- VCs get to invest into startups early
- Companies use this money to grow their customer base often by subsidizing customers
- This rapidly increases the valuation of the company
- VCs look to make an exit by selling their equity while the company is aggressively scaling
I don't see what the problem is. Don't buy the shares from the VCs then. These are adults doing adult things and they can make their own choices on if a company is worth buying into or not because all the financial information is public information, or available if its a private deal.
I'm not sure if the article is saying that growing a business rapidly should be banned or that VCs shouldn't be allowed to sell their shares until some criteria has been met?
the article is saying that the business models exhibited by some companies are unsustainable, and exist only to diminish competition in the market (which is a net loss for consumers)
in other words, it's descriptivism, not prescriptivism. Do you agree with that description presented by the article?
It's sort of prescriptive though in that the lawyers say they want to chip away at this.
I agree that VCs fund companies at high valuations with the idea that the company will use those funds to hit aggressive growth targets which in turn grows the potentiality of the company. This is often done by subsidizing customers to encourage rapid growth. Selling at a loss during the landgrab phase to capture market.
But it's not sustainable (as the article mentions) and eventually companies have to pivot to profitability. So I have no problem with it. It has never been the case in tech that a company did this long enough to put everyone out of business and then used its acquired monopoly power to gauge customers.
"Your margin is my opportunity" comes to mind and the second a margin is too big then someone will come along and take their piece.
indeed, it's not sustainable, and with both the aim and effect being the destruction of competition in the market, it's a loss for consumers. I do have a problem with such societal losses.
I think I was asking when has it happened that a tech company has used these tactics to put everyone out of business so as to create a monopoly. I feel like that's what the article advocating against. But I'm not sure it's a real problem.
just to be clear, in response to a discussion about big tech companies working to stifle competition (which is bad for consumers), you're asking for examples of something different, in which there is a complete monopoly with no competitors whatsoever?
forgive me, but such a topic change sounds a bit like an attempt to move the goalposts, to avoid talking about the actual topic, which is big tech working to stifle competition (which is bad for consumers)
to avoid confusion, we can explicitly state here that a complete or successful monopoly is not necessary for a company to work to stifle competition (which is bad for consumers), so let's get that out of the way first
- VCs get to invest into startups early - Companies use this money to grow their customer base often by subsidizing customers - This rapidly increases the valuation of the company - VCs look to make an exit by selling their equity while the company is aggressively scaling
I don't see what the problem is. Don't buy the shares from the VCs then. These are adults doing adult things and they can make their own choices on if a company is worth buying into or not because all the financial information is public information, or available if its a private deal.
I'm not sure if the article is saying that growing a business rapidly should be banned or that VCs shouldn't be allowed to sell their shares until some criteria has been met?