4 ms·

Revenue != profit. Discord, like almost every 2010s SaaS startup, has revenue (from your Nitro) - but not nearly enough to cover expenses.

troupo 1y ago
> Revenue != profit And for over a decade most companies talk only about revenue, which is infuriating. Because most startups and tech darlings survive only by continuous infusion of unlimited investor money.
- inglor 1y ago
  I worked for 4 startups that were operating for years at a loss with revenue, all are profitable today and all were acquired. My current startup is also not profitable, we're burning money but we're already signing big contracts and I hope in a year or two we keep growing rather than become profitable (1B+ valuation in a year). Becoming profitable, even at this point is just a matter of deciding to stop expanding - but neither us nor our investors want this given there is so much potential for growth and more revenue streams on the line. this is ycombinator's news aggregators, I suspect you're not going to get a "don't take risks and build things" vibe - it's a startup accelerator after all :).
  - troupo 1y ago
    > all are profitable today and all were acquired. They are either profitable or acquired :) > Becoming profitable, even at this point is just a matter of deciding to stop expanding Yeah, growth at all costs is one of the defining factors. > it's a startup accelerator after al The only business models for Y Combinator startups are: - run indefinitely long on unlimited investor money - get sold to the highest bidder at some nebulous market valuation Becoming profitable never enters the picture :)
    - sebastiennight 1y ago
      > They are either profitable or acquired :) Why? Once a company has been acquired, does it automatically fall out of profitability? If it's acquired in a stock sale, it remains an independent entity and still has a P&L If it's acquired/merged in an asset sale (not usually a good sign), it can still be assessed whether the new division is profitable - except in some rare cases like Google (allegedly!) not wanting to itemize some of their divisions to avoid too much regulatory scrutiny on monopoly positions. > Becoming profitable never enters the picture :) Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups
      - troupo 1y ago
        > Once a company has been acquired, does it automatically fall out of profitability? It becomes a part of the company that bought it? > Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups It contains very few profitable startups. Those are the exceptions.
        sebastiennight 1y ago
        > It becomes a part of the company that bought it? Not necessarily. As I explained above, most successful acquisitions are stock sales, in which case the acquiring company now owns the startup (they hold the shares). The startup is still a separate entity at this point. Google is known for just merging the acquired startups into their product line (and/or killing them), but it's not a hard rule that all acquisitions are mergers. For example, AFAIK Livestream is still a subsidiary of Vimeo (ie wholly owned, but separate): https://en.wikipedia.org/wiki/Vimeo_Livestream https://en.wikipedia.org/wiki/Vimeo_Livestream So Livestream can be profitable or not, separately from whether its acquirer is.
- lukas099 1y ago
  > most startups and tech darlings survive only by continuous infusion of unlimited investor money. Investors making long bets is a good thing, I’d argue.
  - troupo 1y ago
    The bets are invariably: sell to the highest bidder, exit through inflated IPO and/or speculative "market capitalization". There are a few outliers like "let's subsidize this price dumping until all competitors are dead and then we recoup money by being a de facto monopoly"
7bit 1y ago
Not enough to cover expenses? Do you understand what you're saying? That they're running a deficit for 15 years. Companies must make profit, or they vanish. They clearly make a profit, otherwise they would no longer exist.
- inglor 1y ago
  They raise more capital and get more debt and try to lower burn rate but the original comment was talking about the 2010s mindset of "growth before profit" where you want more users/revenue to get acquired by a bigger player that can better monetize you. The fact Discord isn't profitable (and hasn't been) is well documented. Also, operating at a loss isn't necessarily bad (i.e. if you expand or spend more on R&D your profits shrink). Companies might choose to spend more on R&D and not be profitable (e.g. Amazon for a long time).
- sevg 1y ago
  This is a big misconception (though not one I’m used to seeing in the HN crowd). Companies can operate at a deficit for many years without vanishing, usually because they have venture capital funding or investor backing.
- MrJohz 1y ago
  I'm not a business person, so take this with a grain of salt, but my understanding is that this is common for a lot of smaller startups and tech companies. If you can raise funds outside of revenue (i.e. outside of directly selling your products), you can keep operating even if you're not actually generating any income directly. Typically that will be in the form of investment and loans. So even if your expenses (incl. repayments for outstanding loans etc) are higher than your revenue, you can stay in business as long as you can convince enough investors that it's still worth their while to give you their money. I don't know whether this is true for Discord specifically, but I understand it's a fairly common strategy, especially for companies where their best chance of success is by being the only player in a given market.
- kerkeslager 1y ago
  > Companies must make profit, or they vanish. Oh, buddy. That's how it's supposed to work, but that is not how it works at all.
weird-eye-issue 1y ago
They are profitable And besides my point was that it's pretty clear what their monetization is and that it's not some mystery
- RadiozRadioz 1y ago
  > They are profitable Citation needed. With this type of company and business model, it's highly unusual to be profitable, so the burden of proof is on those who say it is.
  - ltbarcly3 1y ago
    [flagged]
    - gchamonlive 1y ago
      People shouldn't add insult to injury. Just because someone failed to do proper research and documentation doesn't make it ok for others to make the same mistake. People should lead by example, not by shunning.
      - ltbarcly3 1y ago
        [flagged]
        deleted 1y ago
        [deleted]
    - weird-eye-issue 1y ago
      > I can't think of any other consumer SaaS provider that automatically answers my reflexive "how does this make money?" question. My reply was in response to the above quote and not whether they are currently profitable or not. Besides, a company being profitable at this very moment is actually not that relevant in the long term.

troupo 1y ago

> Revenue != profit And for over a decade most companies talk only about revenue, which is infuriating. Because most startups and tech darlings survive only by continuous infusion of unlimited investor money.

inglor 1y ago
I worked for 4 startups that were operating for years at a loss with revenue, all are profitable today and all were acquired. My current startup is also not profitable, we're burning money but we're already signing big contracts and I hope in a year or two we keep growing rather than become profitable (1B+ valuation in a year). Becoming profitable, even at this point is just a matter of deciding to stop expanding - but neither us nor our investors want this given there is so much potential for growth and more revenue streams on the line. this is ycombinator's news aggregators, I suspect you're not going to get a "don't take risks and build things" vibe - it's a startup accelerator after all :).
- troupo 1y ago
  > all are profitable today and all were acquired. They are either profitable or acquired :) > Becoming profitable, even at this point is just a matter of deciding to stop expanding Yeah, growth at all costs is one of the defining factors. > it's a startup accelerator after al The only business models for Y Combinator startups are: - run indefinitely long on unlimited investor money - get sold to the highest bidder at some nebulous market valuation Becoming profitable never enters the picture :)
  - sebastiennight 1y ago
    > They are either profitable or acquired :) Why? Once a company has been acquired, does it automatically fall out of profitability? If it's acquired in a stock sale, it remains an independent entity and still has a P&L If it's acquired/merged in an asset sale (not usually a good sign), it can still be assessed whether the new division is profitable - except in some rare cases like Google (allegedly!) not wanting to itemize some of their divisions to avoid too much regulatory scrutiny on monopoly positions. > Becoming profitable never enters the picture :) Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups
    - troupo 1y ago
      > Once a company has been acquired, does it automatically fall out of profitability? It becomes a part of the company that bought it? > Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups It contains very few profitable startups. Those are the exceptions.
      - sebastiennight 1y ago
        > It becomes a part of the company that bought it? Not necessarily. As I explained above, most successful acquisitions are stock sales, in which case the acquiring company now owns the startup (they hold the shares). The startup is still a separate entity at this point. Google is known for just merging the acquired startups into their product line (and/or killing them), but it's not a hard rule that all acquisitions are mergers. For example, AFAIK Livestream is still a subsidiary of Vimeo (ie wholly owned, but separate): https://en.wikipedia.org/wiki/Vimeo_Livestream https://en.wikipedia.org/wiki/Vimeo_Livestream So Livestream can be profitable or not, separately from whether its acquirer is.
lukas099 1y ago
> most startups and tech darlings survive only by continuous infusion of unlimited investor money. Investors making long bets is a good thing, I’d argue.
- troupo 1y ago
  The bets are invariably: sell to the highest bidder, exit through inflated IPO and/or speculative "market capitalization". There are a few outliers like "let's subsidize this price dumping until all competitors are dead and then we recoup money by being a de facto monopoly"

7bit 1y ago

Not enough to cover expenses? Do you understand what you're saying? That they're running a deficit for 15 years. Companies must make profit, or they vanish. They clearly make a profit, otherwise they would no longer exist.

inglor 1y ago
They raise more capital and get more debt and try to lower burn rate but the original comment was talking about the 2010s mindset of "growth before profit" where you want more users/revenue to get acquired by a bigger player that can better monetize you. The fact Discord isn't profitable (and hasn't been) is well documented. Also, operating at a loss isn't necessarily bad (i.e. if you expand or spend more on R&D your profits shrink). Companies might choose to spend more on R&D and not be profitable (e.g. Amazon for a long time).
sevg 1y ago
This is a big misconception (though not one I’m used to seeing in the HN crowd). Companies can operate at a deficit for many years without vanishing, usually because they have venture capital funding or investor backing.
MrJohz 1y ago
I'm not a business person, so take this with a grain of salt, but my understanding is that this is common for a lot of smaller startups and tech companies. If you can raise funds outside of revenue (i.e. outside of directly selling your products), you can keep operating even if you're not actually generating any income directly. Typically that will be in the form of investment and loans. So even if your expenses (incl. repayments for outstanding loans etc) are higher than your revenue, you can stay in business as long as you can convince enough investors that it's still worth their while to give you their money. I don't know whether this is true for Discord specifically, but I understand it's a fairly common strategy, especially for companies where their best chance of success is by being the only player in a given market.
kerkeslager 1y ago
> Companies must make profit, or they vanish. Oh, buddy. That's how it's supposed to work, but that is not how it works at all.

weird-eye-issue 1y ago

They are profitable And besides my point was that it's pretty clear what their monetization is and that it's not some mystery

RadiozRadioz 1y ago
> They are profitable Citation needed. With this type of company and business model, it's highly unusual to be profitable, so the burden of proof is on those who say it is.
- ltbarcly3 1y ago
  [flagged]
  - gchamonlive 1y ago
    People shouldn't add insult to injury. Just because someone failed to do proper research and documentation doesn't make it ok for others to make the same mistake. People should lead by example, not by shunning.
    - ltbarcly3 1y ago
      [flagged]
      - deleted 1y ago
        [deleted]
  - weird-eye-issue 1y ago
    > I can't think of any other consumer SaaS provider that automatically answers my reflexive "how does this make money?" question. My reply was in response to the above quote and not whether they are currently profitable or not. Besides, a company being profitable at this very moment is actually not that relevant in the long term.