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 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 close new business for 6 months. Your profitability will go down for 2 quarters while your growth may increase dramatically in quarters 3–12.
I know this seems obvious but I promise you that even smart people forget this when talking about profitability. 70–80% of the costs of most startups are employee costs so what you’re really talking about when a company is unprofitable is that they are growing their staff ahead of their revenue.

Comments

  • bitcoincasino
    March 15, 2023 at 7:09 am

    It’s the same topic , but I was quite surprised to see the opinions I didn’t think of. My blog also has articles on these topics, so I look forward to your visit. bitcoincasino

  • https://www.bet-promokod.ru
    March 17, 2023 at 2:20 pm

    1xBet является очень известных на рынке. https://bet-promokod.ru/ Огромный выбор спортивных и киберспортивных событий, множество открытых линий, самые высокие коэффициенты. Кроме того, БК имеет обширный функционал и одна из немногих дает возможность совершать ставки по специальным промокодам. Используя промокоды, вы можете получить настоящие деньги, не внося абсолютно никаких средств. Это реально! Узнать актуальный промокод вы можете прямо сейчас, однако использовать его необходимо в соответствии с условиями и инструкциями, которые приведены ниже.

  • gate io para yatırma nasıl yapılır
    March 22, 2023 at 11:28 pm

    Reading your article has greatly helped me, and I agree with you. But I still have some questions. Can you help me? I will pay attention to your answer. thank you.

  • gate io logo
    March 26, 2023 at 12:15 pm

    Do you mind if I quote a couple of your articles as long asI provide credit and sources back to your website?My blog site is in the very same niche as yours and my users would certainly benefit from some of the information you present here.Please let me know if this okay with you. Thanks!

  • binance register
    April 24, 2023 at 8:42 pm

    I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article.

  • I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://accounts.binance.com/el/register-person?ref=WTOZ531Y

  • S'inscrire sur Binance
    April 30, 2023 at 1:40 pm

    Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://www.binance.com/fr/register?ref=JHQQKNKN

Add a comment