3 ms·
> more unicorns are becoming public. but what's not spoken about a lot is how most of these companies are running on fumes. read any tech company s-1 that's pos
by dzonga 5y ago
> more unicorns are becoming public.
but what's not spoken about a lot is how most of these companies are running on fumes. read any tech company s-1 that's posted on hn these days, high chances the company is cash flow negative. which means if investors withdraw funds the company goes belly up in a day, leaving the regular employees i.e holoi polloi holding the bag.
- dangus 5y ago> if investors withdraw funds the company goes belly up in a day Investors can't withdraw funds from companies by design. When you sell shares in a public company it's another investor buying it from you. Runway is runway, it can be looked as a glass half empty ("running on fumes") or half full. If a company runs out of time/funding rounds it can cut costs. It's easier to make a profit when you have high revenue, brand recognition, fewer competitors. That's why growth companies run for years on losses.
- dzonga 5y agopulling funds, as in the 'cash from financing activities' yeah that can be withdrawn. shares are different, in that investors can sell the shares at a loss.
- Notanothertoo 5y agoThis is often intentional for tax reasons, see palintir and Spotify.
- jlos 5y agoFYI its "hoi polloi": - Hos is the Greek definitive article (i.e. "the") - Pollos is a Greek word, most generally, meaning "many' - They are used with the nominative plural ('oi' ending) - In Greek, the article delclines with the noun so "hos" -> "hoi"
- dzonga 5y agolet's not confuse profits with cash flow. yeah, it's okay to be running losses, if you're reinvesting the money like amazon did. however cash flows are different. will re-check if amazon was cash flow negative