamously spent a fortune on branding and advertising without doing any market analysis, so they weren't prepared for just how small pet supply margins were or how slow adoption would be. It's not ridiculed mainly for being an online petstore, which could have been a viable business even in the 1990s
Worth remembering Amazon invested in pets.com though...
> became the one of most valuable companies in the world
I don't follow the premise.
Amazon became so valuable because of AWS, not because of their retail operations. Its hyper low margin retail division might be worth $120-$150 billion in a sane market. It's considerably smaller and less profitable than Walmart for example. It's not trivial of course, however they'd still be a lot smaller than the other titans of market cap. More like Costco, less like Microsoft. And at this point their retail segment is slow growth, so the stock would probably be under compression duress about now, the bloom would be off the valuation rose.
Amazon's recent market value ramp begins when they start showing off the growth and profit potential of AWS. In the first part of 2015 they showed off the figures, the stock promptly skyrocketed four fold in three years afterward (it was previously on a slow, quite gradual climb and had not gone net higher in about 1 1/2 years).
Most tech growth companies have doubled or more since 2014. So Amazon being at $150B market cap back then probably still means they’d be around $300B+ today without AWS. I’d peg it at $350-375B minimum right now. Amazon’s mostly positive and beloved image to consumers (I know places like HN feel differently) would have still helped Amazon without AWS. In 2018, their operating income for North America was $7B+. International loss was $2B+. So they still did $5B in operating income. AWS adds in another $7B+ of course which is huge.
I’m not saying AWS is worth Amazon’s current market cap minus $375B. Could have both segments being valued less by the market as one combined company. It’s just I have a hard time seeing Amazon worth around $150B in late 2014, which def includes some of AWS pre-publicly being reported in earnings, not being worth around triple that amt now with the way stocks have gone. Assuming AWS was valued at $20 in 2014.
For the growth, their retail growth has slowed. Under 20% a year now. But their growth in subscription (Prime mostly) and advertising are still growing at above 1/3. Like AWS. So the company wouldn’t have nothing for the stock to be speculatively high on without AWS.
> I think all the 'Uber-for-X'/food delivery apps that popped up circa 2015 and went under a couple years later were actually the pets.com equivalents.
Surely ‘Oh shit, point to point delivery for small items in a large built up urban area is actually really difficult and expensive’ is the Webvan equivalent?
I was alive for the .com bust but kind of forgot the scale. I looked up Pets.com. When they IPO'd they were valued at $290 million (about $294 million in inflation adjusted numbers).
They raised $110.5 million in private capital and $82.5 million at IPO [0].
WeWork has raised $14.2 billion in capital to date[1].
In other words, pets.com only raised a mere 1% of the current total that WeWork has raised.
If pets.com was the poster child for the dot com debacles then this new era of irrational startup exuberance exemplified by WeWork is another beast entirely.
Thank you for pointing out my lack of common sense.
Should I take this opportunity to point out that pet.com's $435 million is still a paltry sum compared to WeWork's $14.2 billion in capital, or has that larger point been rendered moot by my lack of common sense?
There is no second bubble, just a waxing stage approach. Some of those internet companies were leveraged 1000 to 1 . Not even WeWork or Uber is close to that. There are revenues in even the worst cases unlike back then. So please don't exaggerate.
