Doordash and Pizza Arbitrage - <AUTHOR> https://themargins.substack.com/p/doordash-and-pizza-arbitrage <comment><USER4> I cut this deal with my neighborhood Italian restaurant!

I texted the owner about being miffed they hadn't told me they were on DoorDash. He replied. They aren't. We compared pricing, and found the prices advertised are way off from what the restaurant charges.

So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.)

Glad to know it's scaling. SoftBank has assembled a unique concentration of stupidity for itself.

<comment><USER5> What was the deal? You pay 5,000, the owner gave you back your 5,000 and kept the 15,000 as profit from door dash? The owner made a massive profit and the shelter gets free food and it didn't cost you anything?

<comment><USER4> > _The owner made a massive profit and the shelter gets free food and it > didn't cost you anything?_

We're in the midst of a pandemic. The restaurant stays afloat, nothing more. The shelter got a donation, and I got promises of comped deliveries and catering.

It cost me $5,000; it cost DoorDash over twenty thousand.

<comment><USER6> This seems very unethical. The fact that you don't like Softbank or DoorDash or the gig-economy or that you're sending pizza to homeless people is irrelevant. The fact is you're exploiting a bug to personally benefit at the expense of investors.

Why wouldn't you apply the same principals of ethical hacking, where you would notify the party of the exploit?

<comment><USER7> It's nog a bug, it's a feature. Doordash uses investment money to evaporate competitors, take over the market and then raise prices for restaurant owners once they gain control. It's a tried and proven concept.

Paying part of the meal is part of that strategy. They know full well that large orders and large amounts of transactions cost them more money and they're betting on nobody actually doing this. They're selling products below the cost of production at this point, something that I would argue should not be allowed in ethical capitalism. Investors know fully well what they're investing in, and of not, they've either not kept their responsibility on reading about the company they're investing in, or the company itself is pulling massive investment fraud.

Play shit games, win shit prices. If they don't want to lose money like this, maybe they should have a business strategy that isn't oriented about purposely losing money to bankrupt competitors. They easily could've set a reasonable limit of say $200 dollars to their cheaper transactions but they chose not to.

Would I go full ethical when finding exploits for an inherently unethical company? Would I dutifully report flaws to companies selling "adult supervision" apps used by controlling spouses? Would I give "bank phishing on demand" websites a 90 day trial period? I don't think so. Making such software is perfectly legal (in many jurisdictions) but is rarely ever ethical. Ethics would need to come from two sides for me to consider responsible disclosure. I have flooded several phishing databases with fake information, got some of them over their resource limit and shut down as well, and I don't feel the smallest bit of regret.

<comment><USER8> Just a note: it's not a tried and proven concept.

Predatory pricing hardly works in economic theory and is working disastrously for a lot of the companies trying it (eg. Ubers financials)

<comment> blaser-waffle Predatory Pricing absolutely works... when you have a working business model and capital to back it up.

Walmart and McDonalds are masters of this approach.

Uber is a long-term play at disrupting cabs/transportation cartels and incorporated self-driving cars into a non-literal roadmap. They're in it for the long play, and even if they hemorrhage money for a while longer it may, in fact, play out in their favor.

<comment><USER8> Walmart and McD don't do predatory pricing -- they just have lower prices while being profitable.

Predatory pricing is intentionally setting loss-making prices to drive out competition to then hike prices to profitable levels.

Notice this isn't what "ultra returns to scale" businesses are doing -- they're just profitably pricing low.

<comment><USER9> American Airlines famously killed upstart after upstart that attempted to fly out of Dallas Love Field. They kept a lease on two gates, but left them unused almost all of the time (AA generally flies out of the larger Dallas-Fort Worth International Airport). Whenever any new company tried to start new service out of Love field, American would open those two gates, match routes exactly to the startup, and charge substantially less, clearly incurring a loss for each plane flown. As soon as the new company was driven into bankruptcy, AA would again shutter those gates, leaving them available to crush the next company that tried to start at Love Field. See, e.g., Legend Airlines.

<comment><USER10> Right, so then the startup should sell nonrefundable tickets several weeks in advance. As soon as American starts flying those routes below cost, move your own planes to a different route, book all your passengers with nonrefundable tickets on the American flights and pocket the difference. As soon as they stop, start flying those routes again.

There is presumably some regulatory burden preventing someone from doing this. Maybe you can't move planes from one route to another so easily etc. But then that's how the company does it. Without that method of forcing the new competitor to incur unrecoverable costs, they can't do it.

It's theoretically possible to have a natural market barrier like that, but in practice to be a barrier that large it's nearly always a regulatory compliance issue. The law says you can't sign up customers on long-term contracts, preventing new competitors from locking in customers at the current price rather than the below-cost price. The law says an ISP has to serve the whole city and not just one neighborhood, increasing the startup capital required by a factor of a hundred. The law prohibits adversarial interoperability, so you can't distribute your own apps unless you can manufacture your own phones.

Most monopolies don't come from natural causes.

<comment><USER11> Can you imagine how furious people would be if they found out their airline put them on their cheaper competitor's flights and kept the difference? Rationality be damned, they'd be out for blood. I can hear the screaming already. Good luck.

<comment><USER12> This happens every day.

<comment><USER11> Really? How do I learn more about this?

<comment><USER12> Codeshare agreements, for example British Airways sells Vueling (budget airline) flights under BA flight numbers.

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER13> This reminds me of a post I submitted a few weeks ago on HN.

A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn't necessarily perishable. He says that the scams work like this:

1\. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by 'customers'.

2\. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished/received some sort of alert/and stopped the transaction.

I am intrigued by this because there is obviously someone on the receiving end that's ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out.

Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc's. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.

<comment><USER14> I bet the person physically receiving the wine/goods is some gullible, naive person who has been social engineered into thinking they're working for a legit business.

It's like the 419 emails where they are trying to "recruit a remote working employee in our finance department" where your job is actually to receive fraudulent ACH wire transfers and send the money to some overseas destinations, go to a bitcoin ATM and buy bitcoin to send to the scammer, etc.

If the scammers are reasonably intelligent and have put a degree of thought into how to not get caught doing this, they'll introduce multiple layers of abstraction between the physical delivery of $450 bottles of liquor, and the point at which that booze is turned into (gift cards, bitcoin, ethereum, etc) and ultimately in their hands. They're probably calculating on taking at least a 20-35% haircut on the revenue before the somewhat-cleaned-up cryptocurrency or gift cards makes it to them.

<comment><USER13> From what I can gather, it is a ring of people behind this operation likely getting a commission for each 'drop' back at base

[https://firstname.lastname@example.com,...](https://firstname.lastname@example.com,-73.9952662,3a,75y,118.31h,90t/data=!3m4!1e1!3m2!1sN51QLh9RTLH_2mI8Vqqh5A!2e0!4m2!3m1!1s0x89c25988011d62a9:0x97fbd69389b47e3?sa=X&ved=2ahUKEwj1gc- NybzpAhXzknIEHQx6DXEQxB0wAHoECAsQAg&cshid=1589776133008319)

<comment><USER15> Told the police about it? Someone would be eager to chase that case.

<comment><USER16> Cops aren't ever eager to take on cases.

<comment><USER13> Yeah, they aren't interested in pursuing this. Phish on.

</comment></comment></comment></comment></comment></comment><comment><USER17> I love this story, especially about ordering dough pizzas.

It reminded me of this twitter thread: [https://twitter.com/meslin/status/1225834920611848192?lang=e...](https://twitter.com/meslin/status/1225834920611848192?lang=en)

In which the author tries to order the Uline "box of boxes", a box of twenty- five (25) 6" x 9" x 6" boxes, only to have Amazon deliver a 6" x 9" x 6" box containing some random product. The collection product from Uline has the same bar code as the box itself, so the pick up robot would scan the shelf for the box, find something that SOME OTHER VENDOR had put into a 6x9x6 Uline box, and pick that to satisfy the query.

Adding automation to a process that any human with visibility to the whole process would say, "Wait, that can't be right." ends up in misbehavior.

<comment><USER18> The automated system _should_ say "weight, that can't be right". Works fairly reliably in supermarkets, especially if you allow a bigger margin of uncertainty on sku weight. Or verify the volume/shape - or both, like volumetric weight that shipping companies use. I'm guessing amazon has some system to automatically assign boxes based on the dimensions of stuff that's being picked.

<comment><USER19> > Works fairly reliably in supermarkets

No it doesn't.

Not just because they can be badly calibrated, but also because the range of weight they have to deal with must make it hard to manage any sane range.

The only SCO I've seen doing a decent job at dealing with weight use a binary check ("was there any product at all added to the to total weight of the basket ?") and they still miss products like lollipops or anything too light to pass the range.

Sure much more reliable system could be built, especially at Amazon's engineering scale. But so far supermarkets are mediocre at best at this game.

<comment><USER20> Works great in any supermarket I've been to with a self-scanning systems and that's been the standard in my country for many years now.

<comment><USER21> "Unexpected item in bagging a area" gets me every time.

<comment><USER20> It used to be like that the first couple of years but the newer systems never give me that and feel very accurate.

<comment><USER22> I used to pickup lunch from Tesco most days. Occasionally you'd find one item that must have been weighed wrongly at the input stage. It would cause an issue every time you checked out. Usually got fixed within a couple of days.

I wonder if they built in correlation of items which on a mis-weighed basket.

</comment></comment></comment></comment></comment></comment></comment><comment><USER23> Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less)

But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.

What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)

If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.

Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.

What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.

<comment><USER24> > The fact that Doordash scrapes prices, and apparently doesn't verify... how > does this happen?

It kind of happens by default if your goal is "growth at any cost".

The video you mention is likely this one, and it's actually even more extreme: [https://www.youtube.com/watch?v=bqPARIKHbN8](https://www.youtube.com/watch?v=bqPARIKHbN8)

The fake restaurant in their garden shed, _which never took customers or delivered any food_ , climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.

<comment><USER25> While that is a good video (and demonstrates manipulation of TripAdvisor), I'm pretty sure the commenter means this one: [https://www.youtube.com/watch?v=k47u9tduwb8](https://www.youtube.com/watch?v=k47u9tduwb8)

This video features (a) delivery and (b) reimbursement, both mentioned in the original comment but not present in your video.

</comment></comment></comment><comment><USER26> After reading more about how these delivery companies function, we stopped using Door Dash a few days ago. We found it very convenient during the pandemic, but we like our local restaurants and we thought we were helping them out by ordering delivery pretty often. So now we just order it as take- out and then we go pick it up ourselves. Screw Door Dash.

<comment><USER27> We came to the same conclusion a couple weeks ago. As a bonus, you're eliminating a person/environment from the loop (the delivery driver & their car), thereby reducing your Covid-19 attack surface.

Edit: I have also both read about & seen firsthand food delivery drivers with someone else in the car. It's almost certainly someone from the same household, but still, that's potentially yet another unknown, potentially untraceable person in the loop.

<comment><USER28> I've had amazon deliveries where it appears the whole family was in the car. Kind of heart breaking to think that a family of 4 has to drive around so I can get my AA batteries same day. We need drone deliveries.

<comment><USER26> Can I choose option C? :). I don't want drones buzzing around my neighborhood. I am 100% willing to pay for _professional_ delivery drivers.

To be fair, I guess, the days of random people driving junky old compact sedans filled to the roof with Amazon packages seems to be gone in my area. All the Amazon deliveries are now done by a guy driving a large Sprinter van painted glossy gray with Prime written on the side.

<comment><USER28> I'm in Canada so we don't yet have the Amazon branded delivery drivers. In my city, many Amazon packages are delivered by a company called Intelcom. It's people driving around their own cars, delivering packages.

</comment></comment></comment></comment></comment><comment><USER29> Very important note (near the bottom of the post) on why Doordash did what they did:

> Note 1: We found out afterward that was all the result of a "demand test" by > Doordash. They have a test period where they scrape the restaurant's website > and don't charge any fees to anyone, so they can ideally go to the > restaurant with positive order data to then get the restaurant signed onto > the platform.

<comment><USER30> It doesn't fully explain why they priced a $24 pizza at $16. I wouldn't be surprised if they're subsidizing purchases, but just skipping fees doesn't explain that.

<comment><USER31> Web-scraping is hard man, especially with mom-and-pop restaurant websites that are often exported straight from microsoft word or some ancient "platform" that got reconfigured 20 times over.

As article pointed out it picked up full-toppings pizza as plain cheese.

<comment><USER32> Surely it's cheaper to just pay someone to do data entry at that point.

<comment><USER33> Cheaper, less sexy, and doesn't justify the jobs of several dozen engineers, a few managers and a director.

If you're the director, which would you go for?

</comment></comment></comment></comment></comment><comment><USER34> Wow, that was great. And honestly good on them for profit-taking on this arbitrage.

The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here.

When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably doesn't have the best grasp of English (no offense intended here). I just couldn't be bothered.

What changed was Seamless came along and suddenly I could order food and not have to talk to anyone. It was (and is) amazing. In NYC at least the restaurants are still handling deliveries (with Seamless anyway) so there's still that control. Seamless/Grubhub seem to charge exorbitant fees but that's another issue.

As an aside, this is a key factor in my use for Uber/Lyft: the fact that the process is _seamless_ (pardon the pun). You order a car without talking to anyone, it arrives and it drops you off. There's no awkward payment step. No dealing with a machine that's broken. No card skimming. It just reduces friction.

This is the promise of food delivery platforms: they benefit the consumer in terms of discovery, convenience and the seamlessness of ordering and payment. You might point out that people get cold pizza because UberEats drivers don't have the bag and you're right. But that's not an unsolvable problem.

Oh and this is the first I'd heard of Grubhub replacing Yelp phone numbers with their own call center. More evidence that Yelp is a cess pool that needs to be flushed. It's sad Grubhub is engaging in this. We have enough rent- seekers. Thanks anyway.

<comment><USER35> I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve?

I also don't know how "not having to talk to someone" is a perk.

<comment><USER36> > I also don't know how "not having to talk to someone" is a perk.

For us introverts it is.

<comment><USER37> It is indeed a perk for an introvert like me, but having to chose between empathy for another human and my discomfort, I prefer the former.

Yes, it will cause me anxiety to talk to someone, and go pickup an order. But if I was to avoid that and use an app, I'd be dipping my hand into their pockets and stealing money for a middleman. So I end up calling my preferred restaurant and picking it up myself.

<comment><USER38> I also struggle with phone calls (or even ordering in house). Apart from the empathy side that you mention my reasoning is also that confronting the anxiety and getting used to it is the only way to manage it.

I rather face the discomfort from time to time and learn to handle it than being paralised in situations when there's no other way and you can't avoid it.

</comment></comment></comment></comment></comment><comment><USER39> Just some back-of-the-napkin math if you wanted to do this "right".

Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.

That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).

When I lived in DC, driving _anywhere_ could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.

Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.

<comment><USER36> > Domino's and lots of other places do it, but they probably aren't paying > $15/hour and they also have one central location and more predictable > demand.

One thing to note about Dominos is that people pay at the door, so they would need to look the delivery guy in the face as they stiff him on the tip. Not required for the delivery apps and fewer people tip there.Because people tip, you can pay lower wages.

I had a relative who worked as a Chinese food delivery guy for a while and he did it exclusively for tips. The restaurant did not pay him at all.

<comment> jon-wood In the UK tipping delivery drivers is basically unheard of, except maybe if they're delivering on Christmas Day or something. Despite that people I know who've worked as drivers for Dominos say its one of the best unskilled jobs available, the pay is good, it comes with some benefits if you're working enough hours, and they generally take care of their employees.

<comment><USER40> > In the UK tipping delivery drivers is basically unheard of

For you it might be.

I tip delivery drivers and I received tips when I worked. Tips made up >20% of my pay.

Rich people generally would not tip, poor people would.

<comment><USER41> Did you pay income tax over those tips?

<comment><USER40> Are HMRC paying you for this comment? :)

</comment></comment></comment></comment></comment></comment><comment><USER42> This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot.

Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments?

From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.

<comment><USER36> DoorDash is winning in terms of market share for one thing.

[https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in- th...](https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-the-food- delivery-wars-in-2019.html)

I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.

<comment><USER43> I have Dashpass free from my credit card. Its not the same as ordering from directly from restaurant as Doordash marks up the prices 10% to 25%. I always thought Doordash was a terrible deal without it, you're paying marked up prices, delivery fee and a tip. Doordash is winning because they have the widest selection of restaurants since they are using their own drivers compared to Grubhub. Not sure why Postmates and UberEats failed to capture more market share since they offer the same service.

</comment></comment></comment><comment><USER44> This is the sad state of VC funding in this day and age.

I can't help but wonder if movie theaters could have exploited a similar loophole with MoviePass before they went bankrupt. Something like this:

1\. Movie theaters buy up MoviePass subscriptions

2\. They use those subscriptions to pick different movies to see every day at their location

If they picked 30 movies a month that would be approximately $450 a month in revenue (at $15/ticket), $440 of which would have been pure profit.

<comment><USER45> Theaters still have to report tickets sold and kick back roughly 50% of the ticket price, so you would need to cut that revenue number in half. Also I don't remember the exact timeline for Moviepass's various restrictions, but there was a limit on the upside at various times due to policies like preventing users from watching movies multiple times (which would generally cap the max tickets below 30 since most theaters don't get 30 new movies a month), limits on how many tickets can be purchased for a single theater that would lock users out from using that theater for the rest of the day, and users being suspended for "fraud" that was often reported to be just heavy use.

</comment></comment><comment><USER46> > The owner insisted the driver take the pizza in a heated bag so the customer > didn't get cold pizza, but leave an ID so the driver would be compelled to > return the bag.

>Doordash was causing him real problems. The most common was, Doordash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold

What this means is that the restaurants really care about their customers. The delivery really really don't care.

I spoke with a few restaurant owners in NYC and they all universally hate the delivery companies. The restaurants are charged anywhere between 30% - 40% which is a ridiculous amount.

There's another company in India called Swiggy. I used to travel to India and would frequent a few bars in Bangalore and Hyderabad. All of them absolutely hated them for the same reason.

</comment><comment><USER47> This reminds me of the SliceLine episode of Silicon Valley Season 5. [https://www.youtube.com/watch?v=Txl90NEl92U](https://www.youtube.com/watch?v=Txl90NEl92U)

Its even better, DoorDash is doing this without even switching boxes.

<comment><USER48> So true. So many of these apps need to do some basic math and not "try and make it up with volume" if their gross margin is negative...

</comment></comment><comment><USER49> I don't understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food.

Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

<comment><USER50> I've spent many thousands of dollars on app-delivered food over the last few years (Foodpanda, Uber Eats, Grab Food, Lineman, and Deliveroo). I use the apps because:

\- GPS tracking of the driver, and helpful notifications

\- Discovery of new restaurants

\- Detailed menu (and occasionally useful suggestions of menu items)

\- I don't have to create a new account or fuck around with giving some restaurant my credit card

\- I don't have to speak to a human

I'm hungry right now. I can pick up my phone, and in 30s, without needing to do anything other than click on the food I want to eat, in 25m I will have a human with food at my building's lobby.

<comment><USER51> That last bit only applies in dense downtowns. In the Bay Area, if I'm hungry _right now_ and that happens to be roughly dinner time, I'm waiting 50-70 minutes for a food delivery.

<comment><USER50> My guess is that your app of choice can show you estimated delivery times for different restaurants based on distance and avg preparation, adding yet another reason for using

<comment><USER51> Yes. I'm just saying that the majority of restaurants in the greater bay area will have lengthy delivery times during weekday dinner hours... the exception being if you order from a place physically close to your delivery point.

</comment></comment></comment></comment></comment><comment><USER52> Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.

<comment><USER53> The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity.

Thus the "monopoly" you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors.

This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery.

It's frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors.

GrubHub / DoorDash / etc., are just more of the same.

You can't take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are.

Artificially increasing the supply of something that's fundamentally not sustainable at that price just will not work.

<comment><USER54> It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - <USER2> the entire planet.

It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.

<comment><USER55> Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.

<comment><USER54> Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.

</comment></comment></comment></comment></comment><comment><USER56> This quote summarizes it all for me: "Amazon just bailed on restaurant delivery in the U.S."

If amazon, a "real" business with a reputation built on ruthlessly cutting margin can't get it to work why would anyone else?

<comment><USER57> I mean, think about it – Amazon can't run it like their current delivery service. They can't mark it as delivered, but then not deliver it until the next day. They can't drive up to the curb, throw it over your fence and then drive off. They can't claim to have delivered it but just not bothered. They can't say they're giving you a pizza from Pizza Hut and then actually give you a pizza some guy made in his basement. In other words, they can't run it like their current business.

<comment><USER56> Yea for sure. At the same time they did acquire Whole Foods and are doing food delivery through prime. They do own the warehouses here rather than acting as couriers but I would not be surprised if they just found out the economics (especially given their strengths) to just not work out for them.

</comment></comment></comment><comment><USER52> The restaurants need to work through their own trade organization where they band together and push out the delivery businesses that are costing them money, and then allow delivery companies to bid for their business.

<comment><USER58> In the end the customer needs some single easy interface where to order food from. It is kind of difficult to see how this could work in a way where restaurants would dictate how customers prefer to order.

<comment><USER59> Why doesn't Google build this as an extension of Google Maps?

Charge restaurants no fee for the platform, if they provide their own drivers. Charge restaurants money through Google Ads to promote their restaurants for higher results.

In a few years, get Waymo's driverless cars on the game.

<comment><USER60> Google is already facing antitrust lawsuits from the EU, DOJ and US states, and you want them to add more fuel to the fire?

</comment></comment></comment></comment><comment><USER61> In another form of arbitrage with "substitute goods", we've noticed restaurants with completely different menus on delivery sites than directly. We ordered anyway and the packaging was totally different. Someone is fulfilling orders for a fancier restaurant with generic food. I ended up throwing it out because I wasn't comfortable with it.

</comment><comment><USER62> The real arbitrage opportunity is for a competitor to DoorDash to place orders through DoorDash, and pay the delivery person a small fee plus let the delivery person collect the DoorDash fee. You could scale this up to huge numbers.

Curious if doing so would survive a lawsuit. On the one hand, DoorDash could argue that it's unfair competition, but only by admitting that their deliveries are priced too low, which itself is unfair competition. I don't know how unfair competition is regulated.

<comment><USER63> Or serve a different version of the pizza place's website to the Doordash scraper with lower prices?

<comment><USER64> Wouldn't be too hard to do, use a PNG for your human menu and embed a "door dash" priced menu below.

</comment></comment></comment><comment><USER65> I've noticed the opposite phenomenon at a popular restaurant in Austin. The menu through DoorDash is priced higher than the normal price. Curiously, the restaurant's own, in-house delivery system is the same price as dining in. This is when I stopped using DoorDash...when I discovered that using the restaurant's own delivery system is just as easy and maybe cheaper.

<comment><USER66> Which restaurant? (I live in Austin)

<comment><USER65> Tarka

</comment></comment></comment><comment><USER67> it will be interesting to see the impact of SoftBank withdrawing on consumption patterns of city-dwelling professionals. So much of their daily life is subsidized courtesy of Son

</comment><comment><USER68> _> How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?_

"(…) What sphinx of cement and aluminum bashed open their skulls and ate up their brains and imagination?

Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks! (…)"

[https://www.poetryfoundation.org/poems/49303/howl](https://www.poetryfoundation.org/poems/49303/howl)

</comment><comment><USER69> "Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble?

How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion "delivery is a shitty margin business" when discussing this post.

You have insanely large pools of capital creating an incredibly inefficient money-losing business model.

It's used to subsidize an untenable customer expectation.

Third-party delivery platforms, as they've been built, just seem like the wrong model, but instead of testing, failing, and evolving, they've been subsidized into market dominance.

The more I learn about food delivery platforms, as they exist today, I wonder if we've managed to watch an entire industry evolve artificially and incorrectly."

A contrary view, from 4 days ago, arguing third party food delivery market is not created by VC, the startups are not over-funded and that they are delivering splendid returns to investors.

[https://news.ycombinator.com/item?id=23171915](https://news.ycombinator.com/item?id=23171915)

</comment><comment><USER70> > _Now suddenly each trade would net $75 in riskless profit ⇒ $240 from > Doordash minus ($160 in costs + $5 in boxes)._

If you do this over and over, obviously you can use the same dough and boxes, so costs are just what you pay Doordash.

</comment><comment><USER71> What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants

<comment><USER72> Chipotle has white labeled DoorDash for delivery in my area. If I open the Chipotle app and make a delivery order, the "track your order" screen says it's "Powered by DoorDash."

<comment><USER73> > Chipotle has white labeled DoorDash ... it's "Powered by DoorDash."

Disclosing who's powering it is the _opposite_ of white labelling.

</comment></comment></comment><comment><USER74> Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

<comment><USER75> It's an interesting question. I suspect there's some trademark arguments to be made regarding confusion as to who is providing the product and service and whose failures any mistakes reflect. That kind of attribution, and the product quality it promotes, is one of the central purposes of trademark law. But there's also the first sale doctrine--that after you sell your physical product, people can do with it as they please, including resell. I suspect it comes down to how clear Doordash makes it that the restaurant is not involved in the service, but I'm not an expert in these areas, and this is obviously not legal advice.

<comment> xkcd-sucks All the regulation around food and beverage sales stands to the contrary - Normal people can't resell liquor, nor resell takeout food from a licensed restaurant.

Relatedly, it's surprising that delivery times aren't monitored because of (totally appropriate!) food safety laws on holding food at proper temperature

<comment><USER76> > Normal people can't resell liquor, nor resell takeout food from a licensed > restaurant

That's actually good and a bit surprising. I find it quite disingenuous that DoorDash lists restaurants that haven't agreed to do take-out or delivery. Not only that by having a call center call into a restaurant it's just making the experience more expensive.

There is one restaurant in SF that was going to push for legal action. [https://www.eater.com/2020/1/29/21113416/grubhub-seamless- ki...](https://www.eater.com/2020/1/29/21113416/grubhub-seamless-kin-khao- online-delivery-mistake-doordash)

</comment></comment></comment></comment><comment><USER77> > the only viable endgame is a promise of monopoly concentration and increased > prices

This is it! I've been involved with Foodpanda and Delivery Hero. The name of the game is, indeed, becoming the #1 player in the market. The tool of the game was M&A. That's what you see everywhere with Delivery Hero, Takeaway Group, Just Eat trading positions across the world. They are effectively cutting and slicing the world into countries and regions where each of them is #1 and the others don't compete. Such "collusion" creates incredibly profitable markets, as the #1 doesn't need to share 30% of top-line with Facebook and Google, can charge a 15% take rate to restaurants AND additionally, a delivery fee to consumers.

</comment><comment><USER78> >I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.

If that's really what happened (sounds plausible) that means that you should be able to trick DD even more by designing a website specifically in order to confuse the scraper. Have some cheap dish listed at $50 but in a way that would be scrapped as $5 or something. As long as a human would have no issue parsing the menu and understanding the actual price I don't really see how you could get into trouble, it's DD's fault for having crappy parsers.

<comment><USER79> I'm not sure I would call a scraper crappy if it was fooled by a site deliberately designed to fool it. It would be like calling somebody's vision crappy if they were fooled by an optical illusion.

Scraping can be an adversarial exercise, but not typically in that manner.

</comment></comment><comment><USER80> Keep reading the level of skullduggery these companies go through and keep saying to yourself "Tech is a meritocracy."

Yeesh.

<comment><USER36> Merit for businesses is defined by consumer acceptance and consumers love these apps.

<comment><USER81> It's because the consumer experience is so subsidized. Consumers would also love an app that sends them $1.10 for every $1.00 they spend in it.

</comment></comment></comment><comment><USER81> This whole sphere of economic activity is a gigantic farce. It would be hilarious if it weren't so pestilent. The only upshot I can see is that it feels like people are finally catching on to it.

</comment><comment><USER82> >> 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.

These might be stupid questions, but... can this go on forever? No, right? Is there precedent for this? How long of a horizon do companies like this expect to be a money toilet? What happens to everyone else if companies like this collapse? Why hasn't it happened yet?

<comment><USER83> The foundation is immense "VC" funds that are throwing money at (often "unicorn") businesses that are using the money to grow their currently unprofitable businesses. The premise is that, once they are big enough to drive all the competing businesses out of business, they will be able to transition to being profitable.

The poster child of these "VC" funds is Softbank.

The foundation is crumbling. [https://www.cnn.com/2020/05/18/tech/softbank- earnings-intl-h...](https://www.cnn.com/2020/05/18/tech/softbank-earnings- intl-hnk/index.html)

When these companies collapse, the investment funding them will have to write down the losses the "unicorns" have built up, and there will be a lot of investors that will be sharing in that hurt.

</comment></comment><comment><USER84> > Amazon just bailed on restaurant delivery in the U.S.

Yeah and Amazon just plugged £500m into Deliveroo in the UK. They are going for UK food delivery market and potentially Europe with that investment. Deliveroo is pretty amazing.

1\. I can track my driver in real-time 2\. Communicate with drivers via Whatsapp 3\. Great range of resturants 4\. Super convenient. Order comes usually within 30 minutes

<comment><USER85> Are they? They were in Munich but then pulled out. Looks like only Lieferando still exists here, as far as I can tell.

<comment><USER84> [https://uk.deliveroo.news/news/amazon-leads- series-g.html](https://uk.deliveroo.news/news/amazon-leads-series-g.html)

But it seems there has been some issues getting the funding past the CMA – [https://www.gov.uk/cma-cases/amazon-deliveroo-merger- inquiry](https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry)

I believe you're correct. Deliveroo did pull out of Germany.

</comment></comment></comment><comment><USER86> I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips?

Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?

<comment><USER36> I assume it is the 30% they take from the restaurant.

<comment><USER59> 30-40% from restaurant + up to 35% in promotional fees from restaurant + delivery fees + service fees from the customer.

<comment><USER36> The promotional fees are on top of the 30-40% for the order?

<comment><USER59> Yep - this is optional though, it's essentially an ad service.

</comment></comment></comment></comment></comment><comment><USER87> Interesting. I always suspected this to be true but not the extent, especially the overall profits generated by food delivery cos. For e.g. one of India's largest delivery co reported a loss that was double the revenue! [1]

The other way to look at this is to think of it as a global capital transfer mechanism, from the super rich to the "real" economy. Sure, it is not sustainable in the long run but while it lasts there is significant transfer of capital which appears difficult to otherwise do, thanks to resistance to capital taxes. I really do not know what to make of the incentives for fraud though.

1 - [https://yourstory.com/2019/12/foodtech-startup-swiggy- loss-r...](https://yourstory.com/2019/12/foodtech-startup-swiggy-loss-revenue- ilfs-financials)

</comment><comment><USER88> Initially I thought this may have gone the other way, setup a business with no physical location, get on Doordash, and when you get orders you place orders at other restaurants not on the platform, then pick up and deliver their food, while charging some kind of markup on their prices.

</comment><comment><USER89> Is there really a monopoly play here for food delivery?

Granted, DoorDash can possibly be used for other kinds of delivery, like medicine and groceries.

It seems the cost of labor and transportation is too high to make it feasible.

But the actual play, might be robotic. To first take over the manual market, and then, conduct research into automated delivery services, like aerial drone delivery, or robotic dog delivery.

Once that technology is viable, then phase out the human delivery people, and replace them all with robots.

I actually never thought something like this would ever be economically viable. And then one day, a pandemic hit the entire world.

</comment><comment><USER13> Oh, one other interesting thing I've heard happens regularly. Couriers have multiple cellular devices. The second account usually get batched orders from the same restaurant they are already at which leads to a host of problems for the customer and restaurant. This leads to the order that was ready first to just sit and die in the courier bag while they work to maximize their earnings. Couriers sometimes leave before the second-order is ready and return well AFTER it's been ready to retrieve it because they are out and about delivering other orders.

<comment><USER90> With location services, should be simple to detect this occurring. The apps could do something about it, if they wanted.

</comment></comment><comment><USER91> I don't see why it's hard.

Probably because Grubhub and Doordash are approaching this with the "holistic mindset" of a "visionary" mind like the WeWorks founders. Hence we get behaviour like this which is probably illegal in multiple ways.

Provide your work at a fixed price per order. Or you might take a (transparent, explicit, of those who actually _signed up for the service_ ) commission, fair enough.

Providing a good service is hard on itself, but it won't distract you from all the other crap and won't alienate the people that actually make your service work.

</comment><comment><USER92> My initial response to this headline was anger as I assumed that the arb would inevitably screw over the small business owner. That anger quickly turned to glee upon reading the first couple of paragraphs!

</comment><comment><USER93> Isn't this fraud? What's unclear to me is if it's illegal, or just unethical.

</comment><comment><USER94> Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).

Once upon a time you started something and hoped to figure out how to scale and find product/market fit. These days with the cloud it's become trivial to scale almost anything that's not building cars or spaceships.

All these other BS startups have no hope for profit and no end game in sight. It's kind of pathetic.

<comment><USER36> > Honestly at times it seems like all these Uber for this or that, DoorDash > and whatever other logistical services were created with the premise of just > keeping people busy and making them feel like they have a job (one that > often costs them money to work at).

Are you referring to customers or restaurants or drivers?

<comment><USER94> I'm referring mostly to drivers, but programmers and basically everyone else in the chain as well.

Let's throw a stupid amount of (not our own) money and manpower at programming a solution to a well defined problem and then grab a bunch of low wage workers and milk them. We will keep everyone, engineers, drivers, restaurants busy all the time to make it seem like we are making progress but in reality we are just burning time, money, oil and the last mile workers to the ground.

With all this money being thrown around you would think they would be able to engineer a solution wherein instead of committing identity theft (which is essentially what the author describes) and exploiting workers, they are actually solving the problem in an honest way which also provides an equitable wage.

Enough with the unethical bullshit. If you have to pose as the business to "help" a business all while exploiting cheap labor you aren't solving a problem and you don't have a right to exist, no matter how much money you got from SoftBank.

</comment></comment></comment><comment><USER95> One thing I'll point out is that we don't actually know if delivery services (for restaurants such as pizza places that the article mentions) are profitable period. It's entirely possible that businesses offer delivery at a loss (i.e. cost of delivery is more than the delivery fee, so it hurts their overall profit margin) because they expect the increase in revenue due to added convenience for customers to offset the lower profit margin.

<comment><USER36> Companies like Dominos are mostly delivery, so I would imagine they must profit.

</comment></comment><comment><USER96> How does the author know it isn't the driver that will get the short end of the stick here? To put it differently, what would happen if the restaurant mistakenly charged the driver who is picking up the food more than listed and then the driver pays that mistaken amount with Doordash's credit card? Will they be penalized/fired once Doordash discovers the accounting error?

<comment><USER97> It would be illegal to penalize the drivers, at least financially. I doubt the driver is given the choice of not buying the food based on price. If Doordash did have some way to penalize them, they could just bounce over to Grubhub or others. Doordash is advertising food at a given price - they must sell it at that price, regardless of price of purchase.

</comment></comment><comment><USER98> I remember the time when I self referred the shit out of doordash, caviar few years back only to stop because I started feeling bad about it.

</comment><comment><USER99> I'm surprised a guy in finance can't see the potential efficiency gains and economies of scale a delivery company could have over all restaurants having to operate their own delivery service. I don't know about DoorDash specifically (not in the US) but it seems obvious to me that those services are here to stay and they can be run profitably.

</comment><comment><USER100> Reminds me of the discussion in 'The Bitcoin Standard' about zombie industries directly or indirectly build on top of unsound monetary policies. One could argue this capital burning colossi exist by virtue of access to a populations purchasing power / wealth. Instead of multiplying productivity and increasing living standards they stall progress.

</comment><comment><USER101> Perverse incentive drives odd behaviors. People would have shipped bricks to themselves if the arbitrage warrants it.

</comment><comment><USER102> The part of the article that shocked me was the Google hijacking. It seems Google is allowing it as a policy. Why screw these poor restaurants?

[https://support.google.com/business/answer/6218037](https://support.google.com/business/answer/6218037)

</comment><comment><USER103> This is so asburd it feels like a story in bad movie. We have pushed finance & capital so far into the realm of fiction that it doesn't really make sense anymore.

Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale.

How did the startup/VC world become so entangled in all this bullshit capitalism?

<comment><USER104> Same way they did in the 90s, lots and lots of dumb money.

My son and i have a tradition when my wife attends a nonprofit board meeting every other month. She leaves and we order some five guys on doordash while we play a PlayStation game. I use a new email every time and usually get free delivery and a coupon. Doordash loses, Five Guys loses, and we get some dude to deliver a burger.

<comment><USER58> Though according to the article only doordash loses here, not fove guys. Doordash pays the difference netween menu and paid price.

</comment></comment></comment><comment><USER105> Where I live in India, nearly 90% of the restaurants and hotels get their food from one place at rock bottom price.

And the restaurant/hotel the customer is dealing is responsible for arranging delivery and serving.

</comment><comment><USER106> Something just doesn't make sense with this story. Ok, it's possible doordash has accidentally mispriced a pizza. But why would they misprice a pizza but then pay the correct price to the restaurant?

<comment><USER60> Because the person calling the restaurant to place the order gets the correct price. Why isn't it detected and fixed then? Probably a mix of bureaucracy and undermotivated employees; the call center people don't really know or care if DD is making a loss on purpose or not, even if they know how much the final customer actually paid.

</comment></comment><comment><USER107> Nice - this made BBC news! [https://www.bbc.co.uk/news/technology-52724062](https://www.bbc.co.uk/news/technology-52724062)

</comment><comment><USER108> > _That's what is so odd to me about third-party delivery platforms. The > business of food delivery clearly is not intrinsically a loser. Domino's > figured it out. Every Chinese restaurant in New York City seemed to have it > figured out long before any platform came along. My friend is figuring it > out._

Domino's and Chinese are _very_ specific high-margin businesses. Basically the _highest_ -margin restaurant businesses.

That doesn't, in _any_ way, prove that food delivery in general is _not_ a loser. In fact, if you have to specifically pick the two highest-margin examples as your examples... maybe the industry in general _isn 't_ all that sustainable.

</comment><comment><USER109> It's kind of hard to imagine how DoorDash execs are going to explain to those investors who find this on HN / elsewhere and ask them what the eff is going on ?

</comment><comment><USER110> Since at a high level this seems like mis-assigning VC funds, could someone who does this arbitrage eventually be sued by Softbank to recover VC funds?

</comment><comment><USER111> I don't get the opening story. If his restaurants weren't delivering, who was Doordash picking up from? Did they just get doggy-bags to go?

<comment><USER112> yes

</comment></comment><comment><USER113> There's an episode of Silicon Valley where Pied Piper bankrupt an unrelated start-up using this method so that they can hire their developers.

<comment><USER114> Yep, this is the real world Sliceline.

</comment></comment><comment><USER115> Saying that delivery can work for most food in most places just because dirt cheap pizza and super dense NYC can do it, strikes me quite naive.

</comment><comment><USER116> Sounds like the driver is the loose end. I wonder if the author considered becoming a Doordash driver just for the arbitrage transactions.

</comment><comment><USER117> so they have two possible endgames:

1) find a sucker (aka retail investors) that buy a loss-making stock

2) become a monopoly and squeeze everyone to get higher margins (kind of how booking.com pushes hotels to increase their standard prices so that booking can offer a discount; which you also get if you call the hotel itself).

</comment><comment><USER118> I said this in another post about Grubhub but similarly to this article I really don't get it. Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions.

Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?

<comment><USER119> Meal delivery doesn't just exist because people are lazy. It has been around a long time via the much more inefficient process of calling a restaurant that you already knew about, having someone spend time with you on the phone getting your order and credit card # and then dispatching a delivery person they employed directly to deliver the order to you.

<comment><USER120> My experience is that calling for pizza is faster and easier than using an app.

</comment></comment></comment><comment><USER121> Some background -

In my past life I started Crazymenu.com The idea initially started as a central place to host all the restaurant menus with the idea of eventually expanding it to SAAS tech layer for everything restaurant related. The idea ultimately pivoted into google maps for restaurant menus. Meaning companies would just pay me a service fee to incorporate these menus into their services (ordering food, review sites, restaurant apps, etc.)

I self-funded the idea and after my first beta launch (2006, I believe) I was pitching an angle investor (Mr. X) who years later became an early investor in Doordash.

Right away, Mr. X said why not go into online food ordering business and then may be do delivery, etc. I never liked the idea of dealing with all the transaction headaches and told him I wasn't sure about the idea and dealing with so many fragmented restaurant softwares. From what I could gather attending a few National Restaurant Association events in Chicago and speaking with lots of restaurant owners, I noticed two categories. Very small mom and pop operations, or small medium chains. All the small to medium chains already had invested into some technology layer (some were closed off) and unless you could integrate with them, there was no interest to working with you and the smaller mom pop entities were either too busy or they were so bombarded by all types of tech solution offerings that they didn't want to listen to you.

Years later when Mr. X had invested in Doordash I had private chat with him.

I told him in my opinion, restaurant delivery is restaurant business. Meaning that it'll be very hard to compete. On top of one huge exception. You never crave DoorDash, you crave pizza or burger or Chinese food.

When the OP says Dominos figured out the model as did lots of family owned Chinese restaurants. I can understand that.

I believe this is a very vertical business. For one thing it's mostly around the brand, and the brand experience. This is the same reason Starbucks avoided franchising (if you think about it, DoorDash is a bit like franchising a delivery business) as did In-N-Out. These smart people had already figured out the nature of building a food brand experience.

Getting a cold food, soggy pizza destroys the brand.

This is very different than Amazon or UPS delivering books. Because delivery of books or jackets doesn't impact the brand at the same level it does with food. Not to mention when you don't deal with risk of food getting cold you can really scale delivery by mastering routing and all the different things UPS can do with scale.

Ultimately, we either see a very vertical experience. Uber buying several popular food category chains (pizza, burgers, fried chicken, etc.) or the reverse, PEPSI's parent company buying UberEats/Grubhub or if there is a massive consolidations and Uber or Grubhub can charge in an economically sustainable way.

</comment><comment><USER122> So funny how this mirrors the pizza app thing from HBO Silicon Vally.

</comment><comment><USER123> I think I finally understand "growth hacking".

</comment><comment><USER124> Maybe they should rebrand as sliceline.

</comment><comment><USER125> i know no lawyer wants to provide conclusive opinion here, but this has to be illegal

</comment><comment><USER126> > If capitalism is driven by a search for profit, the food delivery business > confuses the hell out of me.

The modern Silicon valley venture capitalism is not about operational profit, it's about company valuation.

</comment><comment><USER127> "Isn't business supposed to solve problems?"

This is a common misconception... Capitalism is only designed to solve one problem: maximizing shareholder value.

</comment><comment><USER128> > _How did we get to a place where billions of dollars are exchanged in > millions of business transactions but there are no winners?_

Simple. Capitalism is broken.

In order for capitalism to work, there has to be a meaningful profit/loss _incentive_. People who are doing the work must get rewarded if the work is done well and penalized if the work is done poorly.

We already started moving away from this many years ago with the growth of large corporations. When was the last time that you at your "capitalist" firm were aware of revenue and costs for the things you were working on in a more- than-superficial way? When was the last time you saw someone make a buy- vs.-build decision based on the actual numerical cost of the employees needed to run the project and not just handwaving? (When was the last time you even knew what the cost of the employees on your team was, given the widespread taboos about compensation?) When was the last time that someone who said "I saved the company X million dollars" got some proportion of those X million dollars? When was the last time that someone who needlessly made the company spend X million dollars in the first place paid for it?

The function of a big company is to abstract away the cold, unfeeling invisible hand of the market and protect people/groups who make unprofitable decisions. This is actually totally fine and good in the short term - <USER3> makes consistently good decisions, and insurance is a thing for a reason. You want people to take bigger risks on behalf of the company than they're willing to subsidize with their own paychecks, which is _why_ individual artisans and professionals team up to form a company in the first place. But it's grown past that. As the article points out, some regional director somewhere is able to _convince other people at the company that their work is profitable_ \- with no hard link to whether the work is, in fact, profitable. And that scenario is entirely plausible for all of us; it's not specific to this one company in any way. If you're in the unlucky position where both you want to draw good charts and everyone around you wants to see good charts, there's no real way to figure out if you're wrong unless the company as a whole is dying, and there might be a host of reasons why it's not dying that have nothing to do with your decision-making.

And now venture "capitalists" have decided that this model needs to scale out from protecting teams to protecting entire companies. You can run a business for years without even attempting to make a profit and get acquired based on the potential of the business. No more messy realities of the market determining whether you are in fact profitable or not - what matters is whether you _look_ profitable. And, again, this is genuinely good at small scale, because it allows new ventures to ignore bumps and potholes that would otherwise have ended a small company. But if you scale it up, it also allows new ventures to ignore driving straight off a cliff.

I expect capitalism to work very well if implemented right. But I don't know how we go from where we are today to actual, functioning capitalism.

<comment><USER129> You say that capitalism is broken, but the capitalists are all doing very well, even as everyone else feels the pain.

If the capitalists are doing very well, then how can you say that capitalism is not doing very well?

To answer this question may require you to undergo a paradigm shift.

Think about it.

</comment></comment><comment><USER130> We really need a true crisis. Free market economy needs to let such companies to buncrupt. Lesson must be learned.

Unfortuanetelly looking what FED is doing, it won't happen soon :(</comment>


"The Bug Count Also Rises" - <AUTHOR> http://www.workpump.com/bugcount/bugcount.html <comment><USER2> Bouncy balls - <http://www.exmsft.com/~hanss/pranks.htm>

Chicago - Codename for Windows 95.

RAID - Microsoft's internal bug tracking tool up until ~2002.

Red Hook - A Seattle-area brewery, which appears to have distribution deals across the US now.

<comment><USER3> And apparently "Sev 2" is a bug severity level, corresponding to one level below "critical/crash".

<comment><USER2> Correct. Sev 1 is the highest.

</comment></comment></comment><comment><USER4> When I am feeling sad, it feels to me that it is bugs all the way down. Fixing one only makes that part of the code shine in contrast, still dark compared to the green fields of a new project. When Im happy though its like whack-a-mole, and I sink into the rhythm like it was suddenly crossed with DDR. I go home tired either way.

</comment><comment><USER5> Successful software projects are all alike; every unsuccessful software project is unsuccessful in its own way. -my boss

<comment><USER6> As profoundly untrue as Tolstoy's original.

<comment><USER7> Maybe it can generalize to, "things you've never been part of all seem the same, while things you're personally involved in all seem unique."

<comment><USER8> You've never been part of a successful project! Wow. Straight out of Hemingway.

</comment></comment></comment></comment><comment><USER9> Oh man, this reminds me of another Hemingway parody I saw 15 or 20 years ago that was hilarious. Alas, no one seems to have ever posted it to the Web, and it's evidently been forgotten.

Here are some snippets of it, quoted from memory as best I can recall. If anyone can come up with the whole thing, I will be eternally grateful.

"That was in [Place??] but now it was [Place??] and a new start but he had bunions and his officemate had the brain of a zither, and in two weeks there was a deadline. Not like the deadlines he had known back home. Those deadlines were hard and sure and swift. These were like melted pudding."

"... At least it wasn't Man Pages."

There was much more, including something about the words on the screen looking like rain. Anyone recognize this???

<comment><USER10> No idea, but here's my own favorite (John M. Ford, "The Hemstitch Notebooks"):

The furry one came into the cantina. He did not walk as a coyote should, he flowed like brown fuzzy water along the floor to the bar and held up a finger, and though he did not speak the owner poured him a drink and he drank it. It poured over his teeth and around his tongue and down his gullet and past his duodenum and into his flat coyote belly, and then he filled out and stood up straight like a man coyote does, and his eyes had the light of those who have had the very big rock fall on them, or been blown up by the Acme dynamite, or have fallen off the high cliff and hit the telegraph wires and bounced up again. When a man coyote knows these things they do not go away from him. The coyote walked out of the cantina straight with the tire marks down his back like sergeant's stripes.

</comment></comment><comment><USER11> I hate to make such a pointless comment, but that was pretty awesome.

<comment><USER12> It's an amazing story and more than a parody - it's also a great example of and tribute to Hemingway's style.

</comment></comment><comment><USER13> Hemingway has such a style, so short and declarative... so suitable to a coding environment.

Also, Cory Stoll did a great job of bringing Hemingway to life in a recent film, and its hard not to read this in his voice

</comment><comment><USER14> That is hilarious.

 _Hernando shrugged. "Prado is finished. He was gored by three Sev 2's on Chicago. All he does now is drink herb tea and play with his screensavers."_

 _Then I will do it, my friend," he said formally. "I will do it for Prado, who was once great with the bugs._

I almost pissed my pants. Which scene is this from? With Anselmo? It could have used some "in-the-milk-of..."

I'm pretty sure 60% of this is a direct edit of _For whom the bell tolls_ (which doesn't make it less awesome).

</comment><comment><USER15> A truly good writer can not only write well, but can mimic the writing of great writers. This guy is a great writer.

Also--that whole thing is hilarious.</comment>


Is there a GPU back end for Numpy/Scipy? Money is no issue - <AUTHOR> https://www.reddit.com/r/Python/comments/1mw9mb/is_there_a_gpu_backend_for_numpyscipy_money_is_no/ <comment><USER2> That discussion is from 4 years ago. Anyone have any more recent comments?</comment>


Living in a Fool's Paradise - <AUTHOR> http://www.boomcalifornia.com/2014/06/living-in-a-fools-paradise/ <comment><USER2> I want to know who's living in these places.

I work in a fairly senior role in a well known South Bay tech company (you've heard of it). I live in Livermore. (For those of you not familiar with the Bay Area, Livermore is so far away from everything, it might as well be Nevada.) Why do I live in Livermore? Because I can't afford anything within a 20 mile radius of Stanford. All over the Peninsula (and the areas in Santa Clara county you'd want to live) are dotted with $1.5M single family houses and $4,000/mo apartments. Summoning the voice of Jerry Seinfeld, "Who are these people? Really, who are they?" They can't all be stock option multi- millionaires can they? I'm doing pretty well for myself, but I can't afford to live anywhere in basically two counties. What do these people do who can afford to live down there?

The Bay Area is going to eat itself soon. There's just no way this housing situation is sustainable? What is the end game? Is this going to turn into Elysium? How will normal people survive here without affordable housing?

<comment><USER3> So, a double income family, each person earning $250,000 with proceeds from a previous house sale for downpayment, can manage quite easily, no?

Pre tax income: 41666/month

20% Down = $300000 Borrow 1.2M @ 4.0% = $5728.98/mo

This looks quite doable.

Heck, with half that income, you could do it!

<comment><USER4> Only in the Bay Area do people say "Well, if your household is making half a million a year it's affordable!" It reminds me of the Wall Street Journal disconnect last year [0] regarding taxes (those single mothers making $250k a year are really suffering). The Bay isn't the real world by a long shot.

I just moved away from the Bay Area for this exact reason. I went from making $120k a year to $85k a year, but in Washington I can get a decent family home for $150k. The Bay Area can't come remotely close to matching that kind of deal, even with the ludicrous salaries.

[0] [http://i.imgur.com/bdgZa.jpg](http://i.imgur.com/bdgZa.jpg), [http://online.wsj.com/news/articles/SB1000142412788732368960...](http://online.wsj.com/news/articles/SB10001424127887323689604578220132665726040)

<comment><USER5> >The Bay isn't the real world by a long shot.

Neither is Manhattan. From the NYT in 2009, and prices for schools and child care and real estate have only gone up since then:

[http://www.nytimes.com/2009/02/08/fashion/08halfmill.html](http://www.nytimes.com/2009/02/08/fashion/08halfmill.html) "Five hundred thousand dollars — the amount President Obama wants to set as the top pay for banking executives whose firms accept government bailout money — seems like a lot, and it is a lot. To many people in many places, it is a princely sum to live on. But in the neighborhoods of New York City and its suburban enclaves where successful bankers live, half a million a year can go very fast."

A lot of this is real estate and private schools, of course. You could get a 5br/5,000 ft^2 house in Green Bay, Wisconsin for 400K: [http://www.zillow.com/homedetails/3318-Whittier-Ct-Green- Bay...](http://www.zillow.com/homedetails/3318-Whittier-Ct-Green-Bay- WI-54311/67984340_zpid/)

While a 5br/5,000 ft^2 prewar apartment (not even a single-family home!) in Manhattan would be $24M, and that's with a kinda small and not very attractive kitchen: [http://www.mironproperties.com/NY/NYC- Apartment-38737-Upper-...](http://www.mironproperties.com/NY/NYC- Apartment-38737-Upper-East-Side-5-Bedroom-Apartment-For-Sale)

Many folks, like you, are better off moving away from the Bay Area and taking a salary cut if they don't already own a house and would like to buy one.

<comment><USER6> NYC is very expensive, but $24m is hyperbole. Corcoran listings for 5+ bedroom townhouses in Manhattan begin at $2.3m, still a very princely sum: [http://tinyurl.com/l7hukd6](http://tinyurl.com/l7hukd6)

(If you're willing to live outside Manhattan, in one of the "outer boroughs", prices drop dramatically.)

<comment><USER5> Um, I think you left off a zero. :)

If you use that Corcoran link you provided and restrict your searches to townhouses in the $2.3-$2.7M range with 5br, you get only Harlem, not Manhattan: [http://tinyurl.com/nvftwqm](http://tinyurl.com/nvftwqm)

<comment><USER7> Harlem is in Manhattan.

<comment><USER5> Ah, didn't know that. I'm a non-NYC dweller and thought it was a separate borough.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER5> This BoomCalifornia.com article is well-written but misses a pretty big point: these are in large part choices that SF bay area governments have made to limit new development. The article does discuss SF, true, but SF has only perhaps 10% of the area's population, and a negligible part of the area.

Housing prices on the SF peninsula once were in line with the rest of the country. Then came anti-development fervor, pushed in large part by existing homeowners who benefited from a rise in demand coupled by fixed supply.

That's one reason why, even though I have enough land to build a small guest cottage that I could then rent out on the SF peninsula, my local government makes it cost-prohibitive or impossible to do (can't cut down trees, can't disturb natural habitat, can't build within 40' of a stream, etc.). That's also why Facebook's massive new campus logically should be surrounded by high- density housing instead of ranch homes on quarter-acre lots, and isn't, and why no housing can be built within walking distance of the Googleplex in MV.

Thomas Sowell, an economist at Stanford's Hoover Institution, wrote about this back in April:

[http://www.dallasnews.com/opinion/latest- columns/20140423-op...](http://www.dallasnews.com/opinion/latest- columns/20140423-open-spaces-and-housing--the-high-cost-of-liberalism.ece) "There are people who claim that astronomical housing prices in places like Palo Alto and San Francisco are due to a scarcity of land. But there is enough vacant land (open space) on the other side of the Interstate 280 freeway that goes past Palo Alto to build another Palo Alto or two — except for laws and policies that make it impossible. As in San Francisco and other parts of the country where housing prices skyrocketed after building homes was prohibited or severely restricted, this began in Palo Alto in the 1970s. Housing prices in Palo Alto nearly quadrupled during that decade. This was not from expensive houses being built, because not a single new house was built in Palo Alto in the 1970s. The same old houses simply shot up in price. That is part of the unacknowledged cost of open space and just part of the high cost of liberalism."

<comment><USER8> >That is part of the unacknowledged cost of open space and just part of the high cost of liberalism.

The devotion to open-space around Stanford/Palo Alto actually comes out of the backlash to all the highway construction in the 50s and 60s. I find it odd to see opposition to big government programs described as "liberalism".

<comment><USER9> Well, it shouldn't be _that_ odd, it is after all what the word means in the rest of the world...

<comment><USER10> I'm certain that "liberalism" has no meaning whatsoever now. It's just an empty word, like "fascism", that politicians use to rally their supporters.

<comment><USER11> The writer of this passage weakened an otherwise good message with this empty and needless use of "liberalism."

I see this was published in a Dallas based newspaper. Ok, I'd like to go build a 20 story cinderblock apartment building called "the proletarian towers" in the middle of a wealthy, republican-leaning Dallas suburb. Hey, I bought the land, I should get to do what I feel like with it, right?

<comment><USER12> I think you can actually do this in Houston ... where, last I checked, there are no zoning laws ?

I was there in 2002 and there were people running mini mart stores out of their front porches, in a completey residential neighborhood.

<comment><USER13> It is still very much the case that Houston has no zoning laws. That does not, however, mean that there are no neighborhoods with their own zoning rules, i.e. home/property owners association regulations and other land use restrictions. However, because there are no overall zoning laws, the restrictions only apply to the immediate neighborhoods that have the H/POA.

</comment></comment></comment></comment></comment></comment></comment><comment><USER14> Boom is a small, high quality journal put out by UC Press. The whole issue of Boom this quarter is devoted to the San Francisco tech influx, and it is excellent ([http://www.boomcalifornia.com/2014/06/summer-2014/](http://www.boomcalifornia.com/2014/06/summer-2014/))

They have articles from both pro-growth and anti-growth people, including Rebecca Solnit, whose piece on Google buses in the February LRB really touched a nerve.

<comment><USER14> I submitted the Rebecca Solnit interview in the same issue a few days ago here:

[https://news.ycombinator.com/item?id=7957573](https://news.ycombinator.com/item?id=7957573)

Solnit is of course anti-development, whereas the editorial stance of the issue is generally pro-development.

</comment></comment><comment><USER15> Finally, finally, finally. An article on Hacker News about the whole San Francisco housing thing that doesn't assume that you're familiar with the issue and have picked a side. After all the rhetoric I've read about, say...

"the defeat of the proposition to prevent the blockage of construction on the waterfront proposed by the cool NIMBY elitist outcasts who are driving up housing prices to keep out the cool rich tech outsiders who are ruining this city"

...it's nice to have some history and context about what's actually going on. Thank you.

<comment><USER16> This is also an excellent (and very long) piece that does the same: [http://techcrunch.com/2014/04/14/sf- housing/](http://techcrunch.com/2014/04/14/sf-housing/)

</comment></comment><comment><USER17> Come to Los Angeles. It's not perfect, but the weather's better, economy broader, there's more space, its downtown is improving every year, and building up (in several places) is encouraged. Even the long neglected Metro is seeing investment.

<comment><USER18> For the longest time I didn't even know LA had a Metro.

I guess I just went there to visit friends/family and we ended so much time stuck in traffic it really got to me after a while. (Usually visit a week at a time). One day the friends had to work and suggested we take the Metro around town. Except that Metro didn't seem to go where we wanted to go. We opted for a bus. It worked out ... ok, the bus ended up stuck in traffic just as well as the other cars.

With that level of traffic, unless there is Metro and it is effective or some other public transportation system, I would go crazy. (Note: I haven't visited SF so not comparing it with, maybe it is just as bad there).

<comment><USER19> I almost don't want to weigh in here since LA is kind of this hidden secret gem, but the answer is to just live on the Westside (Venice/Santa Monica).

You can almost never have to drive if you work it out this way - I bike to work along the beach every day and drive somewhere maybe once a week if that. It's amazing, and it's pretty much 70-80 degrees every day.

You could also live downtown (which has turned around in the last couple years and now is becoming very nice) - the Metro will connect there and Santa Monica in another year or two.

Sidebar: what I've also found here (I moved down from SF around 2002 & have lived all over the US) is that you really get back what you bring here. If you want to connect with smart, creative, great people, they're all over here. If you expect to meet a bunch of a-holes, well... They're here too, if that's the attitude you're bringing.

<comment><USER20> too late, secret's out. SM real estate has been skyrocketing for about 2 years now.

there's nothing even listed in my zip code for < 700k.

when i moved here in 2008 (from SF) people were still talking about scripts and auditions in the cafes and bars. now it's all startups and web technology. i moved 500 miles and ended up in the same damn place.

life is funny like that.

</comment></comment></comment></comment><comment><USER21> So Google can't build property in Mountain View, what about building another campus outside of the Bay Area? Maybe an hour south of Mountain View or something, where they could still recruit in the area.

I imagine Google's thought about this more than I have though.

>that workers in the technology industry do not belong here and are not the type of people who are supposed to be in San Francisco. It is a strangely unprogressive attitude for this open-hearted city.

It's always ironic to see how people in 'rejected' subcultures tend to reject outsiders as well ( this happens way too much in tech as well).

<comment><USER22> >So Google can't build property in Mountain View, what about building another campus outside of the Bay Area? Maybe an hour south of Mountain View or something, where they could still recruit in the area.

Google is doing that to an extent. They have a lot of campuses world wide, mostly due to their acquisitions. It also decreases the amount of sway an individual municipality has over their growth and operation, which isn't a bad reaction given how much MV is mucking around with them.

</comment></comment><comment><AUTHOR> Excerpt:

 _To fully understand what's happening here, let's zoom out and take in the wider picture. San Francisco is a relatively small part of a much larger nine- county metropolitan area of over seven million people. Within this area, governance is fragmented at the county and city levels and it is served by a slew of separate transportation agencies, including six separate but overlapping bus agencies and four regional rail or light rail agencies. There are three major airports, run by separate agencies, and while regional housing policy is supposed to mandate that all municipalities provide their respective shares of housing demand, based on employment patterns, this is often undermined at the local level. Public policy is often not coordinated in any meaningful way at the regional level._

<comment><USER23> There are at least 10 separate train companies running 40+ lines in Tokyo and yet that seems to work for them. JR, Tokyu, Seibu, Eidan, Toei, Odakyu, Keio, Tobu, ... I'm too lazy to look them all up. There are probably as many bus companies as well.

On top of that in Tokyo there are 23 wards each with it's own laws, taxes, etc.

What's special about California? Why does it work in Tokyo with 25 million people (or maybe it doesn't?) and why doesn't it work in the bay area with only 9 million?

<comment><USER24> The counties and wards of Tokyo don't have the power to impose discretionary zoning on landowners. In fact, they don't have the power to impose any of the kinds of abusive and harmful zoning and parking requirements that are universal in the Bay Area. [0]

Japanese zoning and urban development policy are set by the central national government. That policy is considered the gold standard for simplicity and promoting quality development by planners everywhere in the developed world.

If the quality and honesty of government urban planning that Japan has could be transplanted, life in the Bay Area would improve immensely. No amount of land scarcity or Google shuttles or rising demand or offshore Chinese corrupt officials parking money or anything else would be able to make things unaffordable if local governments were good, honest, and effective. But quality government is simply not possible with the current politics of California.

[0] [http://urbankchoze.blogspot.com/2014/04/japanese- zoning.html](http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html)

<comment><USER25> > _That policy is considered the gold standard for simplicity and promoting > quality development by planners everywhere in the developed world._

Nnnno, they're not. In fact, Japanese zoning -- which, incidentally, is set at the federal, prefectural _and_ local level -- is widely regarded as batshit insane. For example, there's a giant garbage incinerator right in on the northern side of central Tokyo (Ikebukuro); taxation makes "used" houses nearly worthless and thus encourages building new cheap crap; draconian building restrictions make Japanese apartments tiny; the well-intentioned "sunshine laws" have all sorts of perverse side effects like making it well- nigh impossible to build tall, high-quality residential buildings in the city center but encourage tall but cheap, crappy ones in the middle of nowhere, etc etc.

This Nomura Research report is an excellent read: [http://www.nri.com/global/opinion/papers/2008/pdf/np2008137....](http://www.nri.com/global/opinion/papers/2008/pdf/np2008137.pdf)

</comment></comment></comment></comment><comment><USER26> I was surprised that he said that the Marriott Hotel was ugly, as if this were a widely-held opinion. I haven't heard anyone else say that, and personally I rather like it.

<comment><USER27> I agree, Marriott is one of the more beautiful high-rises in the city. Maybe he meant Marriott Union Square. Or Hyatt.

</comment></comment><comment><USER28> When people claim it's too expensive to live and do business in California, I think some miss the influence of the geography.

Yes the tax in CA is higher than other states but not THAT high. CA state tax is not 100% or 200% higher than most states. But housing is.

The point of moving to CA for most people is to live on or near the coast, I think... Thus most centers of commerce in CA is relatively close to the beach, like SF or LA or San Diego.

What this does is it almost immediately cuts the the available land for housing by HALF. In midwest of US (including Texas), you put a dot and draw 30 mile circle around it. All of that land is available for housing. In coastal regions like coastal California, put a dot near coast and draw a 30 mile circle around it. You get HALF of a circle available for housing.

No wonder house price in coastal CA is easily double of equivalent in Texas and other cities.

Tax in CA is not that bad. But the geography is bad for making affordable housing available, and that's not the fault of the politicians or Democrats or etc.

</comment><comment><USER29> > This is the tone of a now-dominant narrative among the city's > progressives—that workers in the technology industry do not belong here and > are not the type of people who are supposed to be in San Francisco.

I find this kind of phobia as repulsive as xenofobia or discrimination against blacks.

Why are they so holy they can't accept the Google employees as regular folks?

<comment><USER30> There is nothing in common with the plights of blacks in the city to tech workers, unless you count of course that many well off people moving in drove minorities and the poor into further substandard housing because the cost of living skyrocketed. Mom and Pop businesses folding so trendy restaurants and boutiques can take their spot.

For an industry that boasts connectivity it sure seems location bound at times. Frankly, the fact they have to have / desire to have charted bus services just for themselves should be a hint - your living in the wrong place, be closer to work.

However, many in the industry who like think they are open minded and above it all it must be fun to find out that your not wanted by people that are normally associated with open mindedness.

<comment><USER31> > Frankly, the fact they have to have / desire to have charted bus services > just for themselves should be a hint - your living in the wrong place, be > closer to work.

To be a real NIMBY is to be able to say with a straight face that those darn people ought to be fighting other NIMBYs somewhere else.

</comment></comment></comment><comment><USER32> Stupid question but why don't big companies like Google and Apple just move the bulk of their office outside of San Francisco where there are no regulations and they could just build everything they need there.

If SF is being so hostile towards basically the driving engine of their local economy the best option is to relocate to a place where there are fewer restriction.

A build your own small city kind of situation. They can certainly afford it.

It's win-win Google gets their employes close to the office the employees get cheaper housing and if it's a large enough community you will be getting new people coming in opening shops and other stuff to take advantage of the demand.

The only one slightly worse off is SF with all the money leaving the place but it's not like they appreciate what they have now anyway.

<comment><USER33> As noted in the article, Google is in Mountain View, Apple in Santa Clara, both suburban towns well outside SF. Both towns have strict development laws, also described in the article, that throttle development. Apple has proposed building a new HQ and Santa Clara may actually approve it, but that does nothing to increase housing.

There is no land with 100 miles of Silicon Valley where you could "build a town". Supposing they went the necessary distance (500 miles, or even more, into Nevada perhaps) how practical would it be to get 1000s of employees to relocate to live in a "company town" in the middle of nowhere?

<comment><USER32> Seems pretty practical to me instead of fighting with the locals to do basic things spending god knows how much money trying to approve things.

Plus once you do it you have all the room you need to expand build towers, create housing etc.

It doesn't even need to be something very complex at first just something quick and dirty to see if it's a valid solution.

I find it amazing that there's no large areas of land for sale withing a 100 miles of Silicon Valley.

As for as employee relocation is concerned don't they already have to relocate to SF and the surrounding suburbs to work there?

<comment><USER34> > As for as employee relocation is concerned don't they already have to > relocate to SF and the surrounding suburbs to work there?

Yes, and they choose to live in San Francisco, with bars, members of both sexes, restaurants, museums, parks, baseball, etc...

How fun do you think this theoretical company town is going to be for someone in their 20s?

</comment></comment></comment></comment><comment><USER35> "When I moved to San Francisco in 2003, I found a place to live in one weekend."

But from what I recall after moving to San Francisco in 2005, you would not have been able to.

And from what I've been told, if you moved to San Francisco in 2000, you also would have had a difficult time.

boomcalifornia seems to be an appropriate name.

<comment><USER36> Moved to SF in 2008 - stayed with a friend in Berkeley over a long weekend and found a place to rent on craigslist by the time I left. Was 'expensive' compared to my midwestern rents - but still within reason. Literally impossible now.

</comment></comment><comment><USER37> Can we outsource our regional land-use governance to the Chinese Communist Party? We need much more housing and transit, fast, and they're the pros. Gains from trade!

<comment><USER38> Yeah no thanks. I wouldn't want them building over historical artifacts or putting up apartments that will fall apart in 10 years.

</comment></comment><comment><USER39> The "Manhattanization" argument always struck me as odd. How is a mess of ugly, uncomfortable five-story buildings (at ridiculous prices) superior to an 80-story tower of modern housing? Sure, the tower is more prominent, but it frees up space for parks and makes housing cheaper. These people should either have the courage to say, "We're trying to keep housing costs artificially high and rob people" or get out of the fucking discussion.

Manhattan is expensive, but relative to the local job market, it's cheap. It has its problems, but it's relatively smartly designed. San Francisco is expensive, relative to the job market. Even in California, it's almost impossible to crack $175,000 doing real work, and every corrupt official in Asia has bought housing in SF and the Valley, driving prices into the millions.

California seems to insist that it is building the future, and yet it lives so much in the past.

<comment><USER40> It would be interesting if you would post roughly how many corrupt officials you believe there are in Asia and approximately how many housing units they each purchase.

<comment><USER39> It's well-known that Russian and Arab billionaires keep Manhattan real estate (usually bought through shadowy shell companies) so that, if their people ever revolt and bring them to justice, they have a place to hide. There's so much money laundering it's sickening: [http://nymag.com/news/features/foreigners- hiding-money-new-y...](http://nymag.com/news/features/foreigners-hiding-money- new-york-real-estate-2014-6/)

Generally, the corrupt scum of Europe and Africa and the Americas focus on New York while the corrupt scum of Asia (where half the world's people live) tend to use California. I'm not sure if that's because geographical proximity matters, or if it's something else.

In addition to the purchase of safety housing by corrupt foreign officials, much bigger is the secondary market in U.S. real estate that exists _because_ of this purchase pattern. The fact that every overseas scumbag wants a U.S. house (preferably a high-value one, because if your assets are frozen and have to change your identity, you may have to borrow against the house for 3 years while your fixers buy you a resume and get you able to work legit) in case shit goes seriously wrong, U.S. real estate has become a store of value.

I don't know the numbers. I don't think anyone does, but as for how much housing is being bought by foreign scumbags (or to sell to them, but speculators betting on scumbaggery) it's probably on the order of 1-10% on the high end, and possibly much higher (10-50%) on the ultra-high ($5M+) end. That might not seem like a big deal, but there are two things to consider. First is the push-down effect. Billionaires buying penthouses push modest millionaires into 3BRs and upper-middle-class families into 1BRs and the middle- and working classes out. It propagates down the socioeconomic chain, making everyone pay higher prices.

The second issue is extreme price inelasticity. 1% supply destruction doesn't increase prices by 1%, as one might hope or expect. It can cause them to double.

<comment><USER3> I don't have the link, but I read somewhere that foreign investors (I think this was data upto last year - things may have changed fast) don't make up THAT much of the market, and only for the 1M+ homes, which is way above median price in the US.

<comment><USER41> Way above median for the US as a whole, but according to the article $1M is close to the median in SF.</comment></comment></comment></comment></comment>