Money Hemorrhaging Unicorn Wants to Buy Another Money Hemorrhaging Unicorn

Must be a way to make up the transaction losses with volume.

Uber, which seems to have a business plan of losing money while stiffing drivers and running traditional taxi companies out of business, is now cutting back on their money-losing side hustle, Uber Eats, and contemplating buying Grubhub, a money-losing food delivery business.

It’s worth marveling at the fact that these businesses have been losing money since they opened their doors.  And, despite losing money, they grew and grew and thus burned through more money, all the while making just about everyone who is involved with them, save the founders, poorer for the effort.  There’s reason to believe destroying businesses, and impoverishing workers is the actual end game for these companies.  The benefit is that the rest of us will have to pay higher prices, making it tougher on everyone else as well.

That’s why this article about DoorDash is worth a read.

DoorDash, another money-losing food-delivery operation, with no profits in sight, was valued at nearly $13 billion in February, just as it was poised to go public.  In 2019, it had a net loss of about $450 million on over $900 million in revenue.  They need the money to keep expanding, so they can keep on losing money.

So, there’s this mini-chain of pizza places in Kansas that had eat-in and take-out service only.

Out of the blue, they started getting complaints about pizza being delivered cold.

But they don’t do delivery.

DoorDash, without alerting the pizza place, put the restaurant’s menu on Google and was taking orders for their pizza.  They were selling the place’s $24 pizza for $16.  And then picking up the pies at the shop, and delivering them without an insulated bag to keep the pies warm. Thus the cold pies.

As an experiment, the pizza place ordered ten of their own pizzas for $160 through DoorDash.  The delivery person came, gave them $240, the price of the pizza they were selling and then the place could resell the pizza’s for $240, pocketing up to $80.

Then they ordered ten pizzas from DoorDash for $160, just put the ingredients in the boxes, and were given $240.

Remember, DoorDash lost $1.50 for every $1 of revenue last year.  And was valued at $13 billion.

It can’t work.  Until it runs everyone else out of business.  Or runs out of rich people’s money looking for the next big money-losing thing.