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.

Have a premium account? Sign in to continue reading.

Unlimited access to all stories from $99.9/year*

The latest reporting and analysis from business and investments to news and views on social issues.

Bonus:

  • Simultaneous logins across all devices
  • Instant access to past digital issues
  • Unlimited access to The Edge Malaysia
  • *For annual subscription plan only. T&Cs apply

Subscribe

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook