Since its fumbled March IPO, Deliveroo’s price dissipated like our dreams to enjoy a proper summer vacation on a white sandy beach. Before dismissing this as another idiosyncratic event in the digital start-ups world including Uber and WeWork, it may be time to ask whether the repeated pattern can provide a few lessons that cut across these examples.

For quite a while, the valuation of digital startups have been based on the digital promise: enter with low price and high convenience, capture a large market share, understand the consumers better, deliver on scale (and reasonable margin), and the winner will take all. The concept is an attractive feed forward loop, i.e. Amazon growth flywheel, but the reality is much less simple. For example, even after reaching high penetration of the market, many ride-sharing digital platforms are still struggling to make sustainable profits, including Uber, Lyft, Didi, and Grab. In the e-commerce space, Amazon.com only turned profitable around 2017.

Value does not fall from the sky. Behind every digital platform, there are financial, environmental, and human capital inputs into the value equation. Now may be a good time to pay closer attention to how values are created and how they are then distributed in the ecosystem. This could help us understand the long-term sustainability of some digital business models.

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