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Top comments (3)
You know what? I've been thinking about this, and I want another go. This metaphor is perhaps a little too direct.
You want to start selling bubble tea in the west. You're convinced that bubble tea will take the market by storm, outselling conventional tea, coffee and soda to the point where no-one will drink anything else. This, in your mind, is 100% guaranteed.
Unfortunately, tapioca pearls (which make up the bubbles in bubble tea) are very expensive to manufacture and import. I dunno - for taxation reasons, or something. So you go to the huge company who grows, manufactures and distributes them and you explain your idea. They like the idea of moving into a new market, so they give you a lot of money, which you use some of to buy their pearls.
In exchange for this money, they now own some of your business.
You start pushing bubble tea hard. But no-one wants to pay for it so you are literally giving it away. People can't walk down the street without someone stopping them and handing them a cup of bubble tea. Most people hate it.
Some people - usually young people - like it so much, they will even buy cups of tea. These cups are bigger and have fancier graphics printed on them. But here's the thing: you're even losing money on these products.
Whenever anyone points out that you are losing money on this mad scheme, you show them how much money coffee shops and soda manufacturers make. And when they look at your company accounts, they can see that the tapioca pearl company has invested so much money in your company, your predictions must be right.
Pretty soon, the politicians point out that handing out bubble tea on the streets has led to an increase in littering. So you borrow money and persuade other politicians to argue against them.
Eventually, the coffee chains and the soda manufacturers can ignore this phenomenon no longer: everyone is talking about bubble tea. So they start offering their own versions. They source their tapioca pearls from the same company as you and, just like they did with your company, the tapioca pearl company invests money in them, so they can spend it on pearls.
This suggests your predictions are coming true but what's really happening is that everyone is losing money on this. It might seem like the tapioca pearl company is making lots of money. But in order to keep up with the demand, they've invested in huge new factories to process tapioca and have borrowed money to do this. If the demand doesn't keep growing, they could be in serious trouble.
You have $5. Your two friends, Alice and Bob have $0. All three of you can have $5 as long as you keep passing the notes around in a circle fast enough.
If you do this for long enough, someone might come along and watch. But the notes will be passing too quickly for them to read. They might think "Each of those friends has $50!".
You offer to sell your money to them for £20. They agree to this deal. Then all three of you run away.
Perfect. Right now it feels like a lot of hype.