'Unicorns' Implode Spectacularly

Posted by Ed 15 mths ago
AsiaXPAT (Hong Kong) - Anyone who is running a 'unicorn' business at a loss, should take heed of this latest news.   
Casper, a company sells mattresses (a high tech business!!!) that valued itself at over USD1,000,000,000 went public last week and has now had discovery applied to its valuation by the stock market.   
In just over a 3 days, the share price has collapsed 37% or a whopping 72% from its Pre-IPO valuation. 
Just because someone claims something is worth a billion dollars, does not make it so.
It's going to  get a whole lot harder for these money burning beasts to raise new money.
Read More on Wolf Street

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Ed 15 mths ago
UPDATE -  Funding is Drying Up Big Time Now
Why am I not surprised that this venture is failing?
Cafe X has raised USD14.5M and operates 'robot' coffee shops in San Francisco.   It  is running out of money and now has only two kiosks.
Robotic coffee shops have existed for years.   Most petrol stations have them.   And they are one step up from 3 in 1 Nescafe packets or the coffee- flavoured mud that is served up at Tim Horton's (Canadians will know what I am talking about)
Maybe it would have occurred to the founders (and investors) that people prefer barista coffee?
Read about more failing Unicorns on Wolf Street 
Coffee Monopoly in Hong Kong - Invest Now!
Did I mention my coffee shop idea?    What I plan to do is corner the market in Hong Kong kinda of like Welcome and Parknshop have done - but I will focus on coffee.
I will purchase the absolute best beans in the world and I will sell coffee at half the price of every coffee shop in Hong Kong.   I will gut Starbucks and Pacific Coffee and I will dispatch Uncle Russ to the retirement village. 
I will open next to every coffee shop in the city and drive the whole lot into bankruptcy.
THEN - I will up the prices of my coffee to HKD100 per cup.   And if anyone dares to challenge my monopoly, I will open THREE coffee shops right next to them, and sell at half price.
The thing is, I will only need to do that once, because every would-be coffee shop owner will understand that it is futile to take me on.
If any VC's are reading this, you can ping me on Linked In and I will pass along my bank account number so we can get underway.

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Ed 15 mths ago
UPDATE - Softbank Burned for USD375 Million by Zoom Pizza
This is a tough decision.   Idiocracy 2.0 or Zoolander 2.0.   I am going to go with Zoolander because the following situation lends itself to another classic scene reminiscent of the male models engage in a petrol fight.
"Zume did a so-so job delivering its first pizzas in 2016. Although some reviewers on Yelp appreciated the fresh ingredients and speedy delivery—“Clearly better than low end pizza places,” one wrote—several complained about undercooked dough or small amounts of sauce and toppings.
Eventually, Collins’s team gave up on the dream of baking the pies while driving to customers, according to two people familiar with the matter.
The cheese tended to run everywhere as the trucks turned or hit bumps in the road. Instead, the oven trucks began parking in central locations, with runner cars or mopeds transporting the cooked pies"
Read more on Bloomberg  

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Ed 14 mths ago
Another Softbank Company Heads for the Dumpster
OYO Hotels is a bug headed for a windshield.
The budget hotel operator, with aspirations to be the largest hotel company in the world, is slashing its global workforce by 5000 as it gets hammered by:
1.  A business model that makes zero sense and has not a chance in hell of every being profitable 
2.  An environment where it is nearly impossible to raise new money to keep the bonfire blazing due to the endless unicorn fiascos of which WeWork (otherwise known as WeWTF) is the poster child
3.  The tourism hellfire sparked by the coronavirus that is currently circling the planet resulting in epic numbers of trip cancellations.
Read More on Bloomberg  

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Ed 12 mths ago
A pizzeria owner made money buying his own $24 pizzas from DoorDash for $16

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.

Isn't business supposed to solve problems?

Last week's Uber-Grubhub news set off some antitrust alarms for me and got me thinking about the business of food delivery as a whole.
But let me start this newsletter with a story about Pizza Arbitrage.
In March 2019 a good friend who owns a few pizza restaurants messaged me (this friend has made appearances in prior Margins' pieces).
For over a decade, he resisted adding delivery as an option for his restaurants. He felt it would detract from focusing on the dine-in experience and result in trying to compete with Domino's.


But he had suddenly started getting customers calling in with complaints about their deliveries.

Customers called in saying their pizza was delivered cold. Or the wrong pizza was delivered and they wanted a new pizza.

Again, none of his restaurants delivered.

He realized that a delivery option had mysteriously appeared on their company's Google Listing. The delivery option was created by Doordash.


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Ed 12 mths ago
UBER Lays Off 1/4 Of All Global Staff - Closes 45 Offices
Uber is laying off 3,000 employees in the latest round of COVID-19-inspired cost-cutting, CEO Dara Khosrowshahi said in an email to staff.
The news, which was first reported over the weekend by The Wall Street Journal, comes as the ride-hailing company has seen an 80 percent drop in its ride-hailing business as a result of the coronavirus pandemic.

“We have to take these hard actions to stand strong on our own two feet, to secure our future, and to continue on our mission,” Khosrowshahi said in the email.
The move comes less than two weeks after Uber laid off 3,700 employees, or 14 percent of its global workforce. In total, the company has eliminated around a quarter of its staff in less than a month.

In addition to laying off thousands of employees, Uber will also close 45 offices globally. And it will reshuffle some of its divisions, Khosrowshahi said, to “re-focus our efforts on our core,” which he defines as “helping people move, and delivering things.”

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Ed 10 mths ago
Is Anyone Watching Quibi?
The streaming platform raised $1.75 billion and secured a roster of A-list talent, but it can’t get audiences to notice.

Drawing on his deep well of relationships earned after more than four decades in Hollywood, Katzenberg recruited an amazing array of talent:
Sam Raimi would produce a horror anthology; Idris Elba would star in a car-stunts show; Chrissy Teigen would put on judge’s robes and comically preside over a courtroom; Lena Waithe would make a show about sneakerheads; Anna Kendrick would anchor a comedy in which her character befriends her boyfriend’s sex doll; and the Kardashians would do a mock reality show featuring a mythical fraternal twin brother named Kirby Jenner.
Quibi offered a rare chance to make their silliest ideas, like Barkitecture (exotic luxury kennels are made for dogs) and Dishmantled, in which two blindfolded chef-contestants are blasted with a cannonload of mystery-food gloop and must identify the ingredients by taste, then use them to reconstruct the dish. 
Perhaps in a few more years we will have reached the level of Idiocracy where such vapid content will attract hundreds of millions of paid subscribers.   

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