
The Unicorns Fell into a Ditch - spudlyo
https://www.bloomberg.com/opinion/articles/2020-05-18/the-unicorns-fell-into-a-ditch
======
Mengkudulangsat
I was working on fundraising materials for a client that was just-about-to-
get-a-term-sheet when lockdown happened. They were reliant on airports and the
likelihood of any deal closing soon is slim.

Once I detached myself from the project, I took a good look at my financial
models. For every $50 the client took in bookings, they had to pass $30 to
operators, spend $9 on marketing, 5$ on refunds, and $7 on overheads.

The assumption was while operator payouts grew linearly, marketing, refunds
and overheads grew sub-linearly. There is going to be this nice breakeven
point when everything is going to make sense, if only they procure enough
capital to get there.

These Uber for X / Casper for X business models are all largely dependent on
this belief being true. Whether that's the case or not depends on the unit
economics of the market in question. The only way to know for sure is to run
experiments.

That, I believe is what easy money has allowed in the US - mass
experimentation. In my home country, we don't have the resources to even
attempt to find answers to such questions.

~~~
tompccs
This is a subtle and often-missed point. In the markets where they are trying
to acquire customers and become dominant, the "Uber-for-X" businesses have
negative gross margins. But they will have surely demonstrated (or the
investors really are fools) that, once they have saturated a particular market
(ie, a region or city) they are unit profitable. The bottom line looks bad
because these companies are growing so fast that their balance sheet is
dominated by the markets they're aggressively trying to corner, which wipes
out the profits from the markets they have already won and proven viable.

~~~
ponker
These companies often assume that they can spend money to acquire customers
but that those customers will stay loyal when the money hose turns off. If you
have a fucking amazing product and spent the money to get people over the
activation energy of trying it, that’s true. But a lot of these customers came
to you for the bargain and flee as soon as the bargain dries up.

~~~
krrrh
Or competition appears in your most profitable locales and skims off the most
profitable end of the market, like Juno in Manhattan, offering slightly higher
payouts to the top-rated Uber drivers, and a slightly better service to the
top customers. And they don't have to try to make up the costs of overcoming
legal hurdles and creating the market.

------
pwdisswordfish2
"In the old economy of price signals, you tried to build a product that people
would want, and the way you knew it worked is that people would pay you more
than it cost. You were adding value to the world, and you could tell because
you made money. In the new economy of user growth, you don't have to worry
about making a product that people want because you can just pay them to use
it, so you might end up with companies losing money to give people things that
they don't want and driving out the things they do want."

This "new economy" does not sound like a legitimate one. We often see
complaints online about "gatekeeping" in today's US society. This appears to
be an attempt for all "economic" activity to be controlled through
"investment" by a small number of people desperately searching for returns
(because the real economy is in shambles). Destroy competition ("disrupt") and
then rent-seek.

Proponents once claimed software as a business had infinite upside because the
overhead costs are so low. They argued anyone could start a software company.
Not today. VC required. That seems to be the general consensus.

Why does today's software require so much investment? Low quality work product
that "cost" some ridiculous dollar amount in developer salaries which is then
"sold" at the price of something like $0.00-3.99. The "value" to be recouped
through surveillance of the user. Brilliant.

Unicorn is the perfect symbol because all of this is pure fantasy.

Money with no place to go. There is no "new economy". There is only the old
(real) one that is in dire straits. That is why investors are so desperate.
They will try anything.

~~~
gowld
I know someone losing money handover fist in a VC-backed startup. I know
someone else who goes to a day job for socialization and health insurance but
makes his real money selling Microsoft Excel and Word macros.

~~~
nikanj
I feel like Excel with macros is closest to the "bicycle for the mind" vision
that we've gotten so far.

------
netcan
The thing is, it works sometimes.

Facebook IPOed without a business model. Their ad platform was crap,
attracting generic banner ad prices. They launched all the targeting tools
pretty quick, so Zuck obviously had a a plan... but public investors took the
risk.

Amazon was a long term example. They were losing money on every sale to be
made up in volume (sticking with economist cliches) for decades. Now, they're
literally 1000X bigger than the 2 billion dollar picker-uper startup.

I agree though. There has been a ton of spend spend-2-to-make-1 MOs running
businesses lately... and it _is_ ridiculous. Also agree about Matt. The cat
can write.

I just think it's worth remembering the rational starting point for all the
irrationality. Uber's initial value proposition was:

 _" We are a software platform company. Software platform economics apply,
just like Google & Microsoft. We'll scale like software and have a monopoly
like platforms._"

That actually wasn't all that unreasonable. They did scale at a speed that a
non-software (or law abiding) company couldn't have. But.. it turned out not
to work. Market share didn't translate into monopoly pricing power.

Now (or maybe last year), the alternative value proposition is/was: " _When
self driving gets invented..._ " This one _is_ unreasonable.

Softbank really did go big on some very bad bets huh?

~~~
snowwrestler
Just want to make a correction here: Amazon was definitely not losing money on
every sale.

I think what you're thinking of is that the company rarely reported a profit.
But that was because they carefully managed their finances so that all the
money they made was redirected back into growth, either through capital
improvements, hiring, lowering prices, etc. before it was reported as profit.
Amazon maintained a boot-strapping mindset long after going public.

In contrast, some gig economy companies _are_ losing money on every sale; they
generate no new capital of their own and their growth is financed entirely by
external sources of capital.

~~~
bsder
> Just want to make a correction here: Amazon was definitely not losing money
> on every sale.

Correct. Amazon is in the _other_ category of unicorn--ignore those pesky laws
that limit our competitors.

Amazon gained 5-8% on every sale because they didn't collect sales tax for a
_VERY_ long time.

This drove my local booksellers crazy, and probably put them out of business.
Yes, I'm still mad about that.

Amazon should have been fined _billions_ for those infractions.

But it is just another example of "Do that illegal thing that's profitable. We
likely won't get fined enough for it to be a problem."

~~~
autokad
> "Amazon should have been fined billions for those infractions."

They were not infractions, that was the tax code. Governments (whether you
like it or not) decided that in order for these markets to grow, they need to
forgo taxes on them for a while until they reach critical mass. They weren't
skirting the law, so you can't 'fine' Amazon (or any online retailer) for
that.

~~~
gowld
Government didn't "decide" that. Government was slow at rectifying the
loophole. Legally, all of Amazon's customers were breaking the law by not
paying "use" tax.

~~~
perl4ever
Some states are making up for past undercollection of sales tax by pressuring
you to pay when you file your income taxes. Pretty much everybody collects
sales tax online these days, but if you don't obsessively keep records, you
can't be sure you paid it on every single purchase, so it's safest to pay the
estimated amount when you do your NY state income taxes, which means they are
double dipping to some extent.

~~~
chii
wow that's so stupid. Sales tax is paid by the store, not the customer. How
can the tax be collected after the fact?!

~~~
perl4ever
There is an estimated amount which you can pay optionally.

The implied threat is, if you don't pay the estimate, and thereby claim you
already paid your sales tax due on all online purchases, then if you get
audited, you lied under penalty of perjury on your return.

Now this is very unlikely, but it's compelling if you're very risk averse.

~~~
chii
> paid your sales tax due on all online purchases

what i'm saying is that the gov't should not place the pressure of paying
sales tax on the consumer, and instead get it off the store that's selling to
you.

If it's an overseas store, then they do not have legal right to operate in
america, and should refuse an american customer. Unless they either also pay
sales tax, or have a treaty with the USA in their home country for tax
reciprocity.

It's dumb to have a customer be responsible for said sales tax.

------
umeshunni
The title is a reference to this series of slides in the Softbank earnings
presentation:

[https://imgur.com/a/90bxNjo](https://imgur.com/a/90bxNjo)

[https://group.softbank/system/files/pdf/ir/presentations/201...](https://group.softbank/system/files/pdf/ir/presentations/2019/earnings-
presentation_q4fy2019_01_en.pdf)

~~~
zacksinclair
Holy shit. They actually put that into a slide deck? Wow

~~~
seph-reed
Check out the Pepsi logo design doc if you want a real laugh:
[https://www.goldennumber.net/wp-content/uploads/pepsi-
arnell...](https://www.goldennumber.net/wp-content/uploads/pepsi-
arnell-021109.pdf)

~~~
aunlead
_Attraction Theory: The Pepsi Proposition_

 _Establishment of a gravitational pull to shift from a “transactional”
experience to an “invitational” expression._

Is this for real!! I had to look up Pepsi's current logo to believe this.

They paid $1 million for the logo ([https://www.cbsnews.com/news/pepsis-
nonsensical-logo-redesig...](https://www.cbsnews.com/news/pepsis-nonsensical-
logo-redesign-document-1-million-for-this/))

------
irrational
That story about the pizzas was crazy. Especially the end where you have the
doordash driver in on it, just pretending to deliver the pizzas. At what point
would Doordash notice? A thousand pizzas? A hundred thousand pizzas? A million
pizzas?

~~~
jpm_sd
Gotta love the illustration in the original post:

[https://themargins.substack.com/p/doordash-and-pizza-
arbitra...](https://themargins.substack.com/p/doordash-and-pizza-arbitrage)

Not to mention some horrifying numbers:

> Doordash reportedly lost an insane $450 million off $900 million in revenue
> in 2019 (which does make me wonder if my dream of a decentralized network of
> pizza arbitrageurs does exist).

> Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million
> in Q4 2019 off of revenue of $734 million. Sometimes I need to write this
> out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In
> one quarter.

~~~
christophilus
It really does remind me of the .com bubble in many ways. The quote from Scott
McNeely[0] has sprung to mind a lot lately.

\- MSFT 10x sales

\- V 17x sales

\- MA 16x sales

\- NFLX 9x sales

\- BYND 23x sales

\- ZM 68x sales

Some of those are obviously great companies with fat margins and well worth
above average multiples. But ZM at 68x sales?

The market feels a bit out of touch.

[0] "At 10 times revenues, to give you a 10-year payback, I have to pay you
100% of revenues for 10 straight years in dividends. That assumes I can get
that by my shareholders. That assumes I have zero cost of goods sold, which is
very hard for a computer company. That assumes zero expenses, which is really
hard with 39,000 employees. That assumes I pay no taxes, which is very hard.
And that assumes you pay no taxes on your dividends, which is kind of illegal.
And that assumes with zero R&D for the next 10 years, I can maintain the
current revenue run rate. Now, having done that, would any of you like to buy
my stock at $64? Do you realize how ridiculous those basic assumptions are?
You don’t need any transparency. You don’t need any footnotes. What were you
thinking?"

~~~
sacred_numbers
I think the underlying assumption is that the company will grow very quickly,
so that when it comes time to pay you back they are paying you back with a
small fraction of their revenue. Look at Netflix, for example: ten years ago
they had 1.67 billion in annual revenue. Last year they had 1.87 billion in
net income, and they are still growing. There are certainly some ridiculous
valuations, but that quote is ignoring both the fact that businesses grow and
that not everybody needs a 10 year payback.

More generally, the reason there are high valuations for companies that are
growing users by selling a $20 bill for $18 is that they can drive out all of
their competitors who can't afford to burn money. Once those competitors are
gone, the survivor can raise prices, lobby governments for regulations that
make breaking into the market very difficult, and generally employ anti-
competitive practices to take advantage of their situation. If they're able to
do this without being smacked down by anti-trust regulators they will be a
money printing machine. These high valuations mean that the market thinks that
governments will remain toothless and easily controlled. It's a depressing
future to think about, but there's a pretty high probability that this is how
it will be.

~~~
christophilus
You're right. I just haven't been able to bring myself to invest like this.
Also, I hate the idea of supporting companies who behave like leeches, but
it's pretty hard to avoid that.

------
scep12
> You have insanely large pools of capital creating an incredibly inefficient
> money-losing business model. It's used to subsidize an untenable customer
> expectation. You leverage a broken workforce to minimize your genuine labor
> expenses. The companies unload their capital cannons on customer
> acquisition, while this week’s Uber-Grubhub news reminds us, the only viable
> endgame is a promise of monopoly concentration and increased prices. But is
> that even viable?

Are there historical examples of this strategy working? I can't think of any
off the top of my head.

Uber's bet is that the desirable customer experience (quick, cheap delivery)
is tenable with both 1) scale and 2) new technology that drives prices down.
In the long run, I think they're right:

For #1: When you consolidate two (or more) local delivery operations that do
the same thing, you can increase the efficiency of your operation as a whole.

For #2: The big question is: can they stay solvent long enough to see autonomy
or other delivery technology come to fruition? I have serious doubts about
this. I expect we'll see Uber slowly raise prices to keep the business
sustainable.

~~~
samtp
> For #1: When you consolidate two (or more) local delivery operations that do
> the same thing, you can increase the efficiency of your operation as a
> whole.

The problem with that is delivery services have a fixed cost per order that
does not significantly decrease just because you are fulfilling more orders,
especially across multiple regions. You can group multiple orders per
delivery, but the amount you pay the driver can only go so low before it is
not viable for them to work for you.

~~~
scep12
> You can group multiple orders per delivery

Isn't this the reason that cost per order isn't fixed? The more orders a
single delivery can fulfill, the lower the cost-per-order becomes.

------
ackbar03
I was asking this question a few days ago, are any of these large food
companies still going to exist as they do today? Everybodies basically annoyed
with them except maybe the customer but then again he's being subsidized by
underpaid gig workers, restaurants, and vc money, and all the while the
company itself still can't turn a profit

~~~
reverend_gonzo
For what its worth, even the customer is getting annoyed. I've had multiple
cases where a a driver stole my food or mixed up orders. Sure, the company
will fix it and refund you, but you're hungry now.

I now only order from places that have in-house delivery drivers, or I go pick
it up myself.

~~~
acdha
That's what got us to stop, too: a few years back we stopped using e.g.
GrubHub and Eat24 because they were not only really late (over an hour and,
memorably, once never showing) but lied about it blaming the restaurant, not
knowing that I'd called them first and confirmed that our order had been ready
as scheduled. They tried to offer credit on a future order until I told them
my next call was going to be the credit card company.

~~~
Nextgrid
The same happens with the delivery companies here in the UK like Deliveroo,
Just Eat and Uber Eats.

That is not a mistake or technical error either, someone intentionally wrote
code to do "if no driver is assigned for > 5 mins, pretend like it is and
update the web UI to say the driver is there".

I wrote about my experiences with these services (relying on them daily as I
can't be bothered to cook) in another comment:
[https://news.ycombinator.com/item?id=23096601](https://news.ycombinator.com/item?id=23096601)

~~~
Balgair
Hey, I just want to say Thanks for leaving the link to your comment. You
didn't replicate the comment, and you didn't force me to go through your
history to find the comment. That's really nice of you! Thank you.

------
jcdavis
> The actual nerdy economics joke there is in the second paragraph, which
> takes the form: Two economists are walking down the street. One of them sees
> a $20 bill on the ground. As she bends to pick it up, her colleague says
> “don’t bother, if that was a real $20 bill someone would have picked it up
> by now.” She replies, “no see this was left here by a consumer tech startup
> trying to maximize user growth; their Monthly Active Picker-Upper numbers
> are doubling every two months.” She picks up the $20 bill and the startup
> raises money at a $2 billion valuation.

Matt Levine truly is a poet

~~~
duxup
Intended or not I like the line about "if that was a real $20" as sort of a
subtext of how sometimes in economics you see predictions or explanations
assuming people or businesses are somehow assumed to be logical.

The $20 just couldn't be real because who would do that?

But of course they do that and the expectation that being logical pays off or
how we expect the market to work is all out the window.

~~~
magicsmoke
Economics is a post hoc explanation for how the market works. It's not like
somebody came up with the theory of how a market should work and then built
one, like you would a computer. Rather, markets existed back in the middle
ages before economists did, increased the wealth of its participants, and
economists later appeared to explain why that was the case. Nowhere is the
prerequisite that this system is the result of logical design.

~~~
richk449
<Theory X> is a post hoc explanation for how <Subject Y> works. It's not like
somebody came up with the theory of how <Subject Y> should work and then built
one, like you would a computer.

General relativity is a post hoc explanation for how large-scale spacetime
works. It's not like somebody came up with the theory of how the universe
should work and then built one, like you would a computer.

Darwinian evolution is a post hoc explanation for how life forms change over
time. It's not like somebody came up with the theory of how life on earth
should work and then built one, like you would a computer.

~~~
randallsquared
Those are good analogies (if more precise and more easily testable than is
typical in the social sciences), but the framing suggests you don't believe
they are.

~~~
ORioN63
I read as OP believes examples are common enough, that saying it, is the same
as not saying anything at all.

------
stephc_int13
A lot of what I am reading lately reminds me of the touches of sarcasm I loved
reading back in 1998-1999, just when the bubble popped. Winter is coming, and
it might be uglier this time, I also believe this kind of evolutionary
pressure is a very good thing.

~~~
anticsapp
Hi, don't take this as a challenge or a "cite your source". Didn't the bubble
pop 2000-2001? I'm asking because I'm wondering if I am remembering it wrong,
I lost my job kind of late but I worked with IBM. The "I got $50K of options!"
22 year olds all got jacked much earlier.

~~~
stephc_int13
Yeah, I should have written just _before_ the bubble popped.

I think we had clearly visible warnings back then, just as we had quite a lot
of good warnings recently. In my opinion, the C19 event is only an
accelerator.

------
KoftaBob
I would love to sit down with a few of these ivy league educated VCs and get
them to explain how they justified investing massive amounts of LP money into
blatantly bogus revenue models.

If they can come up with anything other than "build a monopoly and then figure
it out", I'd be shocked.

Look at all of the most prosperous public tech companies, especially the
famous FAANG companies. Every single one of those sells a product/service with
an actual profit margin (ads, ecommerce infrastructure, cloud services, media,
smartphones, operating systems, etc).

Not a single one of them got to where they are with the "sell a
product/service at a loss and then figure it out later". Why? Because that's
an incredibly foolish and reckless use of capital.

This is also why I don't like when companies like AirBnB are lumped in with
ones like Uber during these "unicorns struggling in the pandemic" discussions.
AirBnB has a sustainable revenue model, they were simply affected by an
artificial restriction on travel. Uber and DoorDash have no excuse.

VCs, if you're listening... for pete's sake stop blowing investor money on
this nonsense and invest in actual _good_ businesses.

~~~
pkilgore
Unfortunately, Monopolies are profitable and we do not yet have the
policy/law/political will/experience/all-of-the-above to prevent them for
technology-at-scale.

Been reading "Goliath" lately by Matt Stoller -- there are some crazy
similarities between monopolization in the early 1900s and now.

~~~
tim333
Maybe natural monopolies like Google or Facebook. I'm not sure if any of the
VC trying to buy a monopoly efforts have worked that well? I mean Facebook
took investor money but probably would have done fine without it.

------
auggierose
It's that time again :-)

[https://www.youtube.com/watch?v=I6IQ_FOCE6I](https://www.youtube.com/watch?v=I6IQ_FOCE6I)

------
code4tee
The first .com implosion was broadly marked by companies that lacked revenue
getting crazy valuations.

The current “.com” implosion is broadly being marked by companies that do have
“revenue” but only by using VC cash to create “fake markets.”

The whole story of buying pizzas from a normal pizza shop for $20 and selling
them for $18 through your “app” is the stereotypical example of the current
.com implosion. Anyone can sell $2 bills for $1, but that’s not a business and
no you can’t “make it up on volume” because the only reason people are using
your app is because you’re selling something for a crazy low unsustainable
price.

The take home lesson from the current unfolding implosion is that a great
product does not magically just equal a great business.

~~~
dom96
Serious question, I am a total noob when it comes to investments. But let's
say I want to bet on another ".com" implosion, what can I invest into to make
that bet?

I feel like these unicorns are so ridiculous that they will surely fail sooner
rather than later, is there a way to bet on this eventuality?

~~~
three_seagrass
Unlike the .com implosion, the current unicorn market is propped up by VC
funds and angel investors. By the time they IPO and you can short them,
they're not really unicorns anymore simply by getting to that point.

~~~
blackrock
While I agree with you, the problem is that shorting does have its own risks.

The saying goes: The market will stay irrational, longer than you can stay
solvent.

So while your thesis is correct, it may be too soon. So you’d be wrong. You
can also get caught up in a short squeeze, in which case you will be carrying
heavy losses. Or if you buy a Put, then the derivative may expire worthless.

There are just too many insider trading manipulations that can happen behind
the scenes, that you as a random investor are not privy to.

But, if you are lucky, and if you timed it correctly, then shorting a stock
can net you a significant amount of money.

~~~
three_seagrass
Well, sure, but the question was how to profit off of Unicorn demise. I don't
think they were looking for riskless bets.

------
evanb
It seems they have fallen into the age-old trap of confusing unicorns with
Pegasus.

------
netcan
When it comes to these kinds of basket case occurrences, it's a bad idea to
try and tweak them to be less bad. There is a reason they occur, and it's not
"compliance" or whatnot.

The ratings agencies are an obvious example. It's not a matter of integrity,
ethics or policies. Ratings just aren't what they seem to be anymore. They're
obviously not there for investors to estimate risk. Their main job now is to
regulate the financial industry.

------
jpm_sd
Modern VC investing, in a nutshell:

> In the new economy of user growth, you don’t have to worry about making a
> product that people want because you can just pay them to use it, so you
> might end up with companies losing money to give people things that they
> don’t want and driving out the things they do want.

~~~
caseysoftware
^ This is a really interesting perspective.

If we take this line of reasoning, then the various unicorns didn't detect and
ride user behavior but used their massive piles of cash to distort it in non-
sustainable ways. Now that the cash is drying up, people are bouncing back to
the old patterns and approaches.

I wonder how many of those alternatives disappeared/closed in the meantime?

~~~
ivanbakel
Which is exactly the goal of those unicorns in the first place. Once you've
smothered the competition in investor money, you're free to raise prices to
profitability and beyond.

Like ripping out Detroit's streetcars just to sell more cars.

~~~
economicslol
>Once you've smothered the competition in investor money, you're free to raise
prices to profitability and beyond.

That's the theory at least. How much can Uber realistically raise their prices
before people realize that yellow cabs or driving themselves is just too much
cheaper to ignore. So they'll have to massively increase prices and
subsequently kill off their own userbase. It's a lose lose and I don't think
any of these companies expecting to pull this off will survive.

~~~
qppo
I have never once called an Uber because it was cheaper than alternatives.
It's more convenient, reliable, and except for certain times transparent about
pricing.

They can increase the prices significantly and I will continue to use them
over cabs.

~~~
TheCoelacanth
The real question is whether you will take an Uber for $25 instead of a Lyft
for $20.

------
tim333
You can get the presentation with voice commentary here
[https://group.softbank/en/news/webcast/20200518_01](https://group.softbank/en/news/webcast/20200518_01)

Unicorns in the ditch at 30:30

------
dreamcompiler
Old VC model: 1\. Invest billion$ in startup. 2\. Profit.

New VC model: 1\. Light billion$ on fire. 2\. Matt Levine critiques the height
and coloration of your flames. 3\. There is no step 3.

~~~
projektfu
Old VC model was invest $80M in startup, profit, IPO. Now it’s a billion here,
a billion there....

~~~
altoidaltoid
Pretty soon you're talking about real money

------
dsalzman
Podcast version here! [https://anchor.fm/talking-money-stuff/episodes/The-
Unicorns-...](https://anchor.fm/talking-money-stuff/episodes/The-Unicorns-
Fell-Into-a-Ditch-ee7shc)

------
jariel
Anyone benefiting from the lock-down, like Zoom, is doing well, those that are
not, like Airlines and Uber ... not so much. This is mostly a coronavirus
story, not a crash story or much else.

------
shaan1
I think this is normal. Every business goes through ups and downs.

------
austincheney
This was predictable and the prediction applied more broadly than just tech
start ups. Tech investment in general was over saturated.

I was predicting last April (2019) that we would be heading into recession
within 18-24 months even though we were in the strongest and longest running
bear market in history. I wasn’t the only one predicting this as I was seeing
several vaguely similar comments here on HN. I had no idea there would be a
pandemic, a depression, or that any of it would happen within a year.
Investments crashed earlier and harder that I anticipated because the cause of
the crash was something I never thought of, but the reaction and result are
similar.

The reason why people were predicting a recession is that there was/is too
much money tied to investment speculation that isn’t reflected in the revenue
of a given organization. In more plain terms people were betting on growth
even though growth alone couldn’t repay the investments at present, which
looks like a Ponzi scheme. The idea of a Ponzi scheme is to bet on growth and
then encourage additional layers of investment to drive up the value of the
prior layers and then dump it before it implodes, like a game musical chairs.
Here are some basic examples:

* Uber was a $60 billion unicorn. It was loosing billions every quarter though without any profit in sight and yet people were still investing in it. Now it’s shedding like employees and closing offices.

* Amazon is a less extreme and much less obvious example. For one Amazon is profitable, and two Amazon makes money on infrastructure which provides scalable growth. Amazon’s market cap is insane at $1.2 trillion. Amazon generates neither the profit, revenue, sales, or growth to account for anything close to that, which speaks to speculation. As an interesting side note has historically lost money on its retail business and on Prime. It took selling access to its infrastructure to deliver a profit.

* For an example of the opposite Bank of America’s stock tanked as a result of the pandemic but it still reported a very strong first quarter a month later. It looks like the bank will continue to perform well in its earning statements even with consumer mortgage and loan forgiveness due to strengths in other banking segments. It will be curious to watch as last week Berkshire Hathaway started dumping its investments in the banking sector. The most notable are its dumping of Wells Fargo and Goldman Sachs that are failing to perform to expectations but it is also the largest single investor in BAC and it is dumping that too. This loss of investments won’t impact current business performance relative to the marketplace in general or to its competitors specifically.

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davefp
A unicorn with wings is an Alicorn, thank you very much.

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TrackerFF
lmao, they actually put those pics in their presentation.

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ykl
Metacommentary: Every time I see a Bloomberg link on HN, I cross my fingers
that it is Matt Levine, and every time it is in fact Matt Levine, it’s pure
gold and 100% worth the click. I get the newsletter in my inbox, but since I
check HN before my inbox usually, sometimes this is the faster route to some
good Money Stuff hilarity.

