If we take this line of reasoning, then the various unicorns didn't detect and ride user behavior but used their massive piles of cash to distort it in non-sustainable ways. Now that the cash is drying up, people are bouncing back to the old patterns and approaches.
I wonder how many of those alternatives disappeared/closed in the meantime?
Like ripping out Detroit's streetcars just to sell more cars.
That's the theory at least. How much can Uber realistically raise their prices before people realize that yellow cabs or driving themselves is just too much cheaper to ignore. So they'll have to massively increase prices and subsequently kill off their own userbase. It's a lose lose and I don't think any of these companies expecting to pull this off will survive.
They can increase the prices significantly and I will continue to use them over cabs.
Of course, if a company started raising prices to profitability, perhaps it would be "worthwhile" for another group of investors to come along and start the whole cycle over again with a new - excessively funded - startup.
We haven't got to a place where we can measure a bounce-back to "the old".
For instance, as far as I can see into the future, I'm still going to use Lyft when I travel in the US. I'm price sensitive, but the alternatives are still full of externalities if I can't hail a cab off the street easily.
Of course right now, nobody is traveling outside their home cities, nobody is going to restaurants (& restaurants don't have any leverage on delivery companies), the coworking spaces are all closed, there's no parties to cleanup with taskrabbit & that beach weekend in Carmel-by-the-sea won't happen.
The problem I think is that it's going to take 500+ days to get back to even finding what percentage of the economy would go back to doing things as they used to in 2019. And what percentage will just scale down everything and force the companies to skip non-recurring engineering expenses (I'd say iPhone SE is a good example here of "good enough").
If things pick back up to February levels on June 1st, we're still at -25%. That's the absolute best case scenario and there's nothing that backs that up.
If things start at half and ramp up to full through December, we're closer to -40%. That's more likely than the first scenario but feels unlikely.
If things start start slowly in June and grow monthly for December to be at February levels, we're closer to -50%.
Forget the industry, how many companies can survive losing half their revenue (not profit) for the year?
(Obviously, this assumes a flat/even revenue distribution during the year. Companies that have their busy season in March-June are even worse off.)
Of course, for a lot of business that's simply not possible (they were already at capacity), and for the rest that's very unlikely, but it seems possible for some very specific industries.
Restaurants? No, those meals are gone. Oil changes? No, you've driven less miles. Haircuts? You're not going to get two to celebrate. Clothing? Maybe.. because things are still wearing out. Travel? Nope. Technology? Maybe. Durable goods and appliances? More likely.
What are you thinking of?
If you need to have something inspected once a year, then you might have been able to postpone it some, but you'll need to do it eventually.
Also travel is not so clear. I realise I am quite lucky, but my bottleneck for travel is vacation days. I will still go on holidays the same amount of time this year, but it might be in a different place than expected if the borders do not reopen.
But yes, it certainly does not apply to the majority of businesses.
Companies need lending to survive. But the immediate business performance would cause an immediate breach of covenants or terms, forcing actions like margin calls or liquidation. That would leave both lender and company worse off. So instead they agree to substitute in some plausible values with the expectation that business will return to “normal” sooner or later, inside the lifetime of said contract.
I havent seen anyone actually posit that revenue/earnings/profit are actually going to fully return immediately, nor that theyll capture that “deferred” business. As always matt levine had a good take on this last week.
Seems likely given the ubiquity of "Pivots" where startups have already raised cash for some half baked idea and can pivot to selling something completely different to consumers by force feeding marketing down their throats.