Entrepreneurs: Startups as Pudding
by Miki Saxon
Ever wonder what the old proverb, “the proof is in the pudding” means?
No? That’s good, because it has no meaning.
Why? Because the phrasing is incorrect.
The original proverb is: The proof of the pudding is in the eating. And what it meant was that you had to try out food to know whether it was good.
Startups are like that.
Creating them doesn’t prove anything.
Neither does customers trying them out.
Funding rounds proves even less.
Only when the public market or another corporation has the appetite to eat is the value proved.
Or is it?
Living Social and Groupon are proof that those appetites are fickle as a teen.
Square lost nearly half its value in its IPO (priced $6.46 below the last funding round) and now being actively shorted.
The true test is whether the appetite is sustainable.
Sustainable isn’t just a matter of price; share prices will always go up and down — that’s the nature of the beast.
It’s not even about profitable.
Sustainable means a business model that generates enough revenue to function, grow and innovate without requiring new/outside infusions of cash — like Amazon.
Flickr image credit: Ruth Hartnup
