I keep seeing people being shocked and bewildered about airbnb being so crappy to use now
and itâs giving me the impression not everyone knows that is by design- all of those âdisrupterâ startups operate exactly the same way. So let me lay it out:
First the company starts with an enormous amount of seed money, and they enter an established industry offering the same product but dirt cheap and with the feel of luxury. They operate at a loss for years. They offer their product at such a reduced rate that they literally cannot profit off of it. They rely on their seed money and investment from other wealthy friends to get by. They do this until the other established companies in the industry are on their knees and begging to be bought out. Once all of the competitors have either collapsed or been bought out, the new disrupter company is safe to jack up its prices and reduce services/perks to get to a level that is profitable. It might end up being much more expansive than the industry was to start with, because now that competitors are gone the disrupter business has more room to squeeze customers dry without fear theyâll go to another company instead. The âweâre shaking this industry up to bring high quality products direct to the consumerâ pitch has nothing to do with consumers and is entirely about eliminating competitors, particularly long standing well established ones.
This is how uber works, airbnb, all of those. Itâs the same game the laundry mat chain in my neighborhood who offers free drying is playing- driving out competition so they have more freedom to price things higher.
Individual consumers often donât have the luxury to be so choosy about what companies they buy from, but just be aware going in and donât get taken by surprise later on.
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