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Profit isn't very meaningful without a lot of context. A growing business could plow all of their would-be profits back into growing their business, making it l

Profit isn't very meaningful without a lot of context. A growing business could plow all of their would-be profits back into growing their business, making it look like they are losing money. Or a failing business could cannibalize itself to get a couple quarters of profits at the cost of destroying its long term prospects for success. Revenue is a much more concrete figure that sort of tells its own story, unlike profit.

dmitriid 5y ago
> Revenue is a much more concrete figure that sort of tells its own story, unlike profit. But if you look at a company that is always in the red with no plan to become profitable, the question becomes: - how is this a business? - where is money coming from? - why is money still coming? Twitter seems to be mostly profitable in the past few years.
mrweasel 5y ago
That's is an interesting take, because the company I work for is the exact opposite. Revenue is useless, because you can just create all the revenue you want. Among other things, we resell hardware and software. The basic idea is that customers can get a Dell, or Oracle server and a license for an Oracle database from us, when buying hosting. This saves them the trouble of dealing with multiple suppliers. The hardware and software business is just sort of a side thing, but we can generate crazy amounts of revenue by losing money on hardware. The idea is that we make the money back longterm on hosting. We never use revenue as a meaningful KPI, because we know that some years it will be inflated like crazy by hardware or software sales (which aren't profitable). So I don't really see revenue as useful figure either, not without also knowing if you're profitable.
- djbusby 5y ago
  Your company has a different model than Twitter. Some companies need to measure Revenue, some Profit and some Growth - and many will switch which is the important one as they grow (or shrink).
lotsofpulp 5y ago
> Revenue is a much more concrete figure that sort of tells its own story, unlike profit. No single number tells any story on its own. You can have $1T revenue tomorrow. Just sell $10 bills for $1.
- deleted 5y ago
  [deleted]
- rdtwo 5y ago
  So like most tech unicorns
- FalconSensei 5y ago
  But then you lost money. If you are selling assets worth $10 for $1, your revenue is literally negative
  - lotsofpulp 5y ago
    https://www.investopedia.com/terms/r/revenue.asp https://www.investopedia.com/terms/r/revenue.asp Net income would be negative. Aka profit. https://www.investopedia.com/terms/n/netincome.asp https://www.investopedia.com/terms/n/netincome.asp If you sold 2 $10 bills and received $2 in exchange, your revenue is $2, your cost of goods sold is $20, and your net income or profit is -$18.
typon 5y ago
In the good old days having a successful business meant making money. Now it seems old-fashioned.
- foobarian 5y ago
  This was exactly the feeling in the air around year 2000. Irrational exuberance is what they termed it. Be interesting to see how the current climate evolves.
scarface74 5y ago
So how well does revenue tell a story if you have negative unit costs? If you keep losing money, you eventually run out.
- djbusby 5y ago
  Nope. Cause you have growth, which gets new investors who bring in Money - if you can convince them your Growth numbers are good.
  - scarface74 5y ago
    It’s called a Ponzi scheme. It works until it doesn’t. See Robinhood and Peleton. All five of the Big Tech companies were profitable before they went public. Even Amazon had positive margins and they were plowing money back in to the business. Most of the former unicorns don’t have positive margins. “Growth” is okay if your funneling profits back into your business. But see DoorDash. How do you not money delivering food when everyone is afraid to leave their house like in 2020? It’s not about growth, it’s about attrition. Every VC is hoping that they can pawn their money losing investments off to a gullible public.
- AniseAbyss 5y ago
  The money doesn't run out for as long as your investors have faith.

dmitriid 5y ago

> Revenue is a much more concrete figure that sort of tells its own story, unlike profit. But if you look at a company that is always in the red with no plan to become profitable, the question becomes: - how is this a business? - where is money coming from? - why is money still coming? Twitter seems to be mostly profitable in the past few years.

mrweasel 5y ago

That's is an interesting take, because the company I work for is the exact opposite. Revenue is useless, because you can just create all the revenue you want. Among other things, we resell hardware and software. The basic idea is that customers can get a Dell, or Oracle server and a license for an Oracle database from us, when buying hosting. This saves them the trouble of dealing with multiple suppliers. The hardware and software business is just sort of a side thing, but we can generate crazy amounts of revenue by losing money on hardware. The idea is that we make the money back longterm on hosting. We never use revenue as a meaningful KPI, because we know that some years it will be inflated like crazy by hardware or software sales (which aren't profitable). So I don't really see revenue as useful figure either, not without also knowing if you're profitable.

djbusby 5y ago
Your company has a different model than Twitter. Some companies need to measure Revenue, some Profit and some Growth - and many will switch which is the important one as they grow (or shrink).

lotsofpulp 5y ago

> Revenue is a much more concrete figure that sort of tells its own story, unlike profit. No single number tells any story on its own. You can have $1T revenue tomorrow. Just sell $10 bills for $1.

deleted 5y ago
[deleted]
rdtwo 5y ago
So like most tech unicorns
FalconSensei 5y ago
But then you lost money. If you are selling assets worth $10 for $1, your revenue is literally negative
- lotsofpulp 5y ago
  https://www.investopedia.com/terms/r/revenue.asp https://www.investopedia.com/terms/r/revenue.asp Net income would be negative. Aka profit. https://www.investopedia.com/terms/n/netincome.asp https://www.investopedia.com/terms/n/netincome.asp If you sold 2 $10 bills and received $2 in exchange, your revenue is $2, your cost of goods sold is $20, and your net income or profit is -$18.

typon 5y ago

In the good old days having a successful business meant making money. Now it seems old-fashioned.

foobarian 5y ago
This was exactly the feeling in the air around year 2000. Irrational exuberance is what they termed it. Be interesting to see how the current climate evolves.

scarface74 5y ago

So how well does revenue tell a story if you have negative unit costs? If you keep losing money, you eventually run out.

djbusby 5y ago
Nope. Cause you have growth, which gets new investors who bring in Money - if you can convince them your Growth numbers are good.
- scarface74 5y ago
  It’s called a Ponzi scheme. It works until it doesn’t. See Robinhood and Peleton. All five of the Big Tech companies were profitable before they went public. Even Amazon had positive margins and they were plowing money back in to the business. Most of the former unicorns don’t have positive margins. “Growth” is okay if your funneling profits back into your business. But see DoorDash. How do you not money delivering food when everyone is afraid to leave their house like in 2020? It’s not about growth, it’s about attrition. Every VC is hoping that they can pawn their money losing investments off to a gullible public.
AniseAbyss 5y ago
The money doesn't run out for as long as your investors have faith.