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>Profitable from the first client is... uncommon. Is it? Outside of Silicon Valley, I don't think there are many businesses that deliberately lose money in an

>Profitable from the first client is... uncommon. Is it? Outside of Silicon Valley, I don't think there are many businesses that deliberately lose money in an unsustainable way. I know all of mine have been (at least marginally) profitable from day one, at least.

jefftk 4y ago
Expenses of $100k/m with income of $10k/m can definitely happen outside SV. Often it is even more extreme, where you spend millions of dollars before you earn anything. Let's say I have an idea for a new type of air purifier. I will need to build prototypes, test them, sort out manufacturing, build large numbers, get agreements with various distributors, and all this while not bringing in much if any money yet. If all goes well, however, the investment pays off and once I'm making my new product at scale I more than make up for those initial costs.
edanm 4y ago
It's not about losing money, it's about needing to invest money before you are earning your investment back. In software it's development costs. Outside silicon valley, in the non-techie world, there are many things that work the same way. Eg real estate - building a building is an upfront investment of piles of money that the building doesn't earn back for years. Or eg opening a McDonald's. The main difference in tech startups is that it's not just entrepreneurship, it's innovation too, so it's unknown whether the product will earn back the money. But sometimes McDonald's falls, builfings fail, etc. The odds there are better though.
- Barrin92 4y ago
  if you're building real estate at the very least you have the actual building itself. This isn't comparable to the ephemeral "I'll sell you two dollars for one dollar <something something> we'll monetize the users" There is no equivalent to MoviePass in the rest of the economy aside from literal MLM. They mailed people a credit card for what was it ten bucks a month, you could watch movies worth more than that with it, and that literally was their business. And there's plenty of startups out there right now that basically work the same way. The 'business model' is gift people free stuff, so investors gift you free money and then hope you can somehow IPO and dump it on the retail investors.
- Swizec 4y ago
  > But sometimes McDonald's falls, builfings fail, etc. The odds there are better though. The 6x6 mall in San Francisco is a great example of this. Someone built an entire mall next block to Westfield and it sat empty for 6 years. It's still empty today, but IKEA signs showed up a few months ago so it looks like San Francisco is getting a downtown IKEA. Upfront investment: $150,000,000 according to [1]. Never got a single tenant or opened its doors. [1] https://archive.curbed.com/2020/7/23/21334508/dead-mall-6x6-san-francisco https://archive.curbed.com/2020/7/23/21334508/dead-mall-6x6-...
- cudgy 4y ago
  > Outside silicon valley, in the non-techie world, there are many things that work the same way. Tech exists outside of Silicon Valley. > The main difference in tech startups is that it's not just entrepreneurship, it's innovation too, Innovation exists outside of tech.

jefftk 4y ago

Expenses of $100k/m with income of $10k/m can definitely happen outside SV. Often it is even more extreme, where you spend millions of dollars before you earn anything. Let's say I have an idea for a new type of air purifier. I will need to build prototypes, test them, sort out manufacturing, build large numbers, get agreements with various distributors, and all this while not bringing in much if any money yet. If all goes well, however, the investment pays off and once I'm making my new product at scale I more than make up for those initial costs.

edanm 4y ago

It's not about losing money, it's about needing to invest money before you are earning your investment back. In software it's development costs. Outside silicon valley, in the non-techie world, there are many things that work the same way. Eg real estate - building a building is an upfront investment of piles of money that the building doesn't earn back for years. Or eg opening a McDonald's. The main difference in tech startups is that it's not just entrepreneurship, it's innovation too, so it's unknown whether the product will earn back the money. But sometimes McDonald's falls, builfings fail, etc. The odds there are better though.

Barrin92 4y ago
if you're building real estate at the very least you have the actual building itself. This isn't comparable to the ephemeral "I'll sell you two dollars for one dollar <something something> we'll monetize the users" There is no equivalent to MoviePass in the rest of the economy aside from literal MLM. They mailed people a credit card for what was it ten bucks a month, you could watch movies worth more than that with it, and that literally was their business. And there's plenty of startups out there right now that basically work the same way. The 'business model' is gift people free stuff, so investors gift you free money and then hope you can somehow IPO and dump it on the retail investors.
Swizec 4y ago
> But sometimes McDonald's falls, builfings fail, etc. The odds there are better though. The 6x6 mall in San Francisco is a great example of this. Someone built an entire mall next block to Westfield and it sat empty for 6 years. It's still empty today, but IKEA signs showed up a few months ago so it looks like San Francisco is getting a downtown IKEA. Upfront investment: $150,000,000 according to [1]. Never got a single tenant or opened its doors. [1] https://archive.curbed.com/2020/7/23/21334508/dead-mall-6x6-san-francisco https://archive.curbed.com/2020/7/23/21334508/dead-mall-6x6-...
cudgy 4y ago
> Outside silicon valley, in the non-techie world, there are many things that work the same way. Tech exists outside of Silicon Valley. > The main difference in tech startups is that it's not just entrepreneurship, it's innovation too, Innovation exists outside of tech.