Podcast Summary
Joker's $159 Loss Per Order in the US: Joker, a quick commerce startup, lost $159 per order in the US in August, highlighting the importance of unit economics and understanding asset-heavy marketplaces for profitability.
The quick commerce startup Joker lost an astonishing $159 per order in the United States in August, according to internal documents. This is a significant loss for a company that is trying to deliver goods within 15 minutes or less. Joker's business model is different from other food delivery services like Uber Eats or DoorDash. They have their own inventory and store it in warehouses, and their drivers use e-bikes instead of their own vehicles. Despite launching in 10 cities in the US and Latin America, Joker lost $74 million in the US and $84 million in South America in 2021. Investors and startups often discuss two important concepts: unit economics and asset light versus asset heavy marketplaces. Unit economics refer to the profitability of each transaction, and it's crucial for companies that do a high volume of transactions to have their unit economics dialed in. Joker needs to figure out the cost of maintaining their e-bikes and replace them when necessary to determine their unit economics. An asset light versus asset heavy marketplace refers to a marketplace where there are two different sides of the transaction, like a store and a customer. Airbnb and eBay are examples of asset light marketplaces. Joker, on the other hand, is an asset-heavy marketplace because they own the inventory and the warehouses where it's stored. Understanding these concepts is essential for investors and entrepreneurs in the startup world.
Deciding to make a business asset-heavy comes with costs and risks: Making a business asset-heavy involves substantial upfront investments and challenges in managing inventory efficiently for fast delivery, which can be risky and potentially unprofitable.
The decision to make a business asset-heavy, meaning owning the inventory and infrastructure, comes with significant costs and risks. This was discussed in relation to a hypothetical food delivery company, Joker, which is aiming for 15-minute delivery times. However, owning and managing inventory in a city to ensure fast delivery requires substantial upfront investments, such as leasing expensive real estate or buying out local businesses. Additionally, delivery has historically been a loss-making business, and managing inventory efficiently while maintaining short delivery times presents challenges. The speaker expressed skepticism about whether Joker's asset-heavy model can be profitable, given these factors. Moreover, other successful food delivery companies like DoorDash and Uber Eats have opted for an asset-light model, not holding the inventory themselves but instead relying on restaurants and cloud kitchens to prepare the meals.
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MarketerHire offers businesses on-demand access to expert freelancers across various marketing disciplines without long-term contracts or risks. Their freelancers have been vetted by industry experts and have worked for top brands. This provides businesses with flexibility, cost savings, and access to specialized marketing talent. Additionally, businesses can start with a no-risk trial and only pay for what they need through hourly, part-time, or full-time agreements. The Uber Eats model of leveraging existing inventory and bringing it to consumers is a simpler proposal compared to businesses stocking their own inventory and managing their own logistics. However, it's important to note that there may be costs associated with these services in their early stages. While it's intriguing to get leaked information, it's crucial to consider potential agendas when receiving such data.
Consider context and potential biases when dealing with leaked information: Triangulate information, consider business model and operational structure, and dig deeper to make informed investment decisions.
When dealing with leaked information, it's crucial to consider the context and potential biases. A negative report might not tell the whole story, and it's essential to triangulate information to find the truth. For instance, a business might have improved significantly but was only reported on its initial struggles. Additionally, the business model and operational structure can impact profitability. For example, an asset-heavy business might require a large delivery fee to be sustainable, making it less accessible to a broader customer base. Furthermore, issues like tip baiting in the gig economy can impact drivers' earnings, but solutions like gamification and incentives can help mitigate these challenges. Ultimately, as investors, it's essential to dig deeper and consider multiple perspectives to make informed decisions.
The complexities of tipping in the service industry: Tipping creates inconsistent revenue for workers and cognitive dissonance for customers. Alternatives like letting customers tip after service or including prices in advance could address these issues.
Tipping creates an inconsistent revenue stream for service workers and can lead to cognitive dissonance for customers. The speaker, who grew up being taught to tip by his father, had debates with Uber's founder about tipping in the ride-sharing industry. The speaker argues that if someone repeatedly changes their tip, they should be warned and educated about the potential impact on their ranking. An alternative solution could be to not specify the tip amount in advance and instead let customers tip after the service has been provided. The speaker also mentions that both the tipping and included-in-price models have their merits, but the inconsistency and potential for manipulation with tipping make it a more complex issue. Ultimately, finding a fair and consistent way to compensate service workers remains a challenge.
Evaluating Tipping and Labor Practices in the Service Industry: The current tipping system creates perverse incentives for better service, but concerns exist regarding worker exploitation, particularly in tech industries. A dynamic immigration system could address labor shortages while ensuring ethical labor practices.
The current tipping system in the service industry creates a perverse incentive for better service, and the increasing wages due to competition and labor shortages are making up for the lack of fair compensation for workers. However, there are concerns about the exploitation of workers, particularly in industries like tech, where H1B visas can lead to indentured servitude. The solution could be a dynamic immigration system that allows workers in based on the number of job openings, while ensuring provisions for asylum and refugees. Ultimately, it's essential to reevaluate our systems to ensure fair compensation and ethical labor practices for all workers.
Productivity platform for high performing teams: The Fellow.app: The Fellow.app is a game-changing productivity tool that connects to your calendar, collaborates on meeting agendas, and tracks action items to make meetings more productive and accountable.
The Fellow.app is a game-changing productivity platform for high performing teams, designed to make meetings more productive and delightful. Serial entrepreneur Aidan Mirzai and his co-founders built this tool due to their frustration with unproductive meetings and the importance of clear agendas and accountability. The app connects to your calendar, collaborates on meeting agendas, and tracks action items, ensuring that every meeting has a clear purpose and desired outcomes. Additionally, there's been a significant increase in median valuations of USC and early-stage startups, reaching over $15 million, due to increased investor demand and larger outcomes in the public markets. However, the determination of these valuations remains a complex and contentious issue, as it's primarily based on market demand and the desirability of the startup and its founder.
Understanding the role of potential and performance in company valuation: During early stages, investors focus on potential, but once profitable, focus shifts to performance. Founders should build a strong team and market presence to attract investors and secure a higher valuation.
During the early stages of a company, investors are buying into the potential rather than the performance. This means that the valuation of a company can be influenced by the team, the founder's track record, and the demand for shares from potential investors. However, once a company has established itself and is generating profits, the focus shifts to unit economics and performance. It's important for founders to understand this dynamic and to build a strong team and market presence to attract investors and secure a higher valuation. Additionally, investors should not sweat the valuation too much if they believe in the potential of a great company. Other topics discussed included the comparison of streaming services Netflix and Disney+, the valuation of private companies like Clubhouse, and the current shortage of rapid COVID tests.
Struggling to find COVID-19 tests: A high-risk couple's story: Access to timely COVID-19 testing is crucial for effective treatment and saving lives. Investing in and expanding testing infrastructure is necessary to ensure equitable access for all.
During the pandemic, access to rapid COVID-19 tests was a significant challenge for many individuals, especially those who were high-risk and in need of timely results for effective treatment. A personal story was shared about a woman and her husband, both high-risk individuals, who struggled to find a test due to long lines and unavailability. Their delayed diagnosis led to a severe case of COVID-19, resulting in a lengthy hospital stay. Had they been able to get tested earlier, they could have received life-saving treatments sooner. The lack of accessible and affordable testing options highlights the importance of investing in and expanding testing infrastructure to ensure timely diagnosis and treatment for all individuals, ultimately saving lives and reducing the burden on healthcare systems.
Disappointment in government's response to pandemic prioritizing vaccines over testing: The prioritization of vaccines over testing during the pandemic led to missed opportunities for preventing the spread of the virus and saving trillions in stimulus. Experts' warnings were ignored, and big health industries influenced political decisions.
During the pandemic, the prioritization of vaccines over testing led to missed opportunities for preventing the spread of the virus, particularly with the emergence of highly transmissible variants. The speaker expresses disappointment in the government's response, citing examples of wasted resources and missed warnings from experts. They also criticize the influence of big health industries on political decisions. A missed opportunity for widespread, free testing could have saved trillions of dollars in stimulus later, according to the speaker. Additionally, they mention a referral offer from FanDuel Sportsbook for a chance to win a trip to Super Bowl 56.
Discussion on expanding COVID-19 testing access: Despite challenges, efforts continue to expand COVID-19 testing access, reduce costs, and expedite approvals. Critics push for faster solutions as hospitals reach capacity.
The discussion revolves around the need for widespread access to COVID-19 tests, particularly in light of the emergence of the Omicron variant. Press Secretary Jen Psaki was asked why not just send tests to every American, to which she responded by discussing the expansion of testing capabilities, cost reduction, and the approval process for tests. Critics argue that this approach is too slow and dismissive, especially as hospitals reach capacity and ICUs near full. The conversation also touched on the importance of vaccination in mitigating the impact of the virus and the varying approaches countries are taking to make tests more accessible. Despite the ongoing challenges, there is a shared objective to make tests less expensive and more accessible to all.
Balanced approach to COVID-19 measures: Emphasize vaccines, testing, and therapeutics for effective COVID-19 mitigation. Avoid mandating vaccines without alternatives to reduce resistance and polarization.
While the ongoing debate surrounding vaccine mandates continues, it's crucial to acknowledge that various measures, including vaccines, testing, and therapeutics, are essential in mitigating the ongoing COVID-19 crisis. Mandating vaccines without providing alternatives may lead to resistance and polarization. Instead, a balanced approach that emphasizes the importance of getting vaccinated while also acknowledging the value of other solutions like testing and therapeutics could be more effective. Furthermore, individuals have the responsibility to make informed decisions about their health and well-being, but they should also consider the potential impact on others. Ultimately, it's essential to approach the issue with empathy and understanding, recognizing that everyone's circumstances and perspectives are unique.
Navigating Disruptions in Education During the Pandemic: Despite staying home, kids can still contract COVID. Attend school as much as possible, but prepare for disruptions. Solutions include more funding and better technology for remote learning.
The ongoing COVID-19 pandemic continues to pose challenges for schools and students, with Omicron being particularly disruptive. Kids staying home from school may not be any safer from the virus, as they can still contract it from their families or community. Therefore, it's crucial for students to attend school as much as possible, but we should also prepare for disruptions due to staff shortages, remote learning, and potential illnesses. Eric Adams, the mayor of New York City, pointed out that kids who stay home can still get COVID just as easily as those in school. The testing process has also faced significant issues due to bureaucracy and corruption, making it a complex problem to solve despite having abundant resources. Ultimately, we need to adapt to the situation and provide solutions, such as more funding for schools and better technology, to help students learn effectively during these challenging times.
The Role of Centralized Marketplaces in NFTs: Despite the decentralized nature of NFTs, centralized marketplaces like OpenSea have a role in moderating fraud and theft, a debate continues on how to balance decentralization and moderation in the crypto community.
While the decentralized nature of NFTs and web 3.0 is appealing for its potential elimination of centralized control, the reality is that marketplaces like OpenSea, as for-profit businesses, have an incentive to step in and moderate when theft or fraud occurs. This was highlighted in the case of Todd Kramer's stolen NFTs, where OpenSea's intervention to freeze the stolen NFTs was met with criticism but necessary for maintaining the marketplace's safety and appeal. However, this goes against the decentralized ethos, leading to a ongoing debate about the balance between decentralization and moderation in the crypto community. Ultimately, the question is not whether moderation is necessary, but rather what form it should take and how it can be implemented in a decentralized manner.
Balancing Idealism and Pragmatism in Decentralized Systems: While decentralized systems offer potential benefits, they also present significant risks. As these systems evolve and generate revenue, regulations may be necessary to protect users. Building valuable systems for billions is important, but disrupting successful models unnecessarily should be avoided.
While the potential of decentralized systems like Web 3.0 is vast, there are significant risks involved, including anonymity, lack of regulation, and potential for financial loss or damage. The speaker emphasizes that as these systems grow and generate revenue, the incentives will change and regulations may be necessary to protect users. The speaker also reflects on the evolution of the web and the importance of building valuable systems for billions of people, but warns against disrupting successful models unnecessarily. The back-and-forth between Aaron Levy and Brian Chesky highlights the tension between the idealism of Web 3.0 and the pragmatism of established tech leaders. Ultimately, the speaker encourages a thoughtful and balanced approach to the adoption and development of decentralized technologies.
Decentralization and immutable databases have value, but Web3 hype may be overblown: Web3, with its decentralized and immutable databases, has potential benefits, but the industry's toxic culture and fanboy mentality may overshadow its value. Remember, all technologies are subject to replacement or evolution.
While decentralization and immutable databases have value in certain contexts, such as cross-border money transfers and providence tracking, the hype surrounding Web3 as a revolutionary technology may be overblown. The financial incentives and multi-level marketing nature of the industry have led to a high volume of scams and grift, resulting in toxicity and personal attacks. The idea that Web3 must be a revolution instead of an evolution has contributed to this toxicity. Additionally, it's important to remember that all technologies, including Bitcoin, are subject to replacement or evolution over time. The fanboy culture and technology weapons in the space can make it difficult to have an honest exploration of the benefits and potential drawbacks of these technologies.
Jack Dorsey and Chris Dixon debate the ownership and control of technological platforms: Despite differing perspectives, Dorsey and Dixon acknowledge the complexities and nuances of the ongoing debate around the future of technology and its governance, with Dorsey expressing concerns about institutional influence and Dixon emphasizing the historical presence of powerful entities in various industries.
During a recent discussion on the "This Week in Startups" podcast, Jack Dorsey and Chris Dixon engaged in a lively debate about the ownership and control of various technological platforms, including Web 2.0 and cryptocurrency. Dorsey argued that large institutions, such as A16Z, are buying up tokens and exerting significant influence, creating a "same as the old boss" situation. Dixon countered that ownership and control are not unique to cryptocurrency and that a small number of wealthy individuals and institutions have long held power in various industries. The conversation touched on topics such as institutional investment, decentralization, and the role of powerful entities in shaping technology. Ultimately, the debate highlighted the complexities and nuances of these issues and the ongoing debate around the future of technology and its governance.
