Layoffs and cost cuts have commenced.
Let’s get this straight: Layoffs are not a sign of growth for a young money-losing company whose hoped-for explosive growth somehow had justified a “unicorn” valuation not long ago. But that’s what’s happening at Blue Apron, three-and-a half months after its IPO.
In an SEC filing, the meal-kit provider disclosed that it had “implemented a company-wide realignment of personnel to support its strategic priorities” — namely laying off “approximately 6%” of its workforce across “corporate offices and fulfillment centers.”
With 5,393 employees as of June 30, per its first earnings report as a public company on August 10, 6% of the workforce would amount to about 320 people.
At the time, the company also reported that sales rose 18% to $238 million in the quarter. At that rate it would reach about $1 billion in annual sales. But to accomplish this, the bottom line swung from a gain of $5.5 million in the year-earlier quarter to a loss of $31.6 million in the quarter. If you have $1 billion in sales and you cannot make money, when can you make money?
The company had $61.6 million in cash and cash equivalent on hand as of June 30 – which is not a lot, considering that in the first half it burned through $70.7 million in cash just from operations, and it burned another $90 million to purchase equipment.
Raising more money from selling more shares is the standard procedure for startup companies after the IPO, but this is getting harder for the company and more dilutive for existing shareholders since its stock price has plunged.
During its last round of funding in June, 2015, Blue Apron was valued at $2 billion. When its IPO was promoted in June this year, there was talk that the company would price its shares in the range of $15-$17, hoping to raise nearly $600 million. At the midpoint of the range, the IPO price would have given the company a valuation of about $3 billion. But there wasn’t any appetite for the shares, and so the company slashed the price. It went public on June 29 at $10 a share. Today, shares closed at $5.30 and dropped further after hours. Its market cap is now down to $1 billion.
This plunge in share price makes selling more shares a very tricky affair. So now it’s time to slow the cash-burn so that it can hang on for a while longer.
The layoffs would cost about $3.5 million “in employee-related expenses, primarily consisting of severance payments” to be incurred in Q4, it said.
In his lay-off letter to employees today, CEO Matt Salzberg provided some hints that this was a cash conservation effort:
- The layoffs were “necessary as we focus the company on future growth and achieving profitability.”
- “The actions that we took today flowed from the roadmapping and reprioritization exercise that we recently undertook. As part of that work, we identified the need to reduce some roles, open others, and streamline decision making for greater accountability.”
Blue Apron has found itself amid a gaggle of startups with similar business models that burn cash in prodigious amounts. And Big Food has jumped into the game:
- Amazon’s purchase of Whole Foods hangs out there as a threat. Earlier this year, Whole Foods partnered with meal-kit company Salted. And still before the Whole Foods acquisition, Amazon filed a trademark for the phrase: “We do the prep. You be the chef.” It will cover “prepared food kits” that will be “ready for assembly as a meal.”
- Albertsons Co., which has 2,300 stores among its brands across the country, acquired meal-kit provider Plated in September. “This move advances a shared strategy to reinvent the way consumers discover, purchase, and experience food,” it said.
- Kroger, the largest supermarket chain in the US with nearly 2,800 stores, has moved into meal kits that are prepared in its stores. In August it announced that it would expand its in-house meal kits to 37 stores by the end of September.
In early August, Blue Apron already rattled investors – one month after the IPO – when it shuttered a fulfillment facility in New Jersey. The 1,270 workers, at the time about 24% of its workforce, were given the opportunity to move to a new larger locations also in New Jersey. But not all made the move.
The week before that mess erupted, one of the co-founders Chief Operating Officer Matt Wadiak stepped down from his role.
As of September 29, short interest in Blue Apron amounted to 11.4 million shares, or 38% of the public float! This may put a floor under the shares near term since short sellers turn into buyers to take profits when shares sink.
So it’s tough out there. But there is nothing wrong with young companies struggling to make a go of it against all odds, and against the giants that dominate their industry and that want to crush these startups. And there is nothing wrong with these companies not making it when the odds converge on them and when they run out of cash. That’s how it works. And there is nothing wrong for those that make it to give their founder, investors, and employees a decent payday.
What’s wrong are the insane valuations that Wall Street and the venture capital community place on these companies and the pump-and-dump process that includes the IPO with which they’re trying to unload their stakes. This leaves gullible investors licking their wounds.
For Sears, the bankruptcy prospects heat up. Read… Why Did Sears Holdings’ Largest Outside Shareholder Suddenly Jump Overboard?
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“the company would price its shares in the range of $15-$17, hoping to raise nearly $600,000. ” I think this must be an error, no? Who would bother with an IPO for a measly $600k? Not measly to me, but I mean to them, of course.
Yes, big boo-boo. $600 million. Fixed. Thanks :-]
Thus, once Blue Apron has fine-tuned an established process, they can eliminate knowledge base in favor of cranking up the machine?
ie: Once you know the recipe you no longer need a chef to make succotash.
ya know, these days you can buy all kinds of stuff already prepared. pretty good, too.
i get all kinds of pitches in the mail to sign for this that and the other delivery, fresh healthy blah blah blah.
just sayin’.
by the way, what’s the significance of a blue apron? trendy shade of blue? solid, trusted, deep?
Same shade of blue as the bruises on investors
I like to cook my blue apron fixedins over a nice blue flame, till it’s smokey and carbonized !
The last paragraph should be omitted. Articles should give out the facts and let the reader decide if it is a good investment or not without being too judgmental about any particular company being a pump-and-dump.
Myself, am trying to balance my perspectives too. As much as I like to see apparently stupid ideas companies get their flame outs, I can’t honestly tell which companies will succeed and which will not nowadays with the fluid markets.
It is like so many countless Butterfly-Effects where sometimes what seems like minor decisions or effects of happenstance, can have world-altering consequences for the fate of the company later on.
Who is to say Amazon at P/E of 250 is not ridiculously overvalued and “stupid” now for investors? And they are still burning gobs of cash today.
When Amazon first started their IPO, no one knew if they would survive their first year of business or not too. The same applies to Tesla, Microsoft, Apple almost went bankrupt to in the 90s, and many other IPOs. too… many started with equally, if not more “stupid” ideas.
Who knows? In an alternate universe, if WebVan had survived the DotCom crash, they could have dominated present day supply chains much like Amazon now, and Jeff Bezos could have become a nobody employee instead of being on the Forbes list today.
I have seen so many unknown-unknowns with the success and failures of companies (and entrepreneurs), that I now tell myself there is really no cut and dried formula that can tell you in advance who succeeds despite the odds and who doesn’t despite everything going well for it.
I know personally entrepreneurs with almost everything going well for them (i.e. good partners, great financial metrics, great marketing expertise in their field, good customer feedback etc.) and yet they still crashed and burn. And then, I’ve heard of some nubie who starts some “stupid” idea about making accessories for children’s shoes making millions with his simple unpolished business concept and middling execution.
I hate to admit that there is an element of luck involved in most ventures but unfortunately (pun intended) we can’t do anything about gaining luck or lack thereof.
Blue aprons are the color of beginner chefs. It’s a French tradition
I never really understood the model. For the price of takeout, I get something that’s less fresh, requires more work and more cleanup and has been sitting on my doorstep for hours. Oh, and I get less choice too.
What am I missing? Is the IKEA effect really that strong?
As someone who’s used a meal kit service a couple of times (not Blue Apron) and has a friend who likes the idea, I’ll take a stab at explaining it. It gives people the opportunity to try new recipes and ingredients that they might not have chosen on their own. For full-time working people, it lets you learn to cook a bit without the burdensome task of sifting through recipe books and shopping for food. People also say that they think they actually save money because they have no food waste. (I’m not sure I buy this last argument.)
I must say, all of the meal kits I’ve tried have been delicious.
Having said this, I’m not continuing with the service because (1) it’s too pricey for me ($23 for dinner that feeds 2) and (2) it produces too much packaging waste.
The concept seems easy enough to duplicate – many companies are popping – and I can’t imagine they’ll all survive.
My experience too with Blue Apron. It seemed a good idea when I got out of hospital as going to the store was going to be difficult. The quality of the product was good but disposing of the packaging was a problem.
Kroger and Albertson’s have the right idea. Pre packaged dinner kits you buy at the store and take home with high quality produce not ordinarily stocked in your grocery store.
How hard is it to throw away packaging?
This is fallacy. Watch videos on YouTube on Blue Apron meals and you see even for a cook who is timing himself it takes more than half an our to prepare one of Blue Apron meals. That’s a chef; for ordinary people like me, it takes at least an hour to prepare one of their meals. That’s one hour of my life I never get back. So, depending on how much your time is worth, you will be paying several times the price of the meal in terms of the time you have to spend on it.
If I am to pay for one of the Blue Apron meals, I’d rather go to a restaurant.
I have never had a BA meal take longer than 30 minutes. You would have to be legally blind, with dull knives, and 3 glasses of wine into the bottle to take an hour.
Good luck finding some of those dishes at a restaurant for 10 bucks.
There is a large market for this business model. Unfortunately BA may have tried too hard to fast to try to be the first one to IPO.
TheDona: Everyone has that model; even small grocery shops now prepare all kinds of home cooked meals. Everyone gets into the food business since it requires no degree, no brain. The problem is that such an industry attracts millions of illiterate or hardly literate. You sound like a guard dog for Blue Apron. So, how much you have lost in its share up to now?
“….since it requires no degree, no brain…” Most people who try to turn basic ingredients into delicious and healthy foods day-in and day-out would strongly disagree that this work requires “no brain.”
I have a friend who posted his Blue Apron dinner daily on social media. Tired looking overpriced stuff (that you can buy organic locally for less) that you have to spend over an hour cooking anyway.
Then he figured out that he didn’t want to pay extra for shipping, packaging and the printed material that comes with the box. One teaspoon of chili powder in a special baggie? And several more baggies with small portions of spices and condiments that need to be opened and assembled for each meal? A couple of times the produce/chicken was spoilt.
So he tried to cancel. After jumping through several hoops (he couldn’t even find the cancellation button on their site) and having them deduct charges a couple of times after he told the customer service people to cancel, he has sworn never to buy from them again.
A rotisserie chicken and salad from Costco is cheaper and serves more people.
If I were a proper yuppie, I guess I’d take pride in the fact that someone may have been shot or stabbed in the process of making my “Heathkit” dinner.
https://www.vanityfair.com/news/2016/10/blue-apron-warehouse-employees-complain-of-chaotic-violent-working-conditions
Heathkit! Geez, I haven’t heard that name for decades. As a radio ham in my late teens (about 50 years ago…) I thought about a Heathkit but opted to buy an AR88 and built my own VHF convertors and transmitters.
Now I guess I know what this ‘blue apron’ business is all about. Sounds like a dud idea to me, but. Glad I didn’t buy into it. What next, online DIY houses?
I live in a 98 year old DIY home. Ok, it’s a Sears Craftsman 2 bedroom bungalow that cost $600 and was ‘assembled’ by the first owner(s).
Pre-packaged ‘meal-kit’ from Blue Apron? How about a Hungry-Man frozen ‘Classic Fried Chicken’ dinner instead? “Tender white and dark chicken portions, with home-style mashed potatoes and sweet corn. Includes a chocolate brownie. Simply cook and serve.” Hell, you just keep them in your freezer, and you’re good to go.
Kit houses go ‘way back, from the Sears job you’d order and have delivered to the nearest rail depot, to A-frames and various redwood creations I remember in magazines when I was a 1970s kid.
Blue Apron: bringing the teevee dinner and the automat to your kitchen.
It is a dud…….and when you consider that the middle class in the US is shrinking every day…..it’s hard to believe why so many try to defend it as a solid business model.
I don’t think we’re that far away from a shot of vodka, watered-down potato soup, and a slice of white bread for dinner ever night, similar to Russian pensioners after Yeltsin sold out to the globalists.
I love euphemisms, company wide realignment. I’m sure there is a snarky person somewhere who is saying: “Yep, realign you right out into the parking lot.”
The funny thing is VCs have become more and more willing to pump their money into companies like Blue Apron purely for the purpose of chasing the growth, and then when the growth phase is nearly over, bam, out on to the market it goes with the IPO.
The last company that I can think of which saw explosive growth after IPO was Facebook, and even then, a majority of the growth occurred prior to IPO.
Tesla, Blue Apron.
You heard.ot first here – Next one is Uber and poof, the ? open.
George.Soros is betting against the SP 500
SHOULD one short the Index or FAANG or big expensive stocks like Travelocity?
I can lose $5000 with no pain. Please debate.
Central banks are still mainlining $2 trillion a year in financial crack cocaine into the central bankers’ Ponzi markets and asset bubbles. Unless your short happens to coincide with Goldman Sachs taking out massive short positions, then ordering its creature Yellen to hike sharply enough to implode the Ponzi and actuate the next Great Muppet Slaughter, shorting a rigged market is a good way to get your face ripped off.
Yes, a lot of these .com (3.0?) companies are just apps/software coupled with smartphones and other devices- bolted on to some kind of product or service.
Heck, Musk didn’t learn how to weld at PayPal, so Tesla doesn’t know how to weld cars. Doesn’t sound good.
A lot of “rationalization” will occur with these companies. However, the basic model with the apps/software will remain as a marginal improvement in the customer experience, in my opinion. Hint- it’s probably not worth multiple billions of dollars in market cap per company.
Agreed completely. I’m an IT guy. Blue Apron is not an IT company. It is a food delivery service. Uber is a taxi service. Amazon is a retail distribution service (though AWS is a real tech company).
Putting an app that might have cost $500k to write as a front-end to your traditional business doesn’t suddenly make it worth billions of dollars.
I can’t understand why so call “sophisticated investors” don’t get that.
They probably get it but count on greater fools so that they can cash out with a nice profit passing on the lemon to someone else. Sometimes the calculation does not work out as intended, Blue Apron seems to be one of these cases.
I noticed guys on bicycles this year on my annual visit to Warsaw with the name Ubereats on them delivering hot food I imagine
Frederick – I almost got run over by an UberEats cyclist a week or two ago … I wonder what they make? I’m wondering if they make the same $10 an hour Uber drivers too lol.
In China no restaurant needs to have delivery drivers any more. There are millions of drivers on mopeds and motorcycles and electric bicycles using delivery apps on their phones.
So Wolf, ready to make an article about dead or dying Unicorns yet?
I saw this comming ages ago since the whole Juicero deal, and not since the company crashed, but since I learned how overpriced that product was.
My logic was “Gee if investors are trowing money at stuff that sounds like junk they sell you in informercials, maybe just maybe most Unicorns will crash and burn because once people open their eyes they will realise their loved Unicorn is in most cases an overpriced plastic toy.”
I wonder how long will it be before some companies start to say “No we aren’t a Unicorn, our business model is not build is being overvalued and wasting money like drinking water. We have a solid foundation and we are in fact making money instead of losing it.” just with more fancier words.
They already are. Lifestyle business is the most common term (kind of owning the VC insult if you expand it to lifestyle for customers, employees and founders can cover 100mil arr saas also Early exiters, zebras , bootstrapping, my little ponies (yes really)
Expensive, environmentally wasteful meal kits for people who don’t cook: what could possibly go wrong?
The packaging waste from these meals is appalling. I would slap each one of these meals with a $10 environmental impact tax.
i sent my packaging back. if you go to their web site it explains in details how to break everything down and return it.
The expense of these meals are at the top of my price point. it would be difficult to see a price increase to increase cash flow. However a deposit on the packaging to encourage people to return it could generate quite a bit of cash and do the right thing.
So, after transporting all that packaging to your home, it’s to be transported back to the company? That’s insane.
” If you have $1 billion in sales and you cannot make money, when can you make money?”
Why don’t you ask Elon Musk?
Tesla sales : $7 billion
Current Net Income Applicable To Common Shares : $-674 million (Note the minus sign)
Stock Price : $359 / share
Company Valuation: $ 60 billion
# of Quarters Since IPO: 30
# of Profitable Quarters : 1
Come on, Wolf. “Fake It ‘Till You Make It”, that’s the American way.
# of Profitable Quarters : 1
# of Profitable Quarters using GAAP, not Bernie Madoff accounting: 0
Not everyone can burn through cash like Tesla or Netflix and maintain a high stock price.
I never understood the meal-kit service companies, they cost more than your local grocery store food counter and offer less options than your local grocery store food counter.
http://www.blogto.com/listings/grocery/upload/2013/11/20131104-alpremium590-10.jpg
And you still have to spend time and money (electricity/gas) cooking the food at home.
My wife and I eat 3 Blue Aprons a week. We have been doing so for 9 months.
Why: Food quality very high. Meal diversity unique and interesting. Cost – about $12 per plate. Sometimes too much food for 2 – works out to 2 meals + lunch the next day. Convenience – the box is dropped on our front porch on Sunday. Time – the time to prepare a meal is less than the time to drive to a restaurant and park and get seated and wait to be served.
For 2 people, BA works out. For 3 or more – definitely too expensive on a regular basis. We will be sorry if BA folds. We will be gone if the food quality drops.
BA has a good product. There must be 500,000 or more households like us – or at least enough for BA to make money and stop burning cash through promotions.
But then, I do not understand the new way of doing business – losing huge sums in the quest to get big. All the businesses I have been involved in grow internally by re-investing after-tax profits in the business without borrowing.
Pardon the following blunt commentary but your economic model is extremely flawed .
For that same ( for two ) twenty four dollars ( or less ) I can easily create gourmet quality breakfast , lunch and dinner for two with enough leftovers for at least one other creative meal with little or no effort and zero inconvenience . Not to mention having had the joy of picking out the ingredients personally , the social interactions involved when shopping as well as the absolute joy of DIY and the knowledge that I’ve exercised my creativity rather than followed the directions of some second rate wanna be chef too incompetent to make it in the ‘ real ‘ world .
I just invite you to watch a few YouTube videos users have posted to show how long it takes to prepare the Blue Apron meals, and see. For each meal you want to prepare, you have to read a whole set of instructions. On top of that the portions obviously are very small since they are already losing money; if they want to make the portions bigger, they will lose even more money. The business model is a joke that can only come out of the minds of sleazy Wall street executives. They know it’s a business model doomed to fail spectacularly; but they also know they can make their profit long before it completely collapses.
LOL. Prepalaw I agree. We must have been posting at the same time.
Honestly since the inception of these ludicrous ‘ meal kit ‘ services I’ve been asking myself ; Who in the hell is ignorant ( trust me I’m being kind ) and lazy enough to pay an excessive premium for something easily learned thru a multitude of cookbooks with the ingredients readily available ( as well as fresh ) at any and every local megamart across the land ?
In my never ever humble opinion the creation of marketing cons such as these and the fact that even a few fall for them says much about the current state of most Americans . Addled by the perception of convenience and too lazy to learn to DIY . And people have the nerve to ask ( as well as blame others ) why we’re in the state we’re in ?
“Excessive premiums”… One way to look at this is to look at the losses. This means that for now investors are subsidizing the service. So pricing may be right from the user’s point of view – hence the sales growth. But part of the costs are borne and funded by investors. So Blue Apron may be a good deal for users and a bad deal for investors :-]
Right on . I was getting ready to post a similar comment . So for now enjoy investor “subsidized ” products offered by netflix, amazon, and blue apron et al. Do you really think that in a true non suppressed interest rate environment these companies would be viable ? I just don’t see how amazon can make a profit on sending someone a $10 widget delivered to your doorstep in 2 days . If I had a few bucks a would buy a TESLA ev as a collectible . Remember the Delorean .
I doubled my money on “my” DeLorean.
I sold my spot when it was near time for delivery…..
Never looked back.
And my Great Grandparents thought my Grandparents were lazy for not growing, canning, jarring their own food nor hunting, fishing, raising their own meat. Surprise….feeding people has changed the last 100 years. This is just another change and/or option.
To say it’s another option is to suggest it’s somewhat equivalent to other options, but it’s not.
As a business model, it’s inherently unsustainable, not least because, as with Uber, the strategy is for investors to subsidize consumers in hopes of gaining monopoly status. While the hype machine made it appear that might be possible for Uber, it’s always been seen as out of the question for Blue Apron and its ilk.
Environmentally, it’s worse: excessive packaging, the cool-packs that are discarded, the transportation costs.
And while there will be some consumers who like the service, it’s not a viable solution to the problem of people not having enough time to cook varied, healthy food. That can only be solved by people taking their lives back, and learning how to shop and cook.
Watch this company go poof before our eyes when a recession hits, if not before.
I am ignorant enough to do it. Thanks for your kindness. It’s so considerate.
I hate going to the grocery store, wandering the aisles asking what and where the hell is tarragon. Shopping for three distinct recipes every week is my definition of hell.
I hate flipping through cookbooks, few of them have the step by step photos that I, an aggressive non chef, need. I’d invariably just pick things that look familiar anyway. I benefit from the forced exploration.
(“You could force yourself to pick something new!” Luckily we live in a world where lots of people pay to do things they could do for free, so no one will actually articulate this objection. Right?)
The “excessive premium” of $12 a meal is comfortably within my financial means.
I only ever cooked about six different dishes, total. Now I cook three new dishes a week every week. My girlfriend is -much- happier for it.
It takes a long time to cook, for me. If only there was some activity I could engage in while my hands and eyes are otherwise occupied — oh wait. Podcasts. How convenient.
All of the comments that reduce to “what idiots!” are essentially the confession that the author lacks the ability to see the world from the view of people with different value systems and situations.
That author also presumes that $238 million of revenue is all being generated by people less intelligent than they are, and less capable of making intelligent decisions.
Probably not.
If I were that intelligent, I wouldn’t burn time on comment threads, I’d instead leverage my superiority and build something that I deem truly valuable and fleece all these blue apron idiots, because clearly, they’re such easy marks, amiright?
My long contrarian take since everyone seems to be a basher: I am an excellent chef and so is my adult daughter who lives with me. It does get tiresome planning/shopping for interesting meals 7 days a week. We both like Blue Apron and have been subscribers for 2 years.
Positives we have seen:
You can pick and chose what meals and how often delivered. At first we did every week and now maybe twice a month. Website makes it easy to manage this. We have fun looking at the monthly offerings and choosing what we are excited about.
The meat and fish are very high quality. The fresh caught Salmon is gorgeous and was able to try Barramundi for the first time. I like lamb but have never experimented with it so great opportunity to do so.
Able to try new spices and taste profiles from other cultures. Broadens your cooking horizons. Having the exact amount means you don’t have to invest a fortune in unusual spices and condiments that you may never use again.
We have learned a lot of new techniques to add to our cooking skills. For example coating fish in rice flour to crisp it up in pan saute.
Cost of meal is 9.99 per person BUT we always have enough for lunch the next day.
My front door faces the harsh west sun but have never had an issue with their cold packs keeping the meats near frozen. nor the veggies/herbs fresh.
Entire meal take 20 or so minutes and they always suggest wiping out and cooking in same pan so cleanup is easy.
Sorry but Costco chicken gets BORING and most deli sections are premade by one or 2 manufacturers with slightly tweaked recipes….NOT FRESH at all.
I do not work for Blue Apron. Just trying to give the upside to this model.
By the way Plated is the same as Blue Apron and Salted is a grouped section of ingredients inside the store.
Blue Apron should have grown more slowly instead of jumping the IPO gun.
TheDona I agree with you fully. i enjoyed the variation of food, and cooking at home. my husband and i cooked together and learned new recipes and techniques. I purchased blue apron for my adult daughter as well and she enjoyed cooking healthy food and learned a lot about cooking. we are all busy and it was fun having a gourmet meal at home. its too bad they are having difficulty. I will use blue apron again.
TheDona, Thanks for pointing this out. There is a reason why sales are growing and are likely to hit $1 billion this year. As I said elsewhere in this section, investors are subsidizing the costs. So this may be a good deal for users and a bad deal for investors. The article was just about the investor end of it :-]
“Cost of meal is 9.99 per person […]”
Given the labor, food, packaging, delivery, spoilage, regulatory, legal, insurance, benefits, tax, etc, costs of 15.00 to 20.00 per person, that’s a bargain!
And a brilliant business model to boot!
How stupid are these CEO’s? All you have to do to double your share prices is take a cue from Elon Musk.
All Matt Salzberg has to do is to promise is the revenue stream that Blue Apron will have from the 3-4 billions new customers who will be living in the cities Elon Musk is building on Mars and Alpha Centauri, and bang! Not only your share prices stop falling, but will double in no time.
I think I make a great CEO.
Someone mentioned either @ zerohedge or another thread @ wolfstreet something to the affect: All recent American innovations is just “con” and clever marketing/
TSLA – no profit and sky-high valuations
UBER – rental service with no profits, scandals, fraud
AMZN – profits only from AWS. Buying $5B stock back. GEtting up to $7B tax breaks for $5B investment in HQ2. F*king ponzi scheme
Lyft – Copying UBER
NFLX – no real profilt
IBM – no profit since whenever
SNAP – BS, targeted towards millennials who everyone says are broke
————————————
Notables:
FACEBOOK – despite what one might think, people are addicted and solid revenue
MSFT – solid revenue, consistent market. not sexy though
AAPL – we have iPhone/Pad/watch – solid revenue
ALPHABET – Solid revenue. They honestly scare me and only company I admire as a software engineer. Look at their research – real solid advancements. While i am not a fan of them being a CIA for all by tracking everything, their advances in AI is scary for all of us esp. as it starts to create more AI itself. At some point they might obviate all of us including their own owners. Forget Russia, N Korea, Iran – AI is the real thread. At least Musk and Bill Gates, Stephen Hawkins acknowledge that.
————————————————————————————————-
Back to topic: I do not think Central Bankers are there to enrich their buddies.
1. If you are a central banker in the West – you might ask yourself –
What can i do to prolong the collapse of the Western economy knowing that we produce little and have people accustomed to a good quality of life?
Inject fake money to let the party go on as long as we can. Yes, the filthy rich might get richer but that is a side affect. Joe 6-pack still drives a new pickup truck though bitches about paying healthcare premiums. And miss Snowflake can get iPhone X but deserves to F**k anyone and let society pay for her open legs.
2. The Central bankers in China are thinking – the West is screwing us with inflated fake currency, so what do i do? If i stop the charade I have a billion+ people marching in Beijing, so i need to play along as long as I don’t need to – which maybe a while. Let me acquire assets wherever I can and hope that our internal consumption can sustain us in a decade or two. Until then we need to accept the dollar’s hegemony.
R2D2,
Sorry, but those colonies on Mars are not for the riffraff: they’re for the Overclass to high-tail it out of Dodge once they’ve extracted every last gram of wealth.
It’s the same with all the schemes for life extension and immortality being pursued by the likes of Larry Ellison and Peter (“Germany’s Worst Import to the US)” Thiel: whatever benefits are discovered, the likes of you and me won’t be seeing them.
However exploitive they were as employers and monopolists, the robber barons of old did have a sense of noblesse oblige, and endowed museums, parks and other public goods, which Americans are still using. These Silicon Valley characters, instead, are pursuing selfish, deluded sci-fi fantasies.
Can’t they just buy their stock back like everyone other company to increase the stock? Heck, IBM has been doing that for 22 quarters???
They don’t even have enough cash to keep going much longer. Their cash flow is heavily negative. And they can’t issue bonds, like IBM can. They may even have trouble borrowing from the bank, with those kinds of losses. They’re essentially locked out of the capital markets. And they need cash more than anything. This is what happens to young companies. So Blue Apron cannot buy back its own shares.
And what in Blue Apron is currently worth a billion dollars? I guess it does’t matter anymore now that the VC gods have been payed.
Blue Apron has no “moat”, as Warren Buffet (?) says. They do not have a unique product of service. Anybody can copy what they do and improve it, even using BM’s mistakes for a guide.
It’s like the bicycle rental companies in China. If one company succeeds, another 99 jump in and soon nobody is making money.
If your goal is to build a company fast and dump it before others join the party, that’s fine. However, it’s not a long term investment. It’s a formula for bankruptcy.
Here comes Amazon:
https://www.cnbc.com/2017/07/18/amazon-is-twisting-the-knife-in-blue-apron-commentary.html
Blue Apron should be charging their customers at least three times more to turn to real profit. Just take a look at how much the raw materials for the food you order from them costs.
My complain is not about their food or service being bad but about how is a murder for investors. And that the only reason they are making a bilion a year is because they are selling a premiun service at a huge red marker loss.
So unless their prices rise their business is doomed.
Hi Wolf, thanks for another great article. Your commenters are great too.
My wife used a few of these when she got tired of what I was cooking each night. As others have said, it’s basically an overpriced Swanson dinner that you have to make yourself.
I still can’t give away any more cold packs. I have enough to do without shipping the dumb things back.
My wife is a Developer Drone on the Corporate Plantation and her brain is fried by the time she gets home. This was her first foray into “cooking” in a couple years.
What’s interesting is the “hive-mind” of her liberal friends at work. They all love kale, vote Dem, and support each others trendy activities including Blue Apron.
Perhaps linking telepathically to the liberal hive-mind is where the success of the next Unicorn adventure will find success.
Cheers
The problem with Blue Apron is that they lure customers by providing a steep discount for them to join but these same customers do not stay long. Currently, retention is only around 3 months….
http://www.slate.com/blogs/business_insider/2017/06/30/blue_apron_customer_retention_low.html
Another problem with Blue Apron are the instructions for making meals. They are super elaborate and time consuming which turns off customers when they are looking to make fast and simple meals. Their quality is also dropping as well.
Loved this subject and comments!
Here in UK Waitrose food supermarket) have launched some sort of prep service. (We Are not interested: overpriced and sub-quality ingredients and more time consuming to prepare and cook than the food we like to eat.)
Never mind what we like, the point is that having read this article and thread I am disappointed to discover that the idea is not a Waitrose original but yet another USA import.
As for investors in BA subsidising the cost for customers, surely that is the same as in most quoted companies that thrive of revenue and forget the adage “turnover is vanity, profit is sanity”.