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Businesses that don't make money will always fail. For some reason, the tech industry finds new and interesting ways to delude ourselves (and investors!) into t
by s_q_b 13y ago
Businesses that don't make money will always fail. For some reason, the tech industry finds new and interesting ways to delude ourselves (and investors!) into thinking this law doesn't apply. But sooner or later, like gravity, it exerts its pull.
Make something people want. Sure. But more importantly, make something that costs less to make than people will pay.
- kposehn 13y agoInstagram. There are businesses that can succeed at it, but they rely on not making money until acquisition, where the acquirer bets that they will add other value down the line. That said, it is not an avenue I necessarily want to follow.
- s_q_b 13y agoInstagram hasn't proven it's ability to make any money for anyone yet, and I doubt it ever will. I don't doubt that sometimes there's a greater fool you can scam into buying your money pit, and even provide return to your investors. It's crazy exceptions like this that keep the good-money-after-bad merry go round turning. But it is not now, nor has it ever been, a viable path to building a sustainable business.
- Maro 13y agoBut Instagram didn't make money as a company for itself, Instagram itself was sold and made money for the founders/investors. The two are not the same.
- kposehn 13y agoI'm not making that argument necessarily. If you only define success as making money in general revenue, it doesn't fit the bill. But to me, selling for $1bn (at the outset), is definitely a success.
- s_q_b 13y agoFor the founder and the seed investors and the VCs, certainly it was a great success. From my perspective, that's a type of success is exceedingly rare, akin to winning the lottery. That mindset doesn't fit with my own personal goal of building a business that returns consistent profits, preferably as soon as possible after launch.