The Margins

I highly highly recommend reading Ranjan Roy's latest piece on GameStop [1]. It paints an amazing picture to dispel the narrative that's prevalent in the media of Reddit et al. driving the short squeeze. Just as an example from the article, there was a single buy order for 187 million dollars. When Reddit is hailing a young trader with 50 million in assets as the next coming of Jesus (not to downplay him, great job!), it's pretty obvious no one from WallStreetBets is capable of making that order. Though that example is only from this week, it's evidence of big money being well into this play, and I don't think it's a stretch at all to say much of the short squeeze was engineered by them. [1] https://themargins.substack.com/p/game-stop

Congrats to Doordash! The pandemic certainly helped accelerate this process, but I will add that within the bay-area, anecdotally, my first circle were all Dashpass subscribers for a while before 2020 too. Their partnerships with Chase, amongst others were smart, big moves. I do want to link here a super insightful/funny article that calls out how Doordash acquires new restaurants( amongst other ways of course) , and the resulting loopholes. https://themargins.substack.com/p/doordash-and-pizza-arbitrage HN discussion - https://news.ycombinator.com/item?id=23216852

It's a bit more nuanced than that. The best way to think of food delivery businesses funded by VCs is to think of them as payday lenders. Some background reading: https://themargins.substack.com/p/doordash-and-pizza-arbitrage Be sure to also read this insightful comment left by a former GrubHub employee: https://themargins.substack.com/p/doordash-and-pizza-arbitrage/comment…

This is actually a very interesting point that I've come across on a few different platforms recently (Patreon, for example, [also targets their homepage to creators, not consumers](https://www.patreon.com/)). I wonder if Substack just doesn't want to deal with opening the door to some newsletters getting "free promotion" by being features on their homepage? Nonetheless, I'd love to see "trending" or "editors picks" or something. Nonetheless, here are some I subscribe to: Big, by Matt Stoller (about monopolies): https://mattstoller.substack.com/ Margins (about business and tech): https://themargins.substack.com/ Flow State (music): https://flowstate.substack.com/ Normcore tech (tech, data science): https://vicki.substack.com/ The Passion Economy (business): https://passion.substack.com/

> The courts proved exactly the opposite. The system of checks and balances worked. I don't follow your assertion. The courts worked as a balance. But they can only do as much as the laws allow. The tendency of the executive is heard loud and clear. No serious student would want to jeopardize their lives in an environment and society that displays xenophobia. I cannot explain it much better than this https://themargins.substack.com/p/the-international-student-bait-and

I love this paragraph from the pizza arbitrage article, link below. If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me. Every platform loses money. Restaurants feel like they're getting screwed. Delivery drivers are poster children for gig economy problems. Customers get annoyed about delivery fees. https://themargins.substack.com/p/doordash-and-pizza-arbitrage

Gotta love the illustration in the original post: https://themargins.substack.com/p/doordash-and-pizza-arbitrage Not to mention some horrifying numbers: > Doordash reportedly lost an insane $450 million off $900 million in revenue in 2019 (which does make me wonder if my dream of a decentralized network of pizza arbitrageurs does exist). > Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.

> How is the astronomical price a promotion? Because people are expecting it to get to $100k, which means it's a hot commodity in a speculative bubble. Not everyone who buys into a bubble believes that the underlying fundamentals justify the price in the long run- they just believe that there's room to grow, and that there are greater fools to sell to. > These have little and nothing to do with the cause of the high price. Just like the ease and lack of fees of Robinhood spur more stock-buying, Coinbase makes trading crypto easy and facilitates more bandwagoners who further pump up the price. > That explains why Musk would buy it. That does not explain why anyone else would buy it. I brought up that reason with Musk in mind. And Tesla buying it has direct second order effects- it popularizes and legitimizes BTC and cause more to buy into it, whether they're familiar with the underlying intentions of BTC or not. > Obviously, if there weren’t fundamentals, now would be a good time to sell. People buying in now believe there's still room for the price to rise. An asset with solid fundamentals (Tesla stock, GameStop call options) can also be wildly overvalued. I'm sure similar conversations were happening in 2018. > Animal spirits are an unnecessary hypothesis for this event. Look at the market. Look at the economy. Everything is animal spirits now in search of yield. https://themargins.substack.com/p/zirp-explains-the-world

> I'm happy to pay a fair price. But, that's the thing. Would you? OP's article is a follow up to an original that focusses on and explains price forks and how that affects these delivery services. [1] [1] https://themargins.substack.com/p/doordash-and-pizza-arbitrage Why would you - the customer - pay a restaurant 24$ for a pizza while you could get that same pizza for 16$ via DoorDash in a far more convenient fashion? How much do you care about the restaurant's business if the exact same thing is offered to you at 2/3rd's the original price just 2 taps on your smartphone removed from your door? Companies like DoorDash are currently losing money and they are happy about it. Why is that? It's a cost/benefit trade off. DoorDash perceives covering the remaining 8$ of that pizza as an expense. What they bank on is being able to buy an established position of dominance as a middle man on the delivery market. Two things are happening right now. The first is a race to the bottom and drive other delivery services out of the market. That happens by accruing as many restaurants and their customers on their platform. The second is that restaurants get pressured over time to lower their own prices since they compete less with the menu's displayed in their windows on main street, but with the cheap offerings on DoorDash or GrubHub. If and when the price gap closes over time, incumbent delivery services who remain get to flip their losses into a profit. The societal cost?…

I don't think the devil needs any more advocates, tbh, and I kind of wish people would stop refusing to take responsibility for the arguments they put forth by hedging in that way. > Powerful, data comprehension Correlation, maybe -- not the same as comprehension. > A possible solution to this is creating data points for everyone, but that has its own controversies Or you know, creating fewer data points -- maybe even none -- in general. Why is this something that needs to be software-driven? Why increase automation? What is the evidence that policing and criminal investigation is more effective (and by what standards!) when using Palantir's tech? I question the assumption that increased automation and digitization of every process is necessarily an improvement, or useful, and I feel like this line of argument takes that as an assumption. > Their view is that they don't see or pick any sides, but the morality of that is up for everyone to decide, I believe if you don't pick a side, one is often picked for you. "Not seeing sides", or not picking them, is taking a position though. Declaring neutrality doesn't remove the concrete effect of your actions, or change the fact of your material support for a given model of policing or government. As Can Duruk argues convincingly in his latest newsletter[1] one of the best examples of that is low voter turnout in US elections: that benefits one side pretty clearly, so to declare you won't take sides and won't vote is a…

Someone mentioned their surprised at the negativity in this essay. I agree, Paul’s frustration is coming through which is new to me as a long time reader of his. It got me thinking of the recent article [0] the other day about someone analyzing Facebook’s latest PR, with Sandberg, Boz, and Zuckerberg seemingly speaking out a little more “off the cuff” as usual, as if they’ve been letting their frustration get the best of them and speaking publicly about ongoing events when it’d be “better” to say nothing at all. Perhaps this is one of those cases, but seeing as how Paul likes writing about what can’t/shouldn’t be said, maybe I’m not so surprised. And actually I liked this essay anyway :) But it reminded me that Paul usually thanks people who review his essay drafts at the end. This one was no exception, but I noticed a couple new names: Peter Thiel, and Christine Ford. From the Kavanaugh drama[1]? It looks like yes. [0]: https://themargins.substack.com/p/facebooks-pr-feels-broken [1]: https://en.m.wikipedia.org/wiki/Christine_Blasey_Ford

Major new sites, mostly magazine publishers, were doing this. Washington Post, TIME, Newsweek, and CNN as I recall. Five-thirt-eight according to comments here. Some may have dropped them by now, many were discussing this as negative brand value within recent years. Previous discussion: https://themargins.substack.com/p/taboola-outbrain-and-the-chum-supply (https://news.ycombinator.com/item?id=20409693) https://www.nytimes.com/2019/10/04/business/media/online-advertising-c… (https://news.ycombinator.com/item?id=21175145)

an interesting reading on the economics of chumbox ads: https://themargins.substack.com/p/taboola-outbrain-and-the-chum-supply

Coups in the 21st century may not look like coups of the 20th century. This article may interest you - https://themargins.substack.com/p/the-first-phygital-coup

Similar story but with Door Dash. Explanation: Door Dash charged lower than actual price, so owner placed an order and sent just plain dough. Their profit was higher than cost of making the pizza. https://themargins.substack.com/p/doordash-and-pizza-arbitrage

https://themargins.substack.com/p/doordash-and-pizza-arbitrage The previous article should be required reading for anyone trying to understand how crazy this era is.

See also: "pizza arbitrage". https://themargins.substack.com/p/doordash-and-pizza-arbitrage

Can't help but think of this article[0], which summarizes the food delivery market pretty nicely. "You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?" [0] https://themargins.substack.com/p/doordash-and-pizza-arbitrage

reminds me of the pizza arbitrage article and discussion from a few months ago... https://news.ycombinator.com/item?id=23216852 https://themargins.substack.com/p/doordash-and-pizza-arbitrage

Please remove what looks like a tracking token from the URL. Untracked URL https://themargins.substack.com/p/the-silicon-oligarchy

Somewhat related, from Daring Fireball's clipping of https://themargins.substack.com/p/facebook-the-pr-firm: > So, in that way, I read Facebook less as a tech company, but instead a communications one. Not a telecom communications, but more like a PR / marketing consultancy. There’s nothing original about Facebook. It’s a company that hires people to build others’ ideas, and, more often than not, it does that better and faster than them too. And when it can’t do that, it just buys them outright. There is a lot of building, but the ideas are outsourced. But what Facebook is really good at is actually doing all this while fighting what seems to be a never-ending, at least since 2016 or so, PR battle while not giving an inch. > With all the negative press around, you might think they are not doing a good job at avoiding criticism, but consider the alternative that they’ve been able to weather all this because they’ve been able to deflect the criticism and avoid scrutiny and accountability. I know this all sounds pretty unhinged right now, but, stay with me. This is a company who hires conservative politicians to its highest ranks in multiple countries, while maintaining a veneer of political neutrality. The same company pretends its not the arbiter of truth while employing tens of thousands of people to do exactly that. Ask yourselves: What has changed at Facebook?

> Or Uber doesn't tell you the whole story of what you're actually going to make after gas, maintenance, repairs and insurance. It's mainly this. I did a deep dive on Doordash during the pandemic/lockdown while I was going back to school for Supply Chain and Logistics as I wanted to take a better look at how it worked. I even did a few dashes myself. And the people I spoke to, including the owners of the resteraunts, weren't aware of the many hidden costs of these gig economy services. Which is why you have vigilantes like the guy who did that Pizza DD arbitrage and then went on to tell the the whole World about it and ended with; F' Doordash [1]. Then the taxes as an independent contractor at the end of the year are something they seldom take into account as they've never been an independent contractor before. These systems are pretty damn predatory and I think the people (business and tech side) who work on them should have to do a mandatory couple of shifts on their own dime every month to get a perspective of what is occurring. When I lived in Switzerland, one of the coolest things I heard about certain management roles was about how the SBB requires that management and above have to do the more 'menial' work to get a better grasp of what is occurring at the passenger level and help improve the system. My friend was a manager of one of the branches in Bern and she had to go around and collect tickets and clean the train once in a while. She said it is humbling,…

"And here’s Ranjan Roy: The moment Lambda started selling off the contracts, their incentives completely flipped. Their income was then derived from generating ISAs, meaning, the more, the better. Enroll as many students as possible. Of course, if no one ends up getting jobs, investors will eventually stop buying the Lambda ISAs, but that would all happen a long ways down the road. People are right to be angry that Lambda was selling off the ISAs. It broke their core promise. I am less offended. Lambda isn’t selling the equity in the students, it is borrowing against it. In the language of securitization, it is selling the senior tranche to investors, but keeping the equity. (Well, 60% of the equity.) Lots of businesses borrow money to fund their operations, and pay back the loan out of the profits of their operations; that is just the normal way to do business, and is functionally what is going on here. Investors advance Lambda some money so it can pay for its programs, it collects money from students if they get good jobs, it uses the money it collects to pay back the loan, and if there’s money left over—if Lambda does a good job—then it makes a profit." https://themargins.substack.com/p/the-risk-of-distributing-risk