4 ms·

I can see that. Why limit your revenue by a potential $1m/year because you don't want to spend the extra $50,000/year (for example). At the same time when you

I can see that. Why limit your revenue by a potential $1m/year because you don't want to spend the extra $50,000/year (for example). At the same time when you start out saying "I need to pour millions into this idea to make a single dollar back", I start questioning whether it's a viable idea in the first place. Granted, some ideas/problems do require expensive solutions: converting from our current transportation system to driverless cars cannot be done on the cheap. However, if I was an investor, I'd be picking startups running out of someone's basement on a farm in Iowa, rather than someone that wants to use my money to open a lavish office in NYC. Then again, I'm not an investor, so I have no idea what I'm talking about :)

callmeed 12y ago
Yes, if it takes you $5 to make $1, then something is probably wrong. But, if it takes you $1.10 to make $1 and there's a clear path to efficiencies/economies of scale, then maybe you're on to something. Here are some VC perspectives on burn rates: http://avc.com/2014/09/burn-baby-burn/ http://avc.com/2014/09/burn-baby-burn/ http://www.businessinsider.com/bill-gurley-silicon-valley-is-taking-on-too-much-risk-2014-9 http://www.businessinsider.com/bill-gurley-silicon-valley-is...
- timr 12y ago
  "But, if it takes you $1.10 to make $1 and there's a clear path to efficiencies/economies of scale, then maybe you're on to something." I agree with everything you've said, but the latter part of that sentence is easily overlooked when the money is flowing freely: there are a lot of big-name startups right now who sure seem to have business models that are the equivalent of selling dollars for 95 cents. You hear a lot of things that sound like "if only we can solve this NP-complete problem and/or ultra-efficiently operationalize labor-intensive tasks that have been the bane of much larger companies for decades, we'll print money!" If only... In particular, you can hand-deliver low-margin things (that people clearly want) and goose your revenue like crazy...but can you do it profitably in the long run? I'll bet you a Kozmo messenger bag that you can't. This is more of a problem in the valley than elsewhere. People so techno-utopian that they sometimes forget to ask basic questions of feasibility, because revenue growth. That said, I have no idea how you get to hundreds of millions of dollars in funding without someone taking a step back and saying: "hey, wait a second...are there unit economics here?" That's just nuts.
wamatt 12y ago
> "I need to pour millions into this idea to make a single dollar back", I start questioning whether it's a viable idea in the first place. In the late 90's, Google had tens of millions of dollars in funding, and took 3 years before it started making revenue, with the launch of Adwords in October of 2000.
juliangregorian 12y ago
But then you'd want them to grow, and no potential kickass employee wants to go work on this farm in Iowa that you've romanticized.

callmeed 12y ago

Yes, if it takes you $5 to make $1, then something is probably wrong. But, if it takes you $1.10 to make $1 and there's a clear path to efficiencies/economies of scale, then maybe you're on to something. Here are some VC perspectives on burn rates: http://avc.com/2014/09/burn-baby-burn/ http://avc.com/2014/09/burn-baby-burn/ http://www.businessinsider.com/bill-gurley-silicon-valley-is-taking-on-too-much-risk-2014-9 http://www.businessinsider.com/bill-gurley-silicon-valley-is...

timr 12y ago
"But, if it takes you $1.10 to make $1 and there's a clear path to efficiencies/economies of scale, then maybe you're on to something." I agree with everything you've said, but the latter part of that sentence is easily overlooked when the money is flowing freely: there are a lot of big-name startups right now who sure seem to have business models that are the equivalent of selling dollars for 95 cents. You hear a lot of things that sound like "if only we can solve this NP-complete problem and/or ultra-efficiently operationalize labor-intensive tasks that have been the bane of much larger companies for decades, we'll print money!" If only... In particular, you can hand-deliver low-margin things (that people clearly want) and goose your revenue like crazy...but can you do it profitably in the long run? I'll bet you a Kozmo messenger bag that you can't. This is more of a problem in the valley than elsewhere. People so techno-utopian that they sometimes forget to ask basic questions of feasibility, because revenue growth. That said, I have no idea how you get to hundreds of millions of dollars in funding without someone taking a step back and saying: "hey, wait a second...are there unit economics here?" That's just nuts.

wamatt 12y ago

> "I need to pour millions into this idea to make a single dollar back", I start questioning whether it's a viable idea in the first place. In the late 90's, Google had tens of millions of dollars in funding, and took 3 years before it started making revenue, with the launch of Adwords in October of 2000.

juliangregorian 12y ago

But then you'd want them to grow, and no potential kickass employee wants to go work on this farm in Iowa that you've romanticized.