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Everybody is focused on revenue. Last time I checked the important metric in business is revenue - cost of goods sold If they are approximately the same you a

by GDC7 5y ago

Everybody is focused on revenue. Last time I checked the important metric in business is revenue - cost of goods sold If they are approximately the same you are just running a big operation, not a profitable business. And I am not saying there is anything wrong with that, being at the helm of a big operation feels great and gives the master of the ship a lot of meaning, but it's not a profitable enterprise. Even SaaS, bio-tech and platforms feel the pain and the anxiety every minute they spend without being profitable. Despite what the CEOs say, it's like being underwater, you can be optimistic about your ability to swim towards the surface, but still you got to get there.

nabaraz 5y ago
It's all about future growth potential. A company that is growing it's revenue at 50% y/y is going to get much higher valuation than a profitable saas growing at 10-15% y/y.
- deleted 5y ago
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- GDC7 5y ago
  If you are not Saas , biotech or a tech-platform then revenue growing isn't as of itself a good news. You need both revenue growing and costs staying flat or just slightly increasing Only the SaaS, biotech and platforms get a free pass, because the rationale is that once you become the dominant player , drive everybody out of business and kill competitors in the cradle thanks to your strategy aimed at acquiring marketshare...you'd then be able to sweep the market because you'd found yourself in a monopoly or quasi-monopoly regime, thanks to the network effects and a huge first mover advantage. No matter what Musk says : cars and rockets aren't tech-platforms. Of course you can bet on his ability to convince people other than yourself that they are, but that is a social engineering bet, on the charisma and the salesman ability of mr. Musk, it's not an enterprise or a business bet. Nothing wrong with social engineering bets, they are the most profitable ones and you can ride on the way up and all the way down, like Thiel and Robert Mercer did with Trump for example. It's not like they believed he'd Make America Great Again, they believed he could convince people other than themselves that he'd do so.

by GDC7 5y ago

nabaraz 5y ago

It's all about future growth potential. A company that is growing it's revenue at 50% y/y is going to get much higher valuation than a profitable saas growing at 10-15% y/y.

deleted 5y ago
[deleted]
GDC7 5y ago
If you are not Saas , biotech or a tech-platform then revenue growing isn't as of itself a good news. You need both revenue growing and costs staying flat or just slightly increasing Only the SaaS, biotech and platforms get a free pass, because the rationale is that once you become the dominant player , drive everybody out of business and kill competitors in the cradle thanks to your strategy aimed at acquiring marketshare...you'd then be able to sweep the market because you'd found yourself in a monopoly or quasi-monopoly regime, thanks to the network effects and a huge first mover advantage. No matter what Musk says : cars and rockets aren't tech-platforms. Of course you can bet on his ability to convince people other than yourself that they are, but that is a social engineering bet, on the charisma and the salesman ability of mr. Musk, it's not an enterprise or a business bet. Nothing wrong with social engineering bets, they are the most profitable ones and you can ride on the way up and all the way down, like Thiel and Robert Mercer did with Trump for example. It's not like they believed he'd Make America Great Again, they believed he could convince people other than themselves that he'd do so.