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Back of the envelope calculations: Investors clearly want them to be profitable; maybe not now but eventually. They have a $450m valuation and $150m in sales,

Back of the envelope calculations: Investors clearly want them to be profitable; maybe not now but eventually. They have a $450m valuation and $150m in sales, for which they get 5% ($7.5m) [1]. According to Crunchbase, they have 50-100 employees. Assuming only 50 employees, they are spending at least $15m in wages (plus health insurance, etc.), plus fixed expenses (SF building, AWS, etc.) and advertisement. So there is no way they would be making ends meet with their 5%. Even assuming they become 5x bigger while keeping the same expenses, they might still be losing money. The only way for them is to raise fees. Sure, another option is to keep costs down, everything streamlined, don't spend on advertisement, etc. but as others pointed, you can't pick that route if you have investors. [1] https://techcrunch.com/2017/09/14/patreon-series-c/ https://techcrunch.com/2017/09/14/patreon-series-c/ [2] https://www.crunchbase.com/organization/patreon https://www.crunchbase.com/organization/patreon

chmln 9y ago
Why do they have so many employees? Seems excessive and totally unnecessary.
- trowawee 9y ago
  Can't be a Real Silicon Valley Start-Up™ if you aren't wildly over-capitalized and constantly adding unnecessary headcount.
- TylerE 9y ago
  More importantly, why is a company that's not doing anything super cutting edge in SF? That's like a textbook case of a company that should be somewhere boring and CHEAP.
  - fnbr 9y ago
    Exactly. It's also not clear why it's taken VC- seems like it should be bootstrapped somewhere in the Midwest.
    - sdrinf 9y ago
      A bootstrapped company somewhere in the Midwest takes about 3-5 years of bootstrapping to be heard about on the east coast. A capitalized startup can hit the PR drum immediately. As put earler at https://news.ycombinator.com/item?id=15658756 https://news.ycombinator.com/item?id=15658756 > In consumer (markets), even a great product will often get blown out of the water if a competitor with a worse but good enough product has a deep, deep marketing war chest. If you space has a VC backed competitor, you have no choice but to also raise money and fight a war of attrition

chmln 9y ago

Why do they have so many employees? Seems excessive and totally unnecessary.

trowawee 9y ago
Can't be a Real Silicon Valley Start-Up™ if you aren't wildly over-capitalized and constantly adding unnecessary headcount.
TylerE 9y ago
More importantly, why is a company that's not doing anything super cutting edge in SF? That's like a textbook case of a company that should be somewhere boring and CHEAP.
- fnbr 9y ago
  Exactly. It's also not clear why it's taken VC- seems like it should be bootstrapped somewhere in the Midwest.
  - sdrinf 9y ago
    A bootstrapped company somewhere in the Midwest takes about 3-5 years of bootstrapping to be heard about on the east coast. A capitalized startup can hit the PR drum immediately. As put earler at https://news.ycombinator.com/item?id=15658756 https://news.ycombinator.com/item?id=15658756 > In consumer (markets), even a great product will often get blown out of the water if a competitor with a worse but good enough product has a deep, deep marketing war chest. If you space has a VC backed competitor, you have no choice but to also raise money and fight a war of attrition