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You have a point, but remember Amazon and Google did exactly that and figured out the business model later.

barkingcat 3y ago
Amazon was ruthless at making money from day 0. Amazon was famous for not taking profit, and instead putting profit back into the company, but revenue? Amazon was generating gobs and gobs and gobs of revenue from day 0.
__loam 3y ago
Surely the same strategy will work during economic contraction and a period of high interest rates and borrowing costs.
nextworddev 3y ago
Big difference is that Amazon and Google had fast growing revenue
bamboozled 3y ago
I am quite sure Google had a lot to offer from day one, which is why they were encouraged to start the business. There wasn’t any open source Google’s. Yes maybe the business model wasn’t perfect but ad revenue was already well and truly a thing by the time Google invented a better search engine. All they had to do was serve the ads and the rest is history.
deleted 3y ago
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lmeyerov 3y ago
this seems super misleading Amazon nailed high revenue growth from the very beginning, just reinvesting in growth & deferring the margin story. They could have stopped at any time. Google nailed high traffic from the beginning, so ad sales was always a safe Plan B. The founders hoped to find something more aesthetic to them, failed, and the conservative path worked. The reason I write this is misleading is b/c this is very different from a ZIRP YC era thinking that seems in line with your suggestion: - Ex: JustinTV used their VC $ to pivot into Twitch, and if that didn't work, game over. - Ex: Uber raised bigger & bigger VC rounds until self-driving cars could solve their margins / someone else figured it out. They seem to be figuring out their margins, but it was a growing disaster and unclear if they could with such an unpredictable miracle. In contrast, both Amazon & Google were in positions of huge cash flows and being able to switch to highly profitable growth at any time. They were designed to control their destinies, vs have bankers/VCs dictate them.

Amazon was ruthless at making money from day 0. Amazon was famous for not taking profit, and instead putting profit back into the company, but revenue? Amazon was generating gobs and gobs and gobs of revenue from day 0.

__loam 3y ago

Surely the same strategy will work during economic contraction and a period of high interest rates and borrowing costs.

nextworddev 3y ago

Big difference is that Amazon and Google had fast growing revenue

bamboozled 3y ago

I am quite sure Google had a lot to offer from day one, which is why they were encouraged to start the business. There wasn’t any open source Google’s. Yes maybe the business model wasn’t perfect but ad revenue was already well and truly a thing by the time Google invented a better search engine. All they had to do was serve the ads and the rest is history.

deleted 3y ago

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lmeyerov 3y ago

this seems super misleading Amazon nailed high revenue growth from the very beginning, just reinvesting in growth & deferring the margin story. They could have stopped at any time. Google nailed high traffic from the beginning, so ad sales was always a safe Plan B. The founders hoped to find something more aesthetic to them, failed, and the conservative path worked. The reason I write this is misleading is b/c this is very different from a ZIRP YC era thinking that seems in line with your suggestion: - Ex: JustinTV used their VC $ to pivot into Twitch, and if that didn't work, game over. - Ex: Uber raised bigger & bigger VC rounds until self-driving cars could solve their margins / someone else figured it out. They seem to be figuring out their margins, but it was a growing disaster and unclear if they could with such an unpredictable miracle. In contrast, both Amazon & Google were in positions of huge cash flows and being able to switch to highly profitable growth at any time. They were designed to control their destinies, vs have bankers/VCs dictate them.