: Offer stuff cheaper than anyone else, even though you lose money for years, until you scale to unimaginable proportions. Then, once you've crushed the competition and become the only game in town, you can raise prices and make your money back. It's called predatory pricing, and it's supposed to be illegal. It's one of the arguments that progressives in the Justice Department used tolike Standard Oil in the early 20th century.
"We think real world examples are not hard to find — if you look in the right place," Wansley and Weinstein write."A new breed of predator is emerging in Silicon Valley." And the mechanism those predators are using to illegally dominate the market is venture capital itself. Take Uber, one of their key examples. It'd be one thing if the company had simply outcompeted taxicabs on the merits. Cabs, after all, were themselves a fat and complacent monopoly."Matt and I don't have any problem with that," Weinstein says."You have a new product, scale quickly, and use some subsidies to get people on board." Disrupt an old business and make a new one., the ending never arrived.
Let's be clear here: This isn't the traditional capitalist story of"you win some, you lose some." The point isn't that venture capitalists sometimes invest in companies that don't make their money back. The point is that the entire model deployed by VCs is to profit by disrupting the marketplace with predatory pricing, and leave the losses to the suckers who buy into the IPO.
Capitalism is supposed to allow competition to foster innovation and choice; monopolies quash all that so a few people can get rich.