> I recently left an 8,000 person company that's been on a 2 decade loop of private money to publicly traded and back a couple times now. It occurred to me that in 25ish years (about 10 of which I worked there) that it might never have made any money
That is crazy if true. My fear is that there are a ton of tech companies like that, just chasing future profits or an acquisition, but not actually creating anything of value (at least in terms of profit).
I don't know. It just doesn't sit well with me knowing that a lot of products we build don't actually make any money. We're all just part of some weird system of money re-allocation and the software is just there as a signal that money should change hands.
I actually worked providing infrastructure to tech companies; from large enterprises to startups. I think I realized starting in the early to mid 10's that all the startups I was working with were just about taking VC money to provide the founders with hip, well paying jobs - the stated goal of the company was mostly immaterial and the "change the world" talk was virtue signaling to the rank and file so they don't feel so bad about their place in it. I wasn't all that thrilled but I've got to eat too and I'm not built for retail or labor, so what was I going to do?
Might be worth noting that I tend towards the depressed side already so my point of view might be a bit skewed. But when I watch Office Space or other works by Mike Judge, I realize I'm not exactly alone at least.
And keep in mind that this article is about a Buy Now, Pay Later (BNPL) type business - what about that is all that revolutionary? I'm sure the leadership wrapped it up as "empowering people to purchase goods they need today" or something else, but everyone knows they're selling people baubles like TVs with predatory lending, right?
Story time. I was looking to buy a 911 in the past. Found one at a dealership. The car was 3 years old, just off lease, in good condition, and with no accidents shown in Carfax.
I searched the VIN number in the state’s DMV car registration database. Well well. The car had an expired tag and had high thousands of dollars of unpaid taxes, fees and penalties against it. The owner had never bothered to pay any taxes and fees over the years. I would have to pay all those when doing the car transfer at DMV.
I was kind of pissed and disgusted. I then searched the VIN number on the web. Found the VIN in a post in a car forum for an attempt to sell the car. It had a phone number!
I searched the phone number. Got the name of the guy and his company. He was the founder and CEO of a startup.
DMV doesn't care who pays it. They won't process the title transfer of the car as long as there're unpaid taxes or fines. Imagine I've already paid the money to make the purchase, and later going to DMV to transfer the car title but find out I couldn't due to unpaid fines. What could I do? Either paid the outstanding fines or sued the owner to revert the sale. Headaches all around. I didn't go through with the purchase at the end.
I talked to another car dealer and asked him about it. He said this kind of car was usually sold to people in another states, where their DMV won't enforce California's taxes and fines.
The lesson here is be sure to check for a clear title on the car, including DMV fees and fines, before making a purchase.
Exactly. I've seen a lot of media coverage on Klarna (I'm Swedish), often with the angle "wow, innovation". The question I've too often wished journalist had asked is "Why?", what's the benefit of what you do? Except being more shiny.
Lot of waste in the tech sector. Sad how many skilled people work endlessly on more effective ways of pushing ads and loans, to make us desire and buy things we don't need with money we don't have.
Revolutionary is of course an extreme stretch, but they do add unique convenience to the checkout process.
No user account creation, no entering of address and credit card number. Just click purchase and confirm with BankID. I also like that they retain neatly organized purchase history across all vendors, including permanent storage of the product images.
I prefer klarna so much, that I occassionally simply go to another etailer if there is no Klarna checkout option in the first place I try to buy something.
The transaction is finished immediately. No need to de-select any "Pay later" options etc. No need to install their app on your phone.
No need to share your purchase history with some third party with an yet unknown (undetermined) monetization model.
Swish is owned by your bank, and you already trust them with your transaction history.
Buy Now Pay Later actually has a really good use case, it’s for people who may be wary of credit cards, interest, and or low credit scores. For example, many people who wouldn’t take out credit cards will use BNPL. Also, usury is prohibited in the major Abrahamic religions, so BNPL can also work for client avoiding interest loans.
So before I worked at the last job, I worked for a camera store back in the last days where those were still generally a thing (2004-2010 - it wasn't too bad of a job for a kid in school). We offered by now, pay later back then, and I don't think we invented it either. Of course it was basically just a credit card application, and there was no requirement to pay it off within a set amount of time, but if you didn't, then they'd hit you with all the interest that had quietly been accruing during their "introductory period" or whatever they called it. Which is to say that it was scummy and deceptive, but not much more so than other American business practices and certainly less than others, and hey they had to make money and eat too.
Perhaps Klarna really is better, but then again maybe that's why they're hemorrhaging money at such an impressive rate.
I know PayPal "Buy-in-4" has no interest or late fees in its terms. So in that regard, it really is a 0-interest loan, paid in 4 installments. I haven't looked into Klarna, but there's an NPR Planet Money podcast about these types of schemes. The profits are made up by the fact that demand increases compared to credit cards (many are ineligible for credit cards, or don't use them for whichever reason), and that the merchant is charged a higher rate by the BNPL company.
It's not crazy. If you grow the company, and if you have had stock compensation at any point in the past, it's in your interest to scale the company as much as possible. Profits don't go into your pockets, but the growth does.
If a company doesn't make money, cash flow and / or profits (preferably both), it is just under cutting the competition (if smart) or on its way into bancrupcy (if not so smart) or both.
I agree that many are just trying to undercut the competition. My pet theory is this is having an effect on consumers' expectations for tech-based products. Specifically, nobody thinks anything is worth paying for, or at least only want to pay a small price. That leads to only big companies being able to compete in markets since they can subsidize products for a long time.
That is crazy if true. My fear is that there are a ton of tech companies like that, just chasing future profits or an acquisition, but not actually creating anything of value (at least in terms of profit).
I don't know. It just doesn't sit well with me knowing that a lot of products we build don't actually make any money. We're all just part of some weird system of money re-allocation and the software is just there as a signal that money should change hands.