"Throw Free Money At Customers" Is Now A Business Model
The main lesson tech learned from Uber isn't "People will happily ride alone with a potential serial killer solely to avoid public transportation," but instead "Investors don't care if your company loses money, as long as it keeps growing." This has created a new type of company where the entire business model is basically: 1) round up some cash, 2) give it away to customers without any real hope of making it back, and 3) nobody knows. Here's a topical example:
CNNRecently rebranded "MoviePast."
MoviePass' whole deal was buying movie tickets at full price, then selling them to subscribers for a tiny fraction of that. Anyone familiar with the concept of "math" will see a problem there. They seriously figured they could make a profit off of people who bought subscriptions but didn't use them, like a gym membership (forgetting that most people actually enjoy movies).
Then there was car sale site, Beepi, which would hire mechanics to check and detail your car, sell the service for a small commission, and deliver it to the buyer with a bow on the front. They threw $150 million at this (must have been some fancy-ass bows) before going out of business.
But the king of "burning through investor cash without a clear idea of how to make it back" is music streaming. Market leader Spotify pays 70 percent of its revenue to music labels before trying to cover its own overhead. Tidal pays even more, and has been struggling to do so. At some point you have to wonder whether these guys might be better off shoveling cash into some lotto scratchers.
For every Uber or Amazon success story, there are 99 MoviePasses, Beepis, or Kozmos. Not that this is bad ... from a consumer perspective. If a bunch of investors want to foot the bill for your rideshare to a cheap movie while streaming Jay-Z's entire catalog, then great! Just don't expect it to last forever.
Literally Everything Should Connect To The Internet
Think of a household object. Chances are good that somebody is currently trying to sell a version that can go online, whether that's useful to a single soul or not. Usually "not." Take L'Oreal's recently premiered Keratase Hair Coach ($200), a WiFi-enabled hairbrush that uses a gyroscope, accelerometer, microphones, and a "three-axis load sensor" to analyze your brush stroke and send hair-brushing tips to your smartphone. It also collects data to give you a daily "hair score," meaning that for the first time ever, you can be flunking hair.