Here's the thing: the market really does not give two shits about "smarts". You can engineer the best mousetrap in the world and get it into everyone's homes, but the market won't care about the company that makes them... as much as they will care about a company that's found a way to break the rules. That's what they really want. People in tech are being paid massively not because they're postdocs with good credentials and amazing skills, but because they know how to bend governments to their will.
Posted it in an other thread [0] but do we really want to go back to the medallion system? Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid).
The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.
And I'm not even touching the usual pain points and often discriminatory practices of medallion drivers (refusing card payments, refusing rides to non-white passengers and to non-white neighborhoods...).
While it's always nice to see a broken rent-seeking system in our world become eroded we should not laude the transfer to another fiat regency.
> a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air
In what way is Uber not a rent-seeker taking advantage of often poor new immigrants?
The fact that the old system was so poor just lowers our standards for anything that may seek to replace it, but that's no reason to throw all critical thinking out the window.
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Europe is a really good example to look at. Uber entered the market in most (all) European countries, but they simply couldn't compete with what already existed. (speaking only of Uber taxis; Uber Eats is doing fine in Europe)
Uber in particular is interesting, as it's a vastly superior service built by somehow even more morally deficient individuals.
Instead of a physical medallion bolted on the car, it's a verified driver ID and rating in Uber/Lyft app.
Uber/Lyft are now collecting what the medallion owners were collecting previously from the drivers.
The apps are more convenient for riders and there are more efficiencies in the routes. But, it's still the same system. Meet the new boss, same as the old boss.
This is something I hear repeated ad infinitum on the net, but has a calculation ever been done the other way? That is, workers stealing from employers by deliberately clocking out early/late, or by goofing off on HN while on the clock. I would hazard a guess that this number is an order of magnitude greater than seedy business owners short changing their staff.
>copyright
>local city's taxi medallion scheme
Arguably the three areas of law where special protections & privilleges got expended so far, repeatedly and over decades, as to create ample opportunity for easy arbitration. Especially in case of copyright and taxi medallions, mafia-like structures were created through very one-sided markets; the only distinction from mafia being that those were gradually introduced through layers upon layers of legislation.
The fault, if any, lays with the legislators. The tangible result of tech businesses is cheaper music for the consumers and cheaper transportation for the consumers.
>special protections for local businesses online
Good luck with that./s France also tried similar legislation, targeted specifically at extracting more tax revenue from Amazon under the guise of "protecting local bookstores". That's neither moral nor productive.
There had to have been some deals on backend to keep things the way they were - insane shortages of vehicles on weekends and no service to minority areas - with Uber you can get dropped and picked up most places I've found even dicey ones.
As long as they are preoccupied with ruthlessly competing against each other things tend to head in positive directions for everyone. Its when they have no competition is when the the mindless ambition and ruthlessness causes the most damage.
Google - How does Google not have to worry about copyright? What exactly is their evasive behavior here?
Amazon - Until the rules changed in 2018, Amazon was following the same tax treatment that existed for mail order catalog sales decades prior to Amazon's existence. These same rules applied to other online retailers as well. They are not "evading" anything. https://www.nbcnews.com/politics/supreme-court/supreme-court...
Uber - OK you have a point here. I'm glad they did it, but that doesn't change the fact that they did evade regulations.
And how exactly is that a bad thing?
You assume regulations are good, but as a customer this is incredibly short sighted.
> Facebook doesn't have to worry about defamation lawsuits. Google doesn't have to worry (as much) about copyright. Amazon built it's business on evading sales tax. Uber broke the back of your local city's taxi medallion scheme. And so on and so forth
So are you sad that you can use freedom of speech without fear of defamation lawsuits, read newspapers on google news without paying, have cheaper goods thanks to businesses forgetting to collect taxes, and better quality cabs that will come to you immediately?
> they know how to bend governments to their will.
That's one of the best points about tech :)
- Facebook doesn't have to deal with defamation lawsuits because they're not the ones making those defaming claims - it's the users posting them. With the scale of the world it literally isn't possible to have an anyone-can-post site that has to screen what its users write for legally risky text. That's bad for commerce and why section 230 exists.
- Google doesn't have to worry about copyright because businesses love to be able to take down content ID-detected content without involving legal resources.
- Amazon built its business on evading sales tax because sales tax didn't affect internet businesses for some reason. Governments had years to change their laws and impose it on them.
You will be surprised to know that from your corner store florist to Walmart and from Bank of America to your child's babysitter everyone is obstructed by regulators of all kinds and to some or large extent all businesses are successful because they have learned how to evade government regulation. I remember a lecture by Aetna CEO who said the only competitive advantage they have over competitors is that they have far better handle on the regulation.
If I were Amazon, I would do the same and as an Indian citizen I am greatly happy to see Amazon going so out of the way to help me get what I want.
> People in tech are being paid massively not because they're postdocs with good credentials and amazing skills, but because they know how to bend governments to their will.
It is other way around. The regulators in DC are confused as to how they will regulate the tech. They simply can not as the people are hooked to Instagram and Snapchat. If you give a free hand to DC people they would want every internet user to have a "internet license" and their search history be made available to every possible alphabet soup of government agency.
Many educated Indians choose to buy from these 33 Amazon owned / equity linked sellers because of the experience they offer - odds of receiving wrong/damaged product is low, and in case where that happens the return / replacement process is hassle free.
Amazon has brought price discovery to many product categories in India. For expensive products I check Amazon's ClouldTail / Appario seller's price before making a purchase from even local vendors, keep that as a reference and negotiate.
Eg: Every computer component, laptop has a ridicules MRP (Maximum Retail Price) in India. A RAM module sold at INR 5500 has an MRP of INR 20,500.
The sad part is even companies like AMD collude with distributors in cheating end customers.
Instead of fixing problems which makes citizens flock to few sellers at Amazon every Indian government irrespective of political party chooses to appease the voting block of traders union - who are nothing but middle men making prices expensive to the end consumer.
A country grows when builders and innovators contribute to the economy, not leeches who don't even understand what they are selling. Everyday I lose a little hope of India ever becoming a developed country, we have our priorities backwards.
Should the end customer eternally pay for these middle men because they bribe politicians and use emotional language to hide their willful incompetence ?
Retail sells 10x Amazon yet refuse to organize or make use of efficiencies of scale.
India is a poor country yet pay more than many developed countries for the same products because of dumb short term policies and protectionism. Creative destruction is important.
Little chance. Bezos has purchased his way into the class of decision makers in this country through acquisitions of media and integrating into the military industrial complex (in numerous ways). Amazon embodies the privatization of a centralized economy more than anything else. Needless to say: this is not good.
You keep out the foreign competition letting internal competition foster and you stop a capital drain.
Imagine if the EU had it’s own Alibaba, Baidu or WeChat... That is a lot of taxpaying money...
If done well, protectionism can get a local industry started, and be relaxed over time as the local industry starts to become competitive with global industry.
Done poorly, protectionism results in a local market that is a decade behind the state of the art (like Brazil's video game industry was)
Nope, the government wants to protect Jio from global competition.
If a French company wants to expand into the Spanish market, they can localize their app all they want; if their prospective customers in Spain are already using a different app that works just as well, they're going to have a hard time convincing them to switch.
The same dynamic also applies within countries, where two interchangeable apps might dominate in different areas or demographics of the same country, without either able to gain significant market share from the other, but it's a bit rarer because of network effects, where people start using an app because they know someone else using it and the app with the most users grows the fastest, eclipsing the competition.
Cross-border network effects in Europe are much weaker than within countries, and not much stronger than between European and non-European countries, so if a company manages to dominate their niche across all of Europe, they'll probably also win in much of the rest of the world.
In my opinion, China and Russia have their own ecosystems because of the language barrier and the physical firewall that their respective governments have put in. India is able to build its own eco system because it has got the fundamentals right, it probably is the only country which broke the Master Card and Visa duopoly allowing local vendors to slash costs by a good margin. I already see a lot of Apps which might pose a threat to the likes of Google in the coming decade(if they are not bought over) but in the long run, I don't see India having a separate ecosystem, India and it's way of thinking is more like the west than it seems to be and it will eventually merge in with larger western ecosystem.
If Europe wants to compete, why not simply create an ecosystem where Europeans companies can succeed?
And we let these beasts run around willy-nilly.
Indian people should ask why Indian government is creating laws that need "evasion", that too from a massively successful, well respected and very innovative company, Amazon wants to invest in India and India needs to change its laws if needed to welcome more investment and more competition.
Perhaps it is the indian government that is wrong here?
The Govt didn’t needed a multi year report to know it wasn’t small sellers making most sales. Some in position of power benefited.
Side note, Even with Walmart’s purchase of Flipkart a couple years ago, Amazon.in always seems to be cheaper. Also there is huge gap in reviews and review quality between the sites. Walmart still playing catch up 3 years later
Most of tech valuation advances are about avoiding/bypassing regulations and taxation. They simply call it innovation and efficiency.
