The day I learnt what arbitrage means

An fun insight into the insane business model of big tech and pizza delivery by Ranjan Roy

‘If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You’d net a clean $8 profit per pizza.’

The business model of companies like Doordash, Uber and originally Facebook to dominate at all costs, seems crazy to me. I understand the logic but cannot help feel it is not sustainable, ethical or profitable for most people unless you are either the winner (Facebook has clearly won in the social space) or an investor as part of your spread bet. And even then it’s still not ethical. If you win, you win big but for most people, they lose.

Ranjan also mentions ZIRP (Zero-Interest-Rate Policy) and links out to another fascinating article on the topic. If I understand it correctly, it’s about risk and how risky ventures are more attractive when other rates of return are low. Given the extremely low-interest rates at the moment I expect we might see even more risk.

Author: Ben Kinnaird


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