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This is the funny math that got Groupon in trouble when it IPO'd. You can't count revenue as the main metric. You have to look at costs & profits. Any bootstra
by joelrunyon 11y ago
This is the funny math that got Groupon in trouble when it IPO'd. You can't count revenue as the main metric. You have to look at costs & profits.
Any bootstrapped business will tell you this - but somehow everyone forgets it when it's VC money.
- morgante 11y agoP&L is not a useful metric for growing startups. If the lifetime value of an Airbnb customer exceeds their marginal cost (including COA), Airbnb should buy customers all day long. I strongly suspect Airbnb's marginal returns are fantastic. Their model seems highly profitable on a unit basis.
- joelrunyon 11y agoI'm not saying it is or isn't - what I'm saying is you have to realize that revenue ≠ profit and failure to do so gets you something like what happened to Groupon.