I mean there’s Reddit ofc, as well as Twitter in its entirety, Discord is implementing some dumb updates, there are issues with Tumblr as well as everything to do with Meta, and I’m sure there are plenty more (and I haven’t even touched other digital media, for example the Sims). Why is it all happening in the span of about a couple months?
That’s by design, isn’t it? Dominate the market while operating at a loss then monetize once you have attained monopoly. Like Uber’s strategy. This is an awful way of conducting a business IMHO, it falsifies the economy. I honestly believe they should put severe regulations on this.
Ish.
It is a strategy that works when interest rates are 0%, and the 2008 recession was so bad that the IS Fed kept interest rates low until 2021.
Redo the math at 5% interest rates today and 13 years of $1 Billion investment needs to make $1.8 billion just to break even. Money losing strategies are nerfed in this new meta.
its silicon valley baby ! you haven’t needed a profitable, sustainable model for decades. you need a big mouth, a slide deck and the phone numbers of a few suckers with lots of money.
That’s kind of core to most business models though, even the ones we usually respect. Take video game consoles; a lot of the hardware is sold at a bit of a loss, especially considering the R&D going into them over a long period of time. Then, they make that money back via third party game sales when their playerbase is eventually high.
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Operating for extended periods at a loss is no longer really an option though. Zero interest rates made it not a big deal to be unprofitable. Companies could afford to operate in the red by taking on debt. Now that taking on debt means large interest payments, having a down quarter or year could be a death spiral of ever increasing interest payments that make it harder and harder to become profitable.
Basically, the business models that work with zero interest rates do not work when interest rates are constantly rising.