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There a loads of companies who don't need outside investment to sustain operations but take it anyway to "inject capital for growth". If I build a SaaS that net

by mbesto 12y ago

There a loads of companies who don't need outside investment to sustain operations but take it anyway to "inject capital for growth". If I build a SaaS that nets (profit) me $5k/month for a whole year, does that mean it's not a "startup" anymore?

zyx321 12y ago
Indeed it does. The startup thing to do when faced with a $5k surplus is to spend $50k on marketing. Remember, you don't want to build a sustainable business, you want to make an exit or die trying.
- soundlab 12y ago
  >make an exit or die trying. Or grow a sustainable business from something small to something huge that produces a lot of cash along the way while your enterprise value increases ahead of a large exit (or die trying).
beagle3 12y ago
If I build a grocery store with similar net profit, revenue, etc, is it a "startup"? why should your SaaS be? The term is not well defined, and basically meaningless; but I think a definition that would resonate more closely with most people is "a company whose meta-strategy is to expand like crazy, whose strategy is flexible, and who is not yet an industry pillar".
ChuckMcM 12y ago
Being a startup or not doesn't protect you from poor management choices :-). Companies that don't need outside investment any more are no longer start ups. Getting some additional capital to expand it not fatal if they can't secure it, they just can't expand. For a start up if they can't close the next round of funding, they die. Answering the next question is a bit trickier. You said "nets (profit) me $5k/month" which can be interpreted in a number of ways. So I'll answer with the two most common interpretations. If you're SaaS business can pay you and anyone else needed to run it, a salary and some benefits, and at the end of the year, after accounting for depreciation of assets, expenses, and taxes is $5K in the 'black' (so the LLC, S-Corp, what have you, could 'bank' that $5K for future expansion) then no it isn't a start up any more. It may be a boutique business but its a going concern. If you run a SaaS business with no employees, and use the revenue to pay your living expenses, have no benefits and you happen to end up with $5K unspent at the end of the year, its more of a consultancy than a startup. Good examples in an adjacent field are accounting companies versus accounting consultants. My mother-in-law ran her own little tax accounting business for years. Not a startup (it was self sustaining) but not large either.

by mbesto 12y ago

zyx321 12y ago

Indeed it does. The startup thing to do when faced with a $5k surplus is to spend $50k on marketing. Remember, you don't want to build a sustainable business, you want to make an exit or die trying.

soundlab 12y ago
>make an exit or die trying. Or grow a sustainable business from something small to something huge that produces a lot of cash along the way while your enterprise value increases ahead of a large exit (or die trying).

beagle3 12y ago

If I build a grocery store with similar net profit, revenue, etc, is it a "startup"? why should your SaaS be? The term is not well defined, and basically meaningless; but I think a definition that would resonate more closely with most people is "a company whose meta-strategy is to expand like crazy, whose strategy is flexible, and who is not yet an industry pillar".

ChuckMcM 12y ago

Being a startup or not doesn't protect you from poor management choices :-). Companies that don't need outside investment any more are no longer start ups. Getting some additional capital to expand it not fatal if they can't secure it, they just can't expand. For a start up if they can't close the next round of funding, they die. Answering the next question is a bit trickier. You said "nets (profit) me $5k/month" which can be interpreted in a number of ways. So I'll answer with the two most common interpretations. If you're SaaS business can pay you and anyone else needed to run it, a salary and some benefits, and at the end of the year, after accounting for depreciation of assets, expenses, and taxes is $5K in the 'black' (so the LLC, S-Corp, what have you, could 'bank' that $5K for future expansion) then no it isn't a start up any more. It may be a boutique business but its a going concern. If you run a SaaS business with no employees, and use the revenue to pay your living expenses, have no benefits and you happen to end up with $5K unspent at the end of the year, its more of a consultancy than a startup. Good examples in an adjacent field are accounting companies versus accounting consultants. My mother-in-law ran her own little tax accounting business for years. Not a startup (it was self sustaining) but not large either.