4 ms·

Bootstrapping is always sexy. Revenue and profits are becoming sexy again. Hopefully dividends too.

patio11 18y ago
>>Revenue and profits are becoming sexy again My brain knows that there were times and places where this sentence makes sense and yet I still cringe hearing it. Businesses are rediscovering that they are in business to make money. Next thing you know banks will rediscover that their business model is loaning money to people who pay it back.
- fallentimes 18y ago
  I was talking more about VCs going after companies with business models than without. And based on what's happened over the past year, those seem like much needed reminders.
webwright 18y ago
Dividends for who? Startup investors? Even conservative/revenue-centric startups have a staggering failure rate. What kind of dividends would be necessary for surviving startups? i.e. I invest $100,000 each in 10 scrappy/revenue-centric startups. 6 die or fail to generate meaningful profit (a much better rate because they aren't "swing-for-the-fences" startups). What sort of dividends would the other 4 have to produce to seem appealing to an investor to compensate for the fact that $600k is lost forever and $400k more is sunk into the survivors. I'd love someone to lay down some math that would make investors say, "Wow-- dividends ARE sexy!"... Any takers? If you mean traded stock dividends, then nevermind. ;-)
- steveplace 18y ago
  Divvies don't necessarily decrease the value of the company. If you're startup is at a point where it could issue dividends, you could probably sell it as well.
- fallentimes 18y ago
  I meant traded stocks, as many companies who issue dividends are trading at historic lows. Makes for good yields. Depending on the situation it could bode well for some startups... Also, sometimes there's no where else to invest profits (within the Company) without expanding outside of what you're good at (I think MBAs call this core competencies).
- Agathos 18y ago
  In general if you sell your company (or pieces of it) you will get something less than the net present value of all its future dividends, as estimated by the buyer. You or your VC shareholders may choose to do so anyway because it's more comfortable and less risky to cash in earlier. But the party/parties who buy the company will demand a discount as compensation for the inconvenience and risk they're taking on.
steveplace 18y ago
Dividends?!? gasp I've always heard about VC funds liking exits and The Flip, but what if your plan was to get good cashflow going and issue dividends... does the idea become less investable?
lionhearted 18y ago
I was coming to make nearly the exact comment. Working hard, being frugal, learning how your business works and how your customers think, and getting money to provide something to them - always a good thing. Create junk and flip it for big cash will always appeal to the human desire to get something for nothing. But create something meaningful and get something for giving the other person a lot more they paid - Damn, that's sexy. I love business.

>>Revenue and profits are becoming sexy again My brain knows that there were times and places where this sentence makes sense and yet I still cringe hearing it. Businesses are rediscovering that they are in business to make money. Next thing you know banks will rediscover that their business model is loaning money to people who pay it back.

fallentimes 18y ago
I was talking more about VCs going after companies with business models than without. And based on what's happened over the past year, those seem like much needed reminders.

webwright 18y ago

Dividends for who? Startup investors? Even conservative/revenue-centric startups have a staggering failure rate. What kind of dividends would be necessary for surviving startups? i.e. I invest $100,000 each in 10 scrappy/revenue-centric startups. 6 die or fail to generate meaningful profit (a much better rate because they aren't "swing-for-the-fences" startups). What sort of dividends would the other 4 have to produce to seem appealing to an investor to compensate for the fact that $600k is lost forever and $400k more is sunk into the survivors. I'd love someone to lay down some math that would make investors say, "Wow-- dividends ARE sexy!"... Any takers? If you mean traded stock dividends, then nevermind. ;-)

steveplace 18y ago
Divvies don't necessarily decrease the value of the company. If you're startup is at a point where it could issue dividends, you could probably sell it as well.
fallentimes 18y ago
I meant traded stocks, as many companies who issue dividends are trading at historic lows. Makes for good yields. Depending on the situation it could bode well for some startups... Also, sometimes there's no where else to invest profits (within the Company) without expanding outside of what you're good at (I think MBAs call this core competencies).
Agathos 18y ago
In general if you sell your company (or pieces of it) you will get something less than the net present value of all its future dividends, as estimated by the buyer. You or your VC shareholders may choose to do so anyway because it's more comfortable and less risky to cash in earlier. But the party/parties who buy the company will demand a discount as compensation for the inconvenience and risk they're taking on.

steveplace 18y ago

Dividends?!? gasp I've always heard about VC funds liking exits and The Flip, but what if your plan was to get good cashflow going and issue dividends... does the idea become less investable?

lionhearted 18y ago

I was coming to make nearly the exact comment. Working hard, being frugal, learning how your business works and how your customers think, and getting money to provide something to them - always a good thing. Create junk and flip it for big cash will always appeal to the human desire to get something for nothing. But create something meaningful and get something for giving the other person a lot more they paid - Damn, that's sexy. I love business.