4 ms·

The point is they should've been making money a lot sooner. I'd agree they aren't real businesses because they AREN'T MAKING MONEY. That is sort of the definiti

by gks 15y ago

The point is they should've been making money a lot sooner. I'd agree they aren't real businesses because they AREN'T MAKING MONEY. That is sort of the definition of a company no? How young they are? That is a criteria for whether a company should be making money or not? The point of any company really is to make money. These "startups" aren't filing as non-profits right? So they should be making money. If after the first couple months of being open you aren't figuring out how to make money you've done something wrong. EDIT: Let me edit this to make it more clear. They should be self-sustaining. They should be able to pay their bills and employees. Whether they make a profit or not isn't the point. But if a company doesn't get funding and that alone causes them to disappear then they've done something wrong.

ig1 15y ago
Not really. Do you think Ford aren't a company, how about Vodafone, BP and UBS ? - these are all companies which have filed annual losses. Yes the purpose of a company is to make money, but not making money in the short term doesn't mean it's not a company. Not all business are inherently self-sustaining in a short time period, many small business (including shop, restaurants, etc) will operate at a loss in their first year. There's plenty of business that take a while to return a profit, that doesn't make them any less businesses just because they're not the type of business that you'd like to run.
- timjahn 15y ago
  My larger point is these "companies" appear to have no interest in making money. I'm not suggesting you need to be making money every single minute of your company's existence. Instead, I'm suggesting that you should be interested in (and actively working toward) making money.
  - ig1 15y ago
    The fact they're raising investment is a pretty clear statement that they want to make money. Just because they're not choosing to focus on revenue at this stage of product development doesn't really mean they have no interest in making money. Any company needs to decide where their focus should be, Tumblr may well have done the analysis and decided that rather than take their focus away from their core product and focus on monetization (which may only generate a few hundred million in revenue at this stage) it's better for them to focus on their core product now in order to have a chance of monetizing at the billion dollar range in the future. It's a perfectly rational economic decision.
    - gks 15y ago
      Tumblr was founded in 2007. That makes it nearly 4 years old. Twitter was founded in 2006. That makes it nearly 5 years old. At what point in their "Humble Beginnings" do you suggest they start thinking about making some money and becoming self-sustaining? Somewhere along the way they need to focus on being able to provide for themselves. Otherwise it's a giant ponzi scheme where all you get are investors investing in a product that won't return their investment.
      - ig1 15y ago
        At the point where it makes more sense to focus on monetization rather than growing the user-base in order to maximize the lifetime revenue of the company (as opposed to current revenue). It's silly to put some arbitrary deadline on something which should clearly be based upon company metrics.
- silverbax88 15y ago
  If Ford, Vodafone, BP and UBS continued to file losses, then, no, they wouldn't be companies either. In fact, UBS probably won't be at the current rate they are barreling towards ruin. Number one rule of business: make a profit, any profit.
blader 15y ago
"Making money" is not a one-dimensional state - there's a time element to it. Officers in a business do not have a fiduciary duty to "make money" at any given point in time, they have a duty to increase the value of the property they are responsible for managing. As a shareholder, that is absolutely what you would want someone managing your property to do. Taking an investment in order to increase the value of the company over the long term, even at the expense of making money today, can be the rational thing to do. And it's certainly more rational than without exception focusing on "making money" today.

by gks 15y ago

ig1 15y ago

Not really. Do you think Ford aren't a company, how about Vodafone, BP and UBS ? - these are all companies which have filed annual losses. Yes the purpose of a company is to make money, but not making money in the short term doesn't mean it's not a company. Not all business are inherently self-sustaining in a short time period, many small business (including shop, restaurants, etc) will operate at a loss in their first year. There's plenty of business that take a while to return a profit, that doesn't make them any less businesses just because they're not the type of business that you'd like to run.

timjahn 15y ago
My larger point is these "companies" appear to have no interest in making money. I'm not suggesting you need to be making money every single minute of your company's existence. Instead, I'm suggesting that you should be interested in (and actively working toward) making money.
- ig1 15y ago
  The fact they're raising investment is a pretty clear statement that they want to make money. Just because they're not choosing to focus on revenue at this stage of product development doesn't really mean they have no interest in making money. Any company needs to decide where their focus should be, Tumblr may well have done the analysis and decided that rather than take their focus away from their core product and focus on monetization (which may only generate a few hundred million in revenue at this stage) it's better for them to focus on their core product now in order to have a chance of monetizing at the billion dollar range in the future. It's a perfectly rational economic decision.
  - gks 15y ago
    Tumblr was founded in 2007. That makes it nearly 4 years old. Twitter was founded in 2006. That makes it nearly 5 years old. At what point in their "Humble Beginnings" do you suggest they start thinking about making some money and becoming self-sustaining? Somewhere along the way they need to focus on being able to provide for themselves. Otherwise it's a giant ponzi scheme where all you get are investors investing in a product that won't return their investment.
    - ig1 15y ago
      At the point where it makes more sense to focus on monetization rather than growing the user-base in order to maximize the lifetime revenue of the company (as opposed to current revenue). It's silly to put some arbitrary deadline on something which should clearly be based upon company metrics.
silverbax88 15y ago
If Ford, Vodafone, BP and UBS continued to file losses, then, no, they wouldn't be companies either. In fact, UBS probably won't be at the current rate they are barreling towards ruin. Number one rule of business: make a profit, any profit.

blader 15y ago

"Making money" is not a one-dimensional state - there's a time element to it. Officers in a business do not have a fiduciary duty to "make money" at any given point in time, they have a duty to increase the value of the property they are responsible for managing. As a shareholder, that is absolutely what you would want someone managing your property to do. Taking an investment in order to increase the value of the company over the long term, even at the expense of making money today, can be the rational thing to do. And it's certainly more rational than without exception focusing on "making money" today.