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I'm sure many plumbers are profitable from day one. Amazon wasn't profitable for a while. Which is the more successful business now? I agree that you aren't

by far33d 17y ago

I'm sure many plumbers are profitable from day one. Amazon wasn't profitable for a while. Which is the more successful business now? I agree that you aren't a success until you are making money, but I don't think that it's important to be profitable always.

tptacek 17y ago
Plumbers make a lot more money than people think. But when Amazon started, Jeff Bezos was still probably making more in interest payments than any Plumber makes in a year. So, two responses: (1) Amazon, and (2) what's your point? Lots of plumbers are more successful today than lots of YC startups.
- rythie 17y ago
  There is not much chance of being a millionaire plumber any time soon especially not after a couple of years work.
  - MicahWedemeyer 17y ago
    There's not much chance of being a tech millionaire, either. Much more likely that you end up poorer than the plumber. But hey, I'm still working on my startup, so I guess that just means I'm dumb.
  - tptacek 17y ago
    I think you're probably wrong. Plumbing scales like any services business: you stop being able to manage your inbounds, so you hire another plumber who makes less than you. Repeat N times. At some point, you're making enough off the top of all the plumbing work to stop doing plumbing; now you're a full-time business manager. You brand, promote, and scale --- by franchising, hiring more managers, partnering, or securing large contracts. Somewhere in the middle back there, you became a millionaire. What is also probably true is that it is very hard to go out of business as a freelance plumber. It is very easy to go bust as a tech entrepreneur. The flip side of that: on a steady income, the plumber gets more opportunities to grow her business than the tech entrepreneur --- she can stay in business, turning different knobs, indefinitely. You hope that the tech entrepreneur's individual opportunities are much more valuable, but that depends, doesn't it? There's also the classic factoid that most millionaires got there not by striking gold, but by managing their money well. Be careful about Geek Exceptionalism. It will burn you. People excelled in business long before there was an Internet.
    - rythie 17y ago
      My point was that it is possible to become a tech millionaire in a couple of years - this is of course unlikely - but there are many examples of people doing this. It's almost impossible to become a millionaire in a couple of years as a plumber. Whilst like you can do the process you point out, it's likely to take 10+ years to do that. You could also do this same process as a tech consultant and then grow your consultancy business the same way - but that wasn't my point - that's all. People after all play the lottery every week - though on average they would be better off putting that money in a savings account and waiting 30-40 years...
  - Silhouette 17y ago
    There is not much chance of being a millionaire software developer any time soon either, especially not after a couple of years' work. The fact that a handful (almost literally) of businesses have achieved this, and quite a few more make a modest profit in a reasonable time, does not by any stretch mean that these "successes" are going to do the same thing. The whole point of the complaint here is that most of those "successes" won't actually be successful, ever. It's just that in this business, the one that does make it will make it big. But the others will still fail.
  - deleted 17y ago
    [deleted]
  - bmelton 17y ago
    Chemed, the parent company of Roto-Rooter, is trading at $42 a share and has a market cap of $944.82M.
    - deleted 17y ago
      [deleted]
deleted 17y ago
[deleted]
ccc3 17y ago
By definition there is not a single business that is profitable from day one. A plumbing business isn't profitable until the tools and vehicles have been paid for. The important consideration is the size of the deficit (in time or money or ownership) a company accepts and what they gain in exchange. And the bigger the deficit, the higher the stakes.
- thaumaturgy 17y ago
  I bootstrapped a consulting business, and didn't have any savings at all to do it. I had to be profitable from day one. I did not even have a laptop at the time (for network diagnostics and the like) -- I just had my experience. I've had to learn an awful lot about resource management as a result of doing it this way, and I'm grateful for that.
  - ccc3 17y ago
    presumably there was a significant cost in time and/or money required to gain that experience.
    - RyanMcGreal 17y ago
      You've got to live anyway. Might as well pay attention while you're doing it.
- dmose 17y ago
  I would argue that prostitution is profitable from day one..
  - deleted 17y ago
    [deleted]
    - iuguy 17y ago
      That depends on whether your parents are perceived as VC's providing seed capital.
timr 17y ago
Maybe it's not important "always", but it's important most of the time. People forget that there were thousands of other web startups who tried to "get big fast" at the same time that Amazon did. They're dead now. If you're the one in a billion for whom "get big fast" works, it's a great outcome. But for everyone else, the other model works a lot more reliably.
- whatusername 17y ago
  :) Hey - I was the winner in the race of about 180 million. (And that was before I was even born!) We're all one-in-a-billion! // Agree with the point though - it's like assuming that all runners are as fast as Usain Bolt.
hexis 17y ago
Some profitable companies operated at a loss for extended period of time at first. Sure, nobody disagrees with that. The point of the post was that it isn't the operating at a loss that makes a business a success, no matter how large the revenue stream. Operating at a loss may turn out to have been worth it, in retrospect, once the profits start rolling in. It may even be the case that great business success is always preceded by years of operating at a loss. Let's assume that for the sake of discussion. It still doesn't show that any company that operates at a loss, no matter how large the revenue stream, is going to be a great business success. And it certainly doesn't show that the business, while operating at a loss, is currently a success. Operating at a loss, with a large revenue stream, may be a necessary condition of success, but it surely isn't a sufficient condition.

by far33d 17y ago

tptacek 17y ago

Plumbers make a lot more money than people think. But when Amazon started, Jeff Bezos was still probably making more in interest payments than any Plumber makes in a year. So, two responses: (1) Amazon, and (2) what's your point? Lots of plumbers are more successful today than lots of YC startups.

rythie 17y ago
There is not much chance of being a millionaire plumber any time soon especially not after a couple of years work.
- MicahWedemeyer 17y ago
  There's not much chance of being a tech millionaire, either. Much more likely that you end up poorer than the plumber. But hey, I'm still working on my startup, so I guess that just means I'm dumb.
- tptacek 17y ago
  I think you're probably wrong. Plumbing scales like any services business: you stop being able to manage your inbounds, so you hire another plumber who makes less than you. Repeat N times. At some point, you're making enough off the top of all the plumbing work to stop doing plumbing; now you're a full-time business manager. You brand, promote, and scale --- by franchising, hiring more managers, partnering, or securing large contracts. Somewhere in the middle back there, you became a millionaire. What is also probably true is that it is very hard to go out of business as a freelance plumber. It is very easy to go bust as a tech entrepreneur. The flip side of that: on a steady income, the plumber gets more opportunities to grow her business than the tech entrepreneur --- she can stay in business, turning different knobs, indefinitely. You hope that the tech entrepreneur's individual opportunities are much more valuable, but that depends, doesn't it? There's also the classic factoid that most millionaires got there not by striking gold, but by managing their money well. Be careful about Geek Exceptionalism. It will burn you. People excelled in business long before there was an Internet.
  - rythie 17y ago
    My point was that it is possible to become a tech millionaire in a couple of years - this is of course unlikely - but there are many examples of people doing this. It's almost impossible to become a millionaire in a couple of years as a plumber. Whilst like you can do the process you point out, it's likely to take 10+ years to do that. You could also do this same process as a tech consultant and then grow your consultancy business the same way - but that wasn't my point - that's all. People after all play the lottery every week - though on average they would be better off putting that money in a savings account and waiting 30-40 years...
- Silhouette 17y ago
  There is not much chance of being a millionaire software developer any time soon either, especially not after a couple of years' work. The fact that a handful (almost literally) of businesses have achieved this, and quite a few more make a modest profit in a reasonable time, does not by any stretch mean that these "successes" are going to do the same thing. The whole point of the complaint here is that most of those "successes" won't actually be successful, ever. It's just that in this business, the one that does make it will make it big. But the others will still fail.
- deleted 17y ago
  [deleted]
- bmelton 17y ago
  Chemed, the parent company of Roto-Rooter, is trading at $42 a share and has a market cap of $944.82M.
  - deleted 17y ago
    [deleted]

deleted 17y ago

[deleted]

ccc3 17y ago

By definition there is not a single business that is profitable from day one. A plumbing business isn't profitable until the tools and vehicles have been paid for. The important consideration is the size of the deficit (in time or money or ownership) a company accepts and what they gain in exchange. And the bigger the deficit, the higher the stakes.

thaumaturgy 17y ago
I bootstrapped a consulting business, and didn't have any savings at all to do it. I had to be profitable from day one. I did not even have a laptop at the time (for network diagnostics and the like) -- I just had my experience. I've had to learn an awful lot about resource management as a result of doing it this way, and I'm grateful for that.
- ccc3 17y ago
  presumably there was a significant cost in time and/or money required to gain that experience.
  - RyanMcGreal 17y ago
    You've got to live anyway. Might as well pay attention while you're doing it.
dmose 17y ago
I would argue that prostitution is profitable from day one..
- deleted 17y ago
  [deleted]
  - iuguy 17y ago
    That depends on whether your parents are perceived as VC's providing seed capital.

timr 17y ago

Maybe it's not important "always", but it's important most of the time. People forget that there were thousands of other web startups who tried to "get big fast" at the same time that Amazon did. They're dead now. If you're the one in a billion for whom "get big fast" works, it's a great outcome. But for everyone else, the other model works a lot more reliably.

whatusername 17y ago
:) Hey - I was the winner in the race of about 180 million. (And that was before I was even born!) We're all one-in-a-billion! // Agree with the point though - it's like assuming that all runners are as fast as Usain Bolt.

hexis 17y ago

Some profitable companies operated at a loss for extended period of time at first. Sure, nobody disagrees with that. The point of the post was that it isn't the operating at a loss that makes a business a success, no matter how large the revenue stream. Operating at a loss may turn out to have been worth it, in retrospect, once the profits start rolling in. It may even be the case that great business success is always preceded by years of operating at a loss. Let's assume that for the sake of discussion. It still doesn't show that any company that operates at a loss, no matter how large the revenue stream, is going to be a great business success. And it certainly doesn't show that the business, while operating at a loss, is currently a success. Operating at a loss, with a large revenue stream, may be a necessary condition of success, but it surely isn't a sufficient condition.