4 ms·
Revenue vs. Value
- timjahn 13y agoI'm sorry. But the argument that there are more important things for companies than making money is getting old. Maybe it's because I'm from the Midwest (gasp!) and you're from the Valley. Companies exist for one reason - to make money. It's their oxygen.
- dmor 13y agoMaybe you should ask yourself why the only Midwest startup I can think of is Dwolla?
- pkmehta 13y agoHave you earned the right to have this much attitude? Strikes me as odd that as someone building a startup about startups that you'd be so dismissive of others on HN - a startup heavy community. Interesting PR strategy.
- dmor 13y agoI'm real. There are enough cheerleaders and I love many friends in the Midwest startup scene, but it doesn't help them to blow smoke up their asses. I'm from Seattle, another startup community in denial. It's time for an objective industry voice and it won't all be flattering.
- pkmehta 13y agoYour conflating two unrelated things here - being objective (or real) and being dismissive.
- tg3 13y agoNot sure if they're all "startups" but: Groupon, Starter League, 37signals, Food Genius, Fee Fighters, Spot Hero. All based in Chicago. Certainly not the Valley, but no need to be dismissive out of hand.
- timjahn 13y agoHow mature. Your lack of knowledge of Midwest startups doesn't equate to there not being any.
- dmor 13y agoI didn't say they don't exist, what I am saying is that unfortunately very few have achieved broad adoption or brand recognition, so the revenue first mindset may not be serving them as well as the first commenter would lead you to believe. It is likely my index will give more non Silicon Valley companies credit for building value, even pre-revenue.
- timjahn 13y agoWho cares about brand recognition or brand adoption? There are boatloads of companies nobody has heard of making boatloads of money. Why does it only matter if you're famous?
- rafaelc 13y agoRevenue can be deadly friction in many early stage startups. If you are in a market with network effects, you need to acquire users FAST. What would grow faster: Facebook monetizing each user from day 1 at $1 a user or Facebook growing fast, kicking in network effects, and delaying monetization. What would ultimately have more value? So this isn't saying "don't make money", it's about examining the market you are in and making a strategic, thoughtful choice.
- _lex 13y agoThis is true for facebook, but false for 99% of other companies. At the end of the day, revenue - costs (profit) is what you're optimizing for. I think dmor's point is that revenue can be a lagging indicator, and that some startups can suddenly turn on a revenue pump that makes watching revenue silly. I agree with her - in 1% of cases. The problem is that for dmor, that 1% of cases is all that matters - because those cases are going to be the all or nothing billion dollar company cases, which is what she's aiming for. Facebook, AirBnB etc - all would have terrible numbers while starting up, then suddenly their numbers start to look great.
- dmor 13y agoTheir revenue numbers maybe, but there were other signals. I am gonna find the next Airbnb with what I'm building mark my words
- smalter 13y agoThis article vastly overestimates the value of tech buzz and considerably underestimates the value of revenue. Buzzed about tech companies where their founders are giving talks, they get mentions on twitter, they're talked about on HN, etc., but that are actually going nowhere are a dime a dozen. Revenue actually changes the underlying economics of your business so it's close to the essence of what a non-vanity metric is. This article takes a really short-term and dismissive view of revenue. If you're at $1M ARR after a year, throw a party and invite all of your best friends -- you've done something that less than 1% of startups will ever accomplish. If you're at $1M ARR after a year, imagine where you will be after 5 years. Of course, revenue is just part of the picture. You have to look at revenue growth, whether it's transactional or recurring, how monetization happens, the market opportunity, etc. etc. But I'm pretty confident that revenue is a better indication of how a company is doing than Facebook likes, Twitter mentions, web traffic, etc. that currently comprises the author's startup momentum index.
- coolsunglasses 13y agoSour grapes are at play in the original content.
- thesis 13y ago20% revenue growth each month isn't sexy? That's crazy.
- hayksaakian 13y agoThis POV pidgeonholes startups into an investor dependent mindset. Why raise 20k if you you'll make that next month? Early Revenue is only bad for pump-and-dump startups that KNOW they'll never be profitable, but hope they can fool everyone long enough to get funding and make the company somebody else's problem. ----- If the data _was_ in fact available, I have no doubt in my mind that it'd be one of the most important indicators.
- orangethirty 13y agoI wonder how this mindset affected the failure of the original referly. Could they have shunned revenue in order to try and get more investment funding? This ultimately send them towards a pivot. A pivot that I'm still to understand. Dmor shows good promise with her data gathering, but I wonder where that fits into the pivot.
- codex 13y agoI can't help but suspect that this blog is a subconscious reflection of the state of the author's venture. SXSW not in the cards this year? Attending conferences is for chumps. Site not generating revenue? Revenue isn't important. Et cetera.
- dmor 13y agoIt's totally conscious, unsustainable revenue was our vanity metric for Referly. If you followed to Ecomom saga it was quite similar, we just pulled the plug sooner (and had no physical inventory). As to SxSW, lol I can't deny I did enjoy taking that dig at all the attendees who should be at home working on their startups. P.S. I've figured out you don't like me by now codex, but somehow I'm gonna win you over
- coolsunglasses 13y agoSo what are you doing to move Referly forward?
- dmor 13y agoI shut it down and I'm building something new
- codex 13y agoActually, I admire your courage to pivot refer.ly and I wish you all the best. I do like reading your articles but, unfortunately, I'm cursed with extreme, clumsy bluntness. That's really not as sexy as it sounds. I myself have terrible blind spots to my own flaws and failings, and I sometimes wish others were as blunt with me as I am with them. Sometimes niceties don't do anyone any favors.
- dmor 13y agoOh, those are qualities I understand all too well, so I guess we are fellow travelers. Months of curiousity satisfied.
- pkmehta 13y agoRevenue is a vanity metric. That's a new one. This seems like an interesting way to justify shortcomings of dmor's momentum index. So: - Mentions in TechCrunch > Revenue - Conference presentations by CEO > Revenue - Klout score > Revenue This is some combination of naive, farcical or dumb. Of course, you can throw out Facebook as an example of what over-optimizing for revenue would have done to them but this is survivor bias at its best. You could also look at Pets.com, Webvan and Kozmo from a bygone era to see what a poor monetization plan does. Note: it's not just revenue that is important but revenue > COGs. (Note: Yes I know. This time is different. I'm an idiot.)
- justinbeaver 13y agoThis is an advertisement for an eventual product. We may as well be discussing the merits of Ron Popeil's latest blender infomercial. So let's stop voting up every ridiculous article submitted by this blog already and get back to real content.
- dmor 13y agoI should hope to be as successful as Ron Popeil! Also, weak sauce argument on your part. Try again
- justinbeaver 13y agoAll the points regarding why this post is so ridiculous have been thoroughly covered. I'm just pulling back the curtain on your exploitative use of HN as part of your grand marketing plan (in case it wasn't obvious).
- dmor 13y agoI love that anyone thinks I have a grand marketing plan
- justinbeaver 13y agoThe "aww shucks" card isn't going to fly. This is very much a content marketing campaign and HN is the soapbox right now.
- dmor 13y agoI troll harder
- cglee 13y agoAn annual run rate of 1 mil is an admirable goal that we should put on a pedestal, not wipe away with a dismissive "tiny business" label. If you're a founder, that should be your goal.
- pkmehta 13y agoVCs don't like that type of company. As a result, you should not aim for that goal.