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Funny enough I worked at a ecommerce clothing “startup” that had upwards of $75 million in sales but wasn’t profitable
by jrs95 8y ago
Funny enough I worked at a ecommerce clothing “startup” that had upwards of $75 million in sales but wasn’t profitable
- CamelCaseName 8y ago...how? What was the game plan? Why would they do this?
- mrguyorama 8y agoHappened all the time in the dotcom bubble: "We lose money on each sale but we'll make it up in volume!"
- vanadium 8y agoHaving started my career at the start of the dot-com boom (and later bust), that was damn near every startup I came across. Our little agency ended up moving into eTour's space in Atlanta (VaHi) when they departed. Nice movie theatre built into the space.
- LyndsySimon 8y agoCustomer acquisition? In some cases it might make financial sense to lose a small amount of money per customer if the cost per acquisition is more than the amount they're losing. Network effect? I'm not sure this would apply to a clothing retailer, but there are lots of services out there that have a marginal cost per customer but can't effectively monetize until they have a sufficiently large customer base and therefore have access to enough data to be marketable. Exit strategy? A company with x million customers, even if unprofitable and unsustainable in its current state, is worth more than a company with x/n customers that is marginally profitable in many cases. As for this case in particular... I don't know. I suspect that a case could be made that the money they're losing has them in the media enough that they're basically paying for advertising by being unprofitable. I doubt I would have ever heard of MoviePass if not for them being constantly in the news.
- cm2012 8y agoThe CLTV is high in fashion - people return to shops they like over and over. If they're in high growth, they're spending a lot in marketing to get new customers acquainted with the brand.
- deleted 8y ago[deleted]
- 27182818284 8y agoFacebook wasn't profitable until what, like year 8 of their existence? Similarly SpaceX now is being awarded more than 50% of all commercial space launches, but burned money in the beginning.
- LargeWu 8y agoSpaceX is trying to develop a new kind of rocket, with insane upfront R&D costs. MoviePass is trying to sell movie tickets for less than they paid for them. I don't think those are similar at all.
- gnicholas 8y agoThis is facially true. But I don't think MoviePass would describe their service this way. They would say they are gathering unprecedented amounts of personal data about movie preferences, which can be worth millions to movie studios and TV production companies that want to know what type of content will attract viewers. Framed this way, it is more understandable that they would need to burn cash in order to get the ball rolling on data collection. Still, it's not rocket science and probably could have been done much more cheaply (just offering subscription coupons or something).
- throwaway2048 8y agois said personal data harvesting going to be worth multiple dollars per movie somebody watches? somehow i doubt it.
- compsciphd 8y agoSpaceX lost money on R&D, they didnt lose money on the launch itself. i.e. every actual customer increased the money in their bank account.