Saturday, December 28, 2019

"Millennials May Have to Get Used to More Expensive Stuff"

From Bloomberg, December 19:

There’s a school of thought that says the dominant business model for tech startups isn’t B2B (business-to-business) or D2C (direct-to-consumer). It’s really V2C: venture-capital-to-consumer.
In other words, piles of venture capital are being directed into the pockets of consumers — often tech-savvy millennials — in the form of discounted services provided by startups prioritizing growth over profit. The fact that your ride-hailing app, co-working space or food-delivery service is so cheap isn’t necessarily because anyone has found a wondrous new business model that reduces costs. It’s because the firms are heavily subsidized by investors.

When the venture cash dries up, however, that model often becomes untenable. Nowhere is that truer than in the transportation industry, as automotive giants Daimler AG and BMW AG are now recognizing.

The German carmakers announced on Wednesday that they plan to withdraw their car-sharing service, Share Now, from North America and three European cities. Tough competition — not least from VC-backed firms with less short-term pressure to be profitable — and low adoption rates stymied the group’s ambitions.

Almost five years ago, the automotive industry was stricken with a panic as three emerging technologies threatened to challenge established car companies: self-driving technology, electric vehicles and “shared mobility” (ride-hailing, car-sharing and so on).

As venture capital flooded into each, automakers responded by spreading their own bets, acquiring or investing in scores of relevant startups. Steadily, Daimler built up compelling counterpoints to Uber Technologies Inc. in Europe, for instance, including the Free Now app in Berlin and Kapten in Paris. Both challengers were included in the joint venture Daimler entered into with BMW in February....