I really like this writer's style. This Dickens reference is hilarious:
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Annual income twenty pounds, annual expenditure three hundred million pounds, result unicorn.
Levine's article "Arbitrage Discovered" might be my all-time favorite econ essay. It's about an investment product that let you trade on past stock prices in the present. Levine is usually pretty calm and wonkish, but this arrangement was so breathtakingly self-destructive that he spends the piece writing things like "It's not actually an arbitrage. EXCEPT NO HOLY GOD IT IS THIS IS AMAZING."
>>By 2015, up to 50 court decisions had been rendered against Aviva France. In September 2014, the French Supreme court, the Cour de Cassation, ruled in favor of the George family, determining that the life insurance contracts, as drafted with the "known price" clause, are legally binding under French law.[18] Nevertheless, George is still in court against Aviva, having won on the principle of the legality of the contracts, he now needs to have his prejudice recognized and valued in a second ongoing battle.<<
It appears he won the court case stating the contract is legal under French last, and now has to fight another one to make them honor it. Courts aren't fast.
If you're a techie and want to understand the financial world (particularly big VC and public equities), I highly recommend reading him daily. He breaks super complex things and makes them very easy to read...and SUPER entertaining.
It feels like finance writing is usually split between content for the general public (understandable, but often vitriolic and devoid of context) and writing for finance types (jargon-filled and usually devoid of ethical considerations). Levine straddles the line beautifully; he uses lay terms to explain the realities of financial instruments, not just silly metaphors, and looks at what should exist in the context of modern finance rather than gut instinct.
Clever and it takes the format of an old quote: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."
It seems like 90% of startups have the business plan "step 1: get as many users as possible at any cost, step 3: profit." Hardly anyone talks about it or seems to think it's weird. I don't get it.
My favorite summary of this entire pattern is that VCs would happily fund a company which sold dollar bills for $0.90, figuring they could get users now and raise prices later. (After all, they already raised the price from $0.70 and nobody complained!)
It's definitely worth remembering that what sounds idiotic in specific cases is often either gambling or a principal-agent problem on a systemic level.
Growth potential and demand elasticity are both hard to predict, so VCs are betting on high growth and trusting that one high-demand win can pay off 100 or 1,000 losses. (The people chasing proven revenue with unknown growth potential are banks, investing in things like expanding existing stores.) Did MoviePass show a <1% chance of succeeding? Probably. <0.1%? I'm not so sure.
As for founders... Often, they're gamblers or extremely self-confident. Less generously, the field attracts a lot of people who are happy to burn someone else's money on a ridiculous narrative, while their actual focus is on getting acquired or elevating their personal reputation. (And heck, there are VCs doing this too. Consistently returning 25% on your fund is nice, but funding Snapchat will get you a job at a fancy Sandhill office, and funding Facebook will get you treated as a rainmaker and even a political player.)
Well, yeah, it's because that's all you hear from incubators, accelerators, investors, etc.
I've been to so, so many startup / entrepreneurship conferences / competitions / workshops and what not the past years, where the main takeaway has been: "Growth is everything, business models can be reshaped later on".
I mean, sure, it's all fun and games for the startups and consumers - they're being bankrolled and subsidized by VC money, but it's a very artificial state. Lots of products start to suck the moment monetization enters the picture.
It stands to reason that once they got a critical mass of users, they would be able to negotiate ticket prices with theaters, a la a distributorship like Wal-Mart, Costco or Amazon.
The trick is holding out long enough to get there, and I think they severely underestimated the general public's free time.
There is nothing weird about it. Profit is not the goal of either the management of the company or the investors. Their goal is either to get acquired or go public and sell their shares as soon as possible.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Annual income twenty pounds, annual expenditure three hundred million pounds, result unicorn.