The Gig Economy -- May 23, 2019

Updates

June 12, 2019: Amazon out of the food delivery business.

May 25, 2019: well, that did not take long. The "original post" was posted two days ago. Today, from The Wall Street Journal, "Wall Street isn't buying what Silicon Valley is selling." Gig economy start-ups mentioned: Uber, Snap, Dropbox, Cloudera, Pinterest, Lyft, DoorDash, Twilio, Okta, Zoom.

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Original Post 

Previously posted, this item from zerohedge:

Link here. At this link, click on the magnifying glass to zoom in. It will be interesting to see how this plays out ten years from now. My hunch is that there may be many more apps in the gig economy ten years from now but most will not make good investments. Many of the apps provide services that Walmart, CVS, Target, Amazon, others already provide. My hunch: Hertz, Avis, Enterprise will get into the ride-hailing business. 

Watching television commercials suggests to me there are a lot of "web-page" start-ups that won't be going anywhere. They are part of the "gig economy." From what I can tell, they simply aggregate data that is freely available, then offer some value-added service, and market it. Most of them seem like get-rich-quick schemes employing five or six executives / Harvard MBA-types and a dozen IT coders. Many probably do what Trivago is accused of doing. Google is accused of the same thing. As are others.

Some will do well; most will simply fade away. There will be consolidation. A dozen "food-delivery" app-companies will "round down" to one or two. A dozen "hotel-finder-app-companies" will round down to one or two. For the investor, the question is finding the needles in the haystacks. 

Example: from The Wall Street Journal, May 20, 2019: GM will scale back its Maven car-sharing business. [To see just how tough this business it, I consider myself somewhat well-read, and yet, I do not ever recall hearing about "Maven."] From the linked site:

Maven is the latest example of a traditional car maker facing challenges while movinginto new transportation ventures. Maven plans to terminate its service in eight of 17 North American cities, including Chicago and Boston. It will continue to operate in Los Angeles, Washington, D.C., Detroit,  Toronto, and other [unnamed] cities.

Example: there are countless hotel-booking websites. SmarterTravel lists the ten best such sites. And hidden in that list of ten, one company, Expedia owns two others: Travelocity and Orbitz. Not listed, of course, are loyalty programs which I assume are huge. And my hunch is that the margins are huge for loyalty programs as opposed to the ten listed at SmarterTravel which all cater to those trying to get the best deal. But twelve hotel-booking websites. Really?

This won't help:

Nor will this: https://www.abc.net.au/news/2018-08-23/accc-sues-trivago-for-misleading-advertising/10156152.

Other high profile names.

• Uber: facing its own difficulties; see WSJ link above; Uber with steep loses and stock has slumped;
• Chariot: Ford Motor Company's private-shuttle service that was shuttered in January, 2019; Ford had bought the company several years ago in a push to diversify;
• Cadillac: dabbling in subscription service for cars that let customers pay one monthly fee to swap in and out of models; Cadillac canceled that subscription business last year (2018) but says it will re-launch with adjustments

• Blue Apron:
• May 21, 2019: a reverse stock split won't save Blue Apron, Motley Fool;
• May 20, 2019: Blue Apron latest to suffer in tough market, The Seattle Times;
• HelloFresh:
• January 23, 2019: breaking through or breaking down, SeekingAlpha; almost ten years old; tea leaves suggest it will go the route of BlueApron