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"Business expansion" rather than "business growth". I agree. They're expanding. They're not profitable, they expanded, the expansion incurs more loss, what the
by PostOnce 8y ago
"Business expansion" rather than "business growth". I agree. They're expanding.
They're not profitable, they expanded, the expansion incurs more loss, what they're doing is digging a deeper hole. If you lose money per customer overall, and you get more customers, now you're losing even more money.
"Positive EBITDA", if you can't pay your taxes/etc and break even... guess what, you're going bankrupt eventually.
All this and they think they can compete with Intuit. This won't be the first time a New Zealand company succeeded in the "ignored by competition because its too small and has its own system of laws and isn't part of a cooperative economic zone (vs, you know, just expanding to another large city in US/EU)" and then thought it could compete overseas, only to have its ass handed to it.
- mseebach 8y agoI don't know what their numbers are exactly, but the math often comes down to something like cost of customer acquisition being $10, and customer lifetime value being $80 over 10 years. As long as there are customers to be acquired, and money to spend acquiring them, you should get as many as you can as fast as possible. This is clearly long term profitable, but the first many years you do this, you will be in the red. The flip side is that you could stop doing this and become profitable overnight (at the cost of foregoing potential future profits). It's still a bet, it's impossible to say if the lifetime value holds up in the face of competition, screw ups or changes in the business environment - but that's why it's an investment.