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Reading this, an old joke and something Hemingway wrote come to mind. The old joke is about a retailer whose margins were very thin but wanted to attract more
by cs702 11y ago
Reading this, an old joke and something Hemingway wrote come to mind.
The old joke is about a retailer whose margins were very thin but wanted to attract more customers, so the retailer decided to have a big sale. After looking at the proposed discounts, an assistant questioned the strategy, noting that they would lose money on each transaction. The retailer said, "That's okay -- we'll make it up on volume!"
The Hemingway bit is this gem from The Sun Also Rises: "'How did you go bankrupt?' Bill asked. 'Two ways, Mike said. 'Gradually and then suddenly.'"
It's understandable for startups who don't yet have a business model not to make any money. In fact, that's what one expects of them. But unicorns are NOT startups; they're fairly sizable businesses that already have a business model, with large organizations, lots of overhead, repeatable processes, etc. It is very risky for companies at such a late stage in their life cycle to still be losing money on every incremental dollar of revenue!
Someone should start a Unicorn Death Watch ;-)
- jameshart 11y agoPaging @pud.... he still owns fuckedcompany.com, maybe it's time to bring it out of retirement?
- toomuchtodo 11y agoI got in touch a few weeks ago and it seemed like he wasn't interested in reviving it for the next onslaught of failures. I'd be game to run fuckedunicorns.com if anyone wanted to contribute with me.
- thaumaturgy 11y agoContact @pinboard, he loves poking his finger at all this stuff.
- eropple 11y agoI own "unicorngrill.com". Could fire it up. Email's in my profile.
- jlarocco 11y ago> It's understandable for startups who don't yet have a business model not to make any money. I don't understand how anybody can value a company without a business plan and some idea of how to make money at anything higher than zero dollars. Do they even meet the qualifications for the traditional definition of "company" if they have no plans to make money? It seems to me as long as venture capitalists are okay investing shit tons of money into silly "startups" that don't know how to make money we're just going to see bubble after bubble after bubble. It's tempting to speculate that the people inflating this bubble are the ones who managed to cash out of the first dot com bubble before the crash came. Most "real" investors learned their lessons the first time around, and want nothing to do with it. It would explain why so many "unicorns" get such a tepid response when they finally IPO.
- GFischer 11y agoI like Steve Blank's definition of startup: "A startup is an organization formed to search for a repeatable and scalable business model." So, by definition, you don't know how much it's worth using traditional valuation methods you'd use for "normal" companies, so investors use other indicators like growth, number of users, etc. (which can be gamed). As the grandparent post states, "unicorns" are companies that already have a repeatable business model, so they should start to be looked at differently. It's in the "unicorn's" best interests to be valued as a startup for as long as possible, that's one reason they cling to the title far after it's not applicable. It's also a status symbol :) , but it sounds silly when people talk about their "10 year old startup".