5 ms·

Having been through the VC wringer I don't think you can be unprofitable for a decade.

harryh 6y ago
Uber, Dropbox, AirBnB, Slack, Pinterest. Long term un-profitable venture backed software companies are practically a cliche at this point.
- KirinDave 6y ago
  Uber is special, but the rest of the companies you named there were at one point rather early in their lifecycle profitable, no? AirBnB for sure. Pretty sure Dropbox and Slack were in the black for awhile. Please feel free to educate me about Pinterest, I have no idea. But personally, I think the idea of companies designed to corner a market and then get acquired are just a different kind of medium term investment strategy. For every unicorn you see, there are hundreds of failures where the plug got pulled and information got fed forward to preferential incarnations of the venture.
- MattGaiser 6y ago
  They are not long term unprofitable for the VCs. Those companies have been through rounds and rounds of growth which has brought in other investors (i.e. who VCs can sell to if they desire). What about the company that would need to labour for 5 years before they get the MVP out the door?
  - golergka 6y ago
    They are profitable to VCs exactly because system for long-term thinking works, it just consists of different levels of investors, with different risk/reward goals, handing over the same company, still long-term, still unprofitable, one to another. VCs are just one of the first levels of this system.
  - harryh 6y ago
    What about the company that would need to labour for 5 years before they get the MVP out the door? Magic Leap.
  - KirinDave 6y ago
    Why is 5 years the cutoff?
ridaj 6y ago
You can. If your operation generates profit, but could grow faster by plunking the profit back into growth, the VC thing to do would be to demand you reinvest all profit towards growth. But if your business is losing money and not growing, or if its unit margins are negative à la moviepass, then it doesn't make sense to stick around for a decade.

Uber, Dropbox, AirBnB, Slack, Pinterest. Long term un-profitable venture backed software companies are practically a cliche at this point.

KirinDave 6y ago
Uber is special, but the rest of the companies you named there were at one point rather early in their lifecycle profitable, no? AirBnB for sure. Pretty sure Dropbox and Slack were in the black for awhile. Please feel free to educate me about Pinterest, I have no idea. But personally, I think the idea of companies designed to corner a market and then get acquired are just a different kind of medium term investment strategy. For every unicorn you see, there are hundreds of failures where the plug got pulled and information got fed forward to preferential incarnations of the venture.
MattGaiser 6y ago
They are not long term unprofitable for the VCs. Those companies have been through rounds and rounds of growth which has brought in other investors (i.e. who VCs can sell to if they desire). What about the company that would need to labour for 5 years before they get the MVP out the door?
- golergka 6y ago
  They are profitable to VCs exactly because system for long-term thinking works, it just consists of different levels of investors, with different risk/reward goals, handing over the same company, still long-term, still unprofitable, one to another. VCs are just one of the first levels of this system.
- harryh 6y ago
  What about the company that would need to labour for 5 years before they get the MVP out the door? Magic Leap.
- KirinDave 6y ago
  Why is 5 years the cutoff?

ridaj 6y ago

You can. If your operation generates profit, but could grow faster by plunking the profit back into growth, the VC thing to do would be to demand you reinvest all profit towards growth. But if your business is losing money and not growing, or if its unit margins are negative à la moviepass, then it doesn't make sense to stick around for a decade.