Middlemen like airbnb,Yelp,doordash , Uber , Eventbrite etc are unsustainable in the current shape
Edit: this analysis is more for the years to come after this pandemic. But pandemic might have just hastened failing of some companies and I think this will also significantly change how some of these companies operate. We a switch companies, when you switch companies think of the next 2-5-10 years and where you want to be and then join the company, this is very important especially when you are getting married or planning to have a baby or have kids. Recent few years have seen silicon valley companies like Airbnb, Uber , Lyft etc. get some obscene valuations. It is obscene because the cut they make from the business at times is more than the actual service providers make and have a greater say in how the service is offered. The layoffs are just the economics of the business, which are built by burning cash and then sustained by more cash burning. At the heart of it, these are businesses that solve a usecase but not as worth as the they are today. Corona outbreak will be a litmus test of silicon valley companies, much like the .com crash , this will clean up a lot of dirt but probably some genuine companies as well. Some businesses I think will be changed by this tsunami, you can pretty much put every business through this lens. 1. Hotels , Lodging 2. Eventbrite , and such ilk 3. Food delivery - doordash , bitesquad etc 4. Financial services - we will see a UPI ( Indian govt provides this , extremely low cost payments) like services gaining, not Stripe , or square that make some obscene cut in transactions 5. Traveling - Expedia , Uber etc, traveling business has seen huge pruning of margins, Emirates doesn't sell tickets in any aggregator and everyone will start doing it soon. Because technology is getting easy to build and adopt 6. Streaming - Netflix etc will struggle for content, content is King . They should build the best streaming platform and offer it to people , trying to do both will make the best platform for streaming, devoid of content. Silicon valley salaries are unreasonable and don't justify the value their products provide. These platforms are costly for the actual service providers because they pay huge salaries. Lookback, the cost of hiring a cab in SF has gone down, with these low prices, can owners also pay a % to ride hailing platforms. Google,MS, FB will sustain because they add a lot of value to the consumers and then make š° off it. Not thin down the already razor thin margins for businesses. Although, one side effect of this is, building a start-up with good tech means outpaying Goog , MS and FB. Corona impact will be seen only after a couple months of ending lockdown and we start normally back again. Until then introspect and save your cash.
āMiddle menā is the wrong word. What do you think Walmart and Amazon do?
New breed is a different kind of middlemen than WM or Amazon are. WM solves the problem of accessibility of goods and logistics very economically. Not all goods manufacturer can ship themselves or sell to the end consumers. That said , the cut Amazon makes in e-commerce site is unsustainable too and with time there are people like Shopify that will create huge problems to Amazon. Logistics, customer services etc will be like a cloud service and any seller can use it. Time tested middlemen are the one that have gone through a lot of pruning, new ones have to go through that as well and validate themselves, metamorphize themselves to act by the laws of economics. Good tech doesn't make you immune to laws of economics.
I disagree that these are a new breed. Amazon (Retail), Netflix, Uber, Rover, Zillow are all middlemen whose value is entirely determined by the number of users who partake. All of them are sustainable as long as people use them. I agree that the growth is unsustainable without a pivot such as AWS. You mention the word ālawā which is a great way to cement middlemen into sustainability. Weāve seen it with car dealers, real estate brokers/agents, insurance brokers/agents.