Should startups care about profitability? More news at 10
There are certain topics that even some of the smartest people I talk with who aren’t startup oriented can’t fully grok. One of them is whether startup profitability matters . It’s common cocktail party chatter to hear people confidently pronounce that some well known startup is sure to blow up. Or you know the other one — the one where Snapchat lost $2 billion in just one quarter. Two-fucking-billion! What a disaster! Except that they didn’t actually lose $2 billion in cash. It was a stock option incentive related “expense” but I bet you didn’t know that because in an era where we only read the headlines — they must be a train wreck losing billions. (They actually lost about $175 million in cash in that quarter, FWIW. See appendix if you want to know more on this.) “How could they succeed when they’re not even profitable!” If you hire 6 senior sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not ...