Comment by Centigonal | Hacker News Reader

Comment by Centigonal | Hacker News Reader

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Everyone from Sam Altman to Peter Thiel has been talking about this for years. Capitalists are very straightforward about this - if you want to capture value, find a way to plant your flag in some emerging market and get a monopoly on one or more parts of the value chain. Marketplace operators are especially attractive to investors, because the financials are really pretty - the marketplace provider doesn't own significant assets, only pays for marketplace development costs and sales/marketing, and yet it can levy a tax on a potentially very large market.

Uber, Lyft, Etsy, Doordash, Postmates, Shopify, Spotify, Yelp, Datarade, G2, Capterra, Turo - all are marketplace providers. They don't make a thing. they make the thing that lets a much larger class of thing-makers get in touch with the thing-buyers.

The fervor for marketplace providers has gotten so intense that we're seeing more and more niche businesses get funded, e.g. https://swimply.com/

Edit: ... and don't get me started on how companies (ab)use the 1099 designation to turn traditionally asset-heavy businesses into marketplace providers, generating a lot of paper value while not really innovating in terms of how the service is actually rendered. Looking at you, Arise!

> "Everyone...Peter Thiel..."

no, not this fake thought leader. business school literally teaches cornering markets (in strategy, but also marketing), and has for decades before those guys were even born. they literally recycled this information and presented it as if they were geniuses who came up with this miraculous approach all by themselves.

He's just the guy I heard say it. Unfortunately, John Rockefeller's estate and HBS don't put as much effort into marketing to startuppy-minded millenials in software like myself.

Not trying to endorse Peter Thiel's opinions or those of or anyone else in that mileau. I'm saying the folks funding all the tech companies have been using this playbook for decades.

and that's why i commented. thiel is an idle opportunist, not an innovator or thought leader, and should be disregarded in such confines.

Thiel didn't claim to have invented this strategy. The reason why people associate him with monopolies is because he claimed that they're better for the consumers. And he wasn't the first to make that argument, either - it's straight from Bork's "The Antitrust Paradox" - Thiel just happened to be the most prominent "big tech" voice who openly embraced this notion.

he was one of the few because the idea that monopolies were good for consumers is about a 5th grader's level of thinking. in a perfect world where monopolies serve a single, narrow segment, don't overreach into adjacent markets or sociopolitics, and there's no general uncertainty or strife, you might argue they'd be a more efficient than multiple market participants, but we live in a dynamic and ever-changing world where that kind of thinking is laughably simplistic. monopolists can't resist distorting markets for their own benefit.

I'm not suggesting that he was right; quite the opposite, I blame the man for the sorry state of affairs today. But this idea was not restricted to "a few" - Bork's book was popular in circles around Reagan, and from there it became a part of modern Republican economic orthodoxy. What was unusual was a businessman, and in the industry that had already seen issues with monopolies at that, saying it openly.

i mean, the era of reagan was also the era of trickle down economics. it was all sorts of stupid--full of greedy, motivated reasoning, not reasonable, rational, or coherent thought.

as an independent, party affliation is a sure sign of vacuous thinking to me, where the cost of membership is leaving your brain at the door (and that's what thiel does btw). democrats are currently making this mistake with anti-federalism, trying to push through national laws that are squarely in the province of state control. this is expedient in the short run for their political careers but damaging to the foundations of the nation in the long run, as consolidation of power nationally is the quintessential threat to our democratic republic. it reeks of hypocrisy.

They do some organizing of information via their apps, which has a tangible user experience (plus the apps themselves are definitely a thing they built). Building a good marketplace is also no small feat.

In concept, they are all useful abstractions over the worst case scenario: individuals only finding and talking with other individuals to get goods or services. In practice, there are definitely abuses which come down to ineffective regulation.

>Building a good marketplace is also no small feat.

Nope, but it's lavishly overcompensated and starved of competition for the markets who manage to get the network effect going.

There is no really effective regulation to ameliorate this effect either.

Wouldnt need much though. If, say, e.g. airbnb simply werent able to enforce parts of their ToS around scraping/contacting users then it would make the market vastly less dysfunctional.

Not saying what they're doing isn't challenging or valuable. Like pydry said, it's a business model with a cost/benefit asymmetry - if it succeeds, you get a nice little monopoly that's difficult to disrupt. That makes it attractive to investors and very sticky, which means we'll see more and more of them pop up unless something changes.

Aren't most of those examples famously unprofitable?

Capterra? Is that site really that useful practically?

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