Neither, and New: Lessons from Uber and Vision Fund

stratechery.com

This week Ben Thompson wrote a fantastic piece on companies that are "Neither and New", certainly worth reading in its entirety. A snippet below, describing one reason companies like the Vision Fund, investing heavily in companies like Uber and WeWork that are neither technology companies nor can they be compared to the traditional counterparts, is applying faulty logic:

The problem, though, is Vision Fund may have confused “big capital needs” with “big opportunity”. What is striking about the firm’s portfolio is the paucity of “tech companies”. Almost everything falls in the “Neither and New” category defined by Uber: entire categories like real estate and logistics are defined by their interaction with the physical world, almost everything in the consumer category uses technology to enable real-world services, and the other major category, fintech, by definition needs huge amounts of capital. Most of these companies may have income statements that seem attractive in isolation, but when viewed from a total revenue perspective in fact have extremely low gross margins (relative to tech companies) and very high marginal costs.

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