Say goodbye to the ‘millennial lifestyle allowance’

Writing in The Atlantic, Derek Thompson warns of the “end of the millennial lifestyle subsidy,” that blissful era when Uber rides around town cost a few dollars and you can get a meal at any restaurant for a nominal additional fee. “Almost every time you or I ordered a pizza or hailed a cab, the company behind that app lost money. In effect, these startups, backed by venture capital, were paying us, the consumers, to buy their products.”

However, investors continued to support companies that grew their user base while losing money. “As long as money was cheap and Silicon Valley told itself that the next consumer technology company to take over the world was one funding round away, the best way for a startup to make money off venture capitalists was to lose. money by acquiring millions of customers. ”

Now those companies face a reckoning. “These startups were not nonprofits, charities, or state socialist enterprises. Eventually, they had to do capitalism and make a profit.” By 2022, “rising interest rates turned off the faucet for money-losing startups, which, combined with energy inflation and rising wages for low-wage workers, has forced Uber, Lyft and all the others to make their services more expensive. .”

Meanwhile, better labor market conditions mean that workers have more influence over employers. “Today, job openings are historically plentiful and nominal wages are rising faster for low-income workers.”

It turns out, Thompson concludes, that “the golden age of on-demand urban tech discounts is over.” We may now have to pay the actual cost of the products and services again.

Source: www.planetizen.com