5 ms·

I really wish startups would pay attention to this: “The nice thing about revenue is it’s not diluted capital”. Far too often I see people look at their valuat

I really wish startups would pay attention to this: “The nice thing about revenue is it’s not diluted capital”. Far too often I see people look at their valuations as something like a scorecard for success. And if you can cash out, then I suppose more power to you. But this programmer is tired of the ".com", "web 2.0", "unicorn" bubbles... I wish companies would concentrate on providing value to their customers.

rosser 11y ago
I wish companies would concentrate on providing value to their customers. That's just it, though. "Customers" are just another measure of your value to the people to whom you're actually beholden: investors. As long as you're providing value (perceived or actual) to them, you're winning this game. Ideally, that involves providing value to customers, as well, but it's demonstrably not necessary.
- deleted 11y ago
  [deleted]
- TuringTest 11y ago
  Isn't that way of thinking exactly what led to the dotcom bubble?
  - vonklaus 11y ago
    It isn't clear what the above comment actually means by"customers". If they are talking about perceived value to a customer who is the advertiser, and they are selling them your value, I sort of follow the point. In whatever case, you are correct if you are insinuating that the perceived v. Actual value delta is dubious in that it usually doesn't taper off. Once things get way out of whack the correction can be over night
    - mikekchar 11y ago
      I haven't really had the chance to go back and look at this thread. I found the responses really interesting because of exactly what you said here. Each person seems to have a definition of "customer" and "value" and it's different :-) What I originally meant by customer was the person who paid for the service/good being developed. I don't personally consider investors to be customers. They are partners in my eyes. Also, interestingly, I don't necessarily consider users to be customers. For example Facebook users are not customers since they don't pay anything for the service. The customers are the people buying ads. The most interesting thing is that Facebook probably does not provide much value at all. If people would have to pay $15 a month for it, I suspect it would fail quickly. But the gathering of all those faces is worth something to the advertisers. So Facebook (and Google, etc) are caught in a fairly tight squeeze of diminishing returns on adding value to the users. They need to spend enough to bring enough faces to get advertising, but more money/facility is not useful. In almost every job I've worked in, my users are not my customers. In a few jobs I've had no customers -- just speculating investors. It becomes a race to the bottom where we try to make the lease expensive thing that will attract faces (or in the case of speculating investors, create a disruption). Can you imagine having a business plan where you go to an investor and say, "I want to make something that is worth $1000 a year to a user"? If I can find 1000 users, that's a million dollars a year -- enough to fund a decent development team. I know. It's ludicrous. Why would we try to make something that someone values as much as their daily cappuccino? I don't expect my short rant to change anyone's mind. But maybe after people discover that the "fractions of a penny per face with billions of faces" market is not so large as they thought, we'll have more CEOs trying to think about how to make a product that users want to pay for.
- apalmer 11y ago
  No. Full Stop. what is being said here is maybe you should minimize the number and scope of investors. your response is 'your' value is whatever your 'investors' think it is. The key point in this is businesses aren't founded to gather investors, businesses are founded to make money. If you can make money more efficiently by taking on investors then you should, if you can make money more efficiently by not taking on investors then you should not.
  - rosser 11y ago
    You seem to think we have some point of disagreement. The key point in this is businesses aren't founded to gather investors... Maybe together, we can explain that to the rest of Silly Valley, where "getting funded" has for some time now demonstrably been a more important goal than, I don't know, "getting traction".
crdoconnor 11y ago
>I wish companies would concentrate on providing value to their customers. Wish for interest rates to be higher then. That the government policy that's driving this.
- forgetsusername 11y ago
  >Wish for interest rates to be higher then. Why? There are people on both sides of the interest-rate trade, so any change in rates creates winners and losers. Higher rates aren't inherently "better" than lower rates. Personally, I want LOW rates. I'm young and have a mortgage and car payment. I want cheap money, so that I can put it to use investing in my future. Why should I pay more to subsidize the Baby Boomer's retirement funds? They've had an easy enough road as it is.
  - rwj 11y ago
    Those low rates have probably also propped up the the value of your house. Look at the ratio of the median house price to income over time, and you will be less convinced that low interest rates have been helpful.
    - forgetsusername 11y ago
      >you will be less convinced that low interest rates have been helpful. So the fact that I'm paying less interest AND the value of the asset has increased isn't helpful? Again, I'm not making the argument that low rates are "good"; I'm saying they're good for me.
  - jerf 11y ago
    "I'm young and have a mortgage and car payment." Your mortgage costs more because interest rates are low, making lending easy, making it easy to take out loans, meaning all the buyers can get bigger loans, meaning you have to bid more to win. Second order effects. Interests rates are not low in a vacuum. It is likely that because there's nowhere else to make good returns, there's a lot of money sloshing into stupid non-value-focused dotcoms that will dry up when interest rates go back up, creating competition for those dollars. Again, second order effects. You're not thinking economically if you're not thinking about those.

rosser 11y ago

I wish companies would concentrate on providing value to their customers. That's just it, though. "Customers" are just another measure of your value to the people to whom you're actually beholden: investors. As long as you're providing value (perceived or actual) to them, you're winning this game. Ideally, that involves providing value to customers, as well, but it's demonstrably not necessary.

deleted 11y ago
[deleted]
TuringTest 11y ago
Isn't that way of thinking exactly what led to the dotcom bubble?
- vonklaus 11y ago
  It isn't clear what the above comment actually means by"customers". If they are talking about perceived value to a customer who is the advertiser, and they are selling them your value, I sort of follow the point. In whatever case, you are correct if you are insinuating that the perceived v. Actual value delta is dubious in that it usually doesn't taper off. Once things get way out of whack the correction can be over night
  - mikekchar 11y ago
    I haven't really had the chance to go back and look at this thread. I found the responses really interesting because of exactly what you said here. Each person seems to have a definition of "customer" and "value" and it's different :-) What I originally meant by customer was the person who paid for the service/good being developed. I don't personally consider investors to be customers. They are partners in my eyes. Also, interestingly, I don't necessarily consider users to be customers. For example Facebook users are not customers since they don't pay anything for the service. The customers are the people buying ads. The most interesting thing is that Facebook probably does not provide much value at all. If people would have to pay $15 a month for it, I suspect it would fail quickly. But the gathering of all those faces is worth something to the advertisers. So Facebook (and Google, etc) are caught in a fairly tight squeeze of diminishing returns on adding value to the users. They need to spend enough to bring enough faces to get advertising, but more money/facility is not useful. In almost every job I've worked in, my users are not my customers. In a few jobs I've had no customers -- just speculating investors. It becomes a race to the bottom where we try to make the lease expensive thing that will attract faces (or in the case of speculating investors, create a disruption). Can you imagine having a business plan where you go to an investor and say, "I want to make something that is worth $1000 a year to a user"? If I can find 1000 users, that's a million dollars a year -- enough to fund a decent development team. I know. It's ludicrous. Why would we try to make something that someone values as much as their daily cappuccino? I don't expect my short rant to change anyone's mind. But maybe after people discover that the "fractions of a penny per face with billions of faces" market is not so large as they thought, we'll have more CEOs trying to think about how to make a product that users want to pay for.
apalmer 11y ago
No. Full Stop. what is being said here is maybe you should minimize the number and scope of investors. your response is 'your' value is whatever your 'investors' think it is. The key point in this is businesses aren't founded to gather investors, businesses are founded to make money. If you can make money more efficiently by taking on investors then you should, if you can make money more efficiently by not taking on investors then you should not.
- rosser 11y ago
  You seem to think we have some point of disagreement. The key point in this is businesses aren't founded to gather investors... Maybe together, we can explain that to the rest of Silly Valley, where "getting funded" has for some time now demonstrably been a more important goal than, I don't know, "getting traction".

crdoconnor 11y ago

>I wish companies would concentrate on providing value to their customers. Wish for interest rates to be higher then. That the government policy that's driving this.

forgetsusername 11y ago
>Wish for interest rates to be higher then. Why? There are people on both sides of the interest-rate trade, so any change in rates creates winners and losers. Higher rates aren't inherently "better" than lower rates. Personally, I want LOW rates. I'm young and have a mortgage and car payment. I want cheap money, so that I can put it to use investing in my future. Why should I pay more to subsidize the Baby Boomer's retirement funds? They've had an easy enough road as it is.
- rwj 11y ago
  Those low rates have probably also propped up the the value of your house. Look at the ratio of the median house price to income over time, and you will be less convinced that low interest rates have been helpful.
  - forgetsusername 11y ago
    >you will be less convinced that low interest rates have been helpful. So the fact that I'm paying less interest AND the value of the asset has increased isn't helpful? Again, I'm not making the argument that low rates are "good"; I'm saying they're good for me.
- jerf 11y ago
  "I'm young and have a mortgage and car payment." Your mortgage costs more because interest rates are low, making lending easy, making it easy to take out loans, meaning all the buyers can get bigger loans, meaning you have to bid more to win. Second order effects. Interests rates are not low in a vacuum. It is likely that because there's nowhere else to make good returns, there's a lot of money sloshing into stupid non-value-focused dotcoms that will dry up when interest rates go back up, creating competition for those dollars. Again, second order effects. You're not thinking economically if you're not thinking about those.