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Selling Products or Services Below Cost is Not Disruptive or Innovative

Disruptive Innovation
Written by Andy

The hard truth many don’t like to hear: Selling products or services below all-in-cost is not “disruption”, or “an innovative business model”. Its not a “moat”. It’s not “investing in growth”.

It’s financial illiteracy and a total lack of any business and economic sense. Case-in-point I just ordered 24 meals from HelloFresh for $60 with a promotion. Planning on cancelling after the delivery 😂 Sorry HelloFresh Inc investors. And the premium tenderloin meal was +$13.99/serving with Brussels sprouts… but +$0.99/serving if you chose broccoli lol. I got a few.

Same for $DASH bagholders! Thank the mindless numbnuts who invested other people’s money in that “business”! Their “gift” is your reward. “What we lose on every order we make up in volume (of stock that we dumped to dumb funds)!”

And its even better when you can use printed stonk (shares) as compensation. The stonks were the actual product in such cases. Management could print an unlimited amount, on the back of pure delusion. All they needed was some near-criminal broker to push fake projections and lies.

Selling below cost is just “buying business” when you have no customers

We used to say, Live by Price Die by Price. I found it’s normally because they don’t have a unique selling proposition or differences, the product benefits are inferior or non existent, and it’s not guaranteed risk free. I’m fed up having to argue that profits matter. Uber, Amazon, Carvana — are all failed models IMHO. All they did was unfairly crush competitors by selling at less than cost. Which used to be illegal before we became a corporatocracy. Think of all the damage these guys wreaked while getting rich. At worst such companies can even be a front for laundering money.

Too many call themselves the “next Amazon” and follow a $ losing model hoping to grow. The idea is to take market share from existing business until the “innovator” have pricing power. But most businesses fail before that happens. But it should really be a red flag.

It should really be criminal behavior because while the founders and Executives get rich selling stocks (the only purpose of many of these type of growth companies) they forcé many well managed companies to bankruptcy because you cannot compete with the ones selling dollars for 80 cents.

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Andy

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