I hear you, Manny. I remember when I was here last February and the MBTA was shut down because it was too cold for the brakes on the train to work properly. I didn’t even realize that was possible!
One differentiator for me, however, is the overall utility that the MBTA provides to the city. I think there is a lot of value added there, even if it is not necessarily captured by profit. I’m not sure what value there is in providing someone with the ability to travel from Cleveland to Denver via AMTRAK.
Great point, Aner. I can tell you that I have been on their website when they have been out of a particular size in their most popular suit. I wonder if the average custom minds having to wait a bit for a particular size to get back in stock, or if suits are more of a “need to have it now” type of product.
Really interesting write-up Charlotte. I will be interested to see how they fare. I think the razor and razor blade model is an interesting fitness concept, but deciding to go after the “at-home” exerciser is a brave choice. I often hear the story of how the $500 treadmill turned into the $500 clothes hanger after a few months; I wonder if this subscription model will incentivize people to stick with the Peloton through those times when they are just “over” cycling, or working out in general.
It also seems that a driver of CrossFit and Soulcycle’s success has been their almost cultish following. I imagine this varies from box to box (or studio to studio), but that type of network effect/peer pressure might be hard to replicate digitally.
Nice post, Jack. As a taxpayer, it is frustrating that I subsidizing a venture that, as designed, has no hope of every being profitable. I will have to read up on the Passenger Rail Act; can’t say I understand why it exists given that there are obviously other means with which to get around the country. It’s quicker (and cheaper) to take a bus across country than to try to do the same trip by rail, so I cannot say the benefit is obvious to me. One wonders whether the derailment in Philly would have happened if AMTRAK did not have to spread its CAPx spend across so many lines…
Andy, I think they are already trending this way. They have recently started offering a second line of suits that average a little over $200 and are also going the bespoke route. I wouldn’t be surprised if in the future they only offer a few basic versions for the low price, while their newer or small-batch styles are priced at a higher point.
Good points, Akash. I also think there is plenty of room in the market for more than just a few companies. One of the drawbacks of the CG model is that it is hard to scale in order to meet unpredictable demand. The same sheep can only be shorn so many times a year…
Great post, Nate. I’d be interested to know if any of the Palantir employees ever wind up being poached by the CIA or NSA. Granted, working for the government can be frustrating and bureaucratic, but as you mention there is a great deal of tangible value being delivered.
They really do own the sheep; though perhaps the flock has increased in size over the past few years. The $20M revenue goal would also include clothing that is not wool based (e.g., shirts, denim, ties, and chinos). From what I can gather, the founder was very concerned about the quality of the wool, which is why he initially decided that the best way to ensure the quality was to literally own the sheep providing the wool. As the company scales, I do wonder if this method of raw material sourcing will continue to make sense…