If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year.

To maximize customer growth they have strategically—or at least “strategically”—throttled their prices, in effect providing a massive consumer subsidy. You might call it the Millennial Lifestyle Sponsorship, in which consumer tech companies, along with their venture-capital backers, help fund the daily habits of their disproportionately young and urban user base. With each Uber ride, WeWork membership, and hand-delivered dinner, the typical consumer has been getting a sweetheart deal.

Let’s say you buy a subscription to a meal-kit company, which sends you fresh ingredients and recipes to cook at home. You pay $100 a month. The ingredients are tasty, so you renew for the second month. And the third. But by the fourth month, you’ve decided that you’ve learned enough basic tricks around the kitchen to handle roasted chicken or sautéed cod by yourself. You cancel the subscription.

Your lifetime value to this company is $400—or $100 for four months. Since you quit, the meal-kit company has to find the next “you” to keep growing. So they advertise on podcasts. Let’s say that, on average, this company can expect to add 100 new users if it spends $50,000 on podcast advertising—or $500 per new user.

If the company spends millions on podcast ads, its user base and revenue base will grow and grow. Outside analysts will gasp and marvel: This meal-kit thing is on fire! But look closer: If it costs $500 to add a new user, and the typical marginal user—like you—only spends $400 on meal kits, there is no path to profitability. The road leads to the red.

https://www.theatlantic.com/ideas/archive/2019/10/say-goodbye-millennial-urban-lifestyle/599839/