“Uber is a shitty business. The pizza shop on the corner is a better business than Uber.” — Jason Fried
A business that relies on technology that does not exist is a scam (see: Theranos). And a business that is based on the principle of firing most of its employees (which you have locked into predatory loans) is a moral mess at best.
The problem is it’s working. People keep investing in them.
Why? That’s the scam. That’s the con. They have worked very hard at convincing people of two things:
1) They’ll be profitable one day, eventually
2) It doesn’t really matter if they’re profitable, it’s about size and growth (see: “unicorns”)
They’ve invested billions of dollars in this narrative. They have hundreds of PR people working day and night to spread this message. There are more PR specialists working in tech startups than there are full-time journalists in America. Their message spreads faster and better than the truth.
And so the real problem is that every religion is only effective to the extent that it can spread. My insane beliefs are only insane as long as you keep denying them. Once I’ve convinced you, too, what we’re up to is simply normal.
Regular people have started to believe, too. So now you have business owners attempting to copy a con. You have startups attempting to replicate a scam.
Too many business owners today believe the secret of success is to copy the most “successful” people they see. But the people they’re copying are failing, they’re just doing it in public, and spending a lot of other people’s money while they’re at it.
And so of course they struggle. Because the only way Uber works as a business is if reality changes. The only way many tech startups work is if they get an investor to spend millions of dollars on something they couldn’t get a customer to spend a buck on.
Because these brands aren’t businesses. Anyone can spend money without recouping it—that’s literally the easiest thing in the world and it’s how most people and businesses go broke.
There is no meaningful difference between a $100 million company that isn’t profitable and a $10,000 company that isn’t profitable. One is no more likely than the other to suddenly turn a profit. The only difference is that one is a bigger, more public grift. Which will have a much bigger, more public failure.
Turning a lot of money from investors into less money from consumers is not hard. Anyone could do it.
Turning a little bit of money into even more money is what real businesses do.