The era of the ‘Millennium Lifestyle Grant’ is coming to an end

If the millennial lifestyle grant is to return, it could take years. Derek Thompson, American magazine editor Atlantic observed last month that “for the foreseeable future, subway dwellers will have to live the old way: paying what things really cost”.

David Rohrsheim lived through the early years of the pricing strategy as a ‘nerd’ in San Francisco in 2010, then inundated with new apps invented for the iPhone, before bringing Uber to Australia as the country’s first local boss .

Across the startup space, deep discounts and freebies that once lured people to new consumer goods are less common.Credit:iStock

“You were constantly part of a beta test for the future,” Rohrsheim said via email. “Developers could quickly reach critical mass in San Francisco and find out if their idea was a good one. Many weren’t, but that was half the fun.”

At that time, Rohrsheim said, about three-quarters of the world’s venture capitalists were based in the town of Sand Hill Road, which has become a metonym for the industry. That money went to companies like Uber.

“In 2012, I remember handing out $20 Uber vouchers to bars in Sydney myself,” Rohrsheim said. “This investment can quickly move a start-up business forward into its future.”

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Part of the logic of this expensive path to growth is that many companies scale to become profitable. A delivery company may be losing money on its drivers’ salaries, but hopes to negotiate better deals with suppliers as it gains market power. If his staff can deposit more goods per delivery, the profit from these sales will also help cover his salaries. Some companies like Uber cannot exist without a large number of customers and drivers. Without scale, it would take too long for passengers to get a ride and for drivers to get a fare. With the scale, serving feels effortless.

Rohrsheim, who is now a seed investor after leaving Uber, said the approach only works if the underlying business is sustainable.

“Sometimes you see businesses that just sell $2 coins for $1 ⁠ — they won’t magically become profitable when they scale up,” Rohrsheim said.

Millennials, commonly defined as those born between 1981 and 1996, have been the big beneficiaries of this infusion of investor dollars. Born too late for affordable housing and just in time for stagnating real wages, the generation could at least enjoy the convenience of lower prices.

But public markets and venture capitalists are not social workers. They demand a return for their investors, which include the country’s largest pension funds. Uber, which has lost billions for years, has also come under pressure to raise fees (and cut the company’s share) from its couriers and drivers who argue their pay is too low as fuel prices soar. soaring and used cars becoming more expensive.

“A lot has changed since Uber launched in Australia, but we haven’t made any significant changes to recommended fares since 2017,” a spokeswoman said. “It was clear from the driver-partner feedback that we needed to revisit this.”

“Subsidizing the start is something that’s easier when the money is virtually free, but becomes especially difficult as interest rates rise.”

Economist Chris Richardson

Payslips seen by The Sydney Morning Herald and age for a region, the base price for a trip ranging from $2 to $2.25, the per-minute rates ranging from 38 cents to 40, and the minimum rate increasing from $7.50 to $8.50. Representatives of Koala’s external press declined to comment. A spokeswoman for Neuron said it had made only a marginal increase in its standard pricing since its launch in 2019, which was the same or lower than its competitors. It increased its monthly pass from $89 to $99 in February this year for certain regions, and the spokeswoman said it would continue to run promotions.

Marley Spoon’s Australian managing director, Rolf Weber, said the company was working with its suppliers to manage cost and supply chain challenges. “We raised our prices slightly in May and our customers have been very understanding, as they only see prices go up and up in supermarkets,” Weber said.

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Richardson said startups that offered discounted products were always going to have to raise prices. The necessary change had just been accelerated, he said.

Rohrsheim was more optimistic about the future of the startup world. “There’s more venture capital than ever looking to back good ideas – especially in big markets like food and transport – so I don’t think the winter will last too long.”

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