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If the Shoe Fits: Your Survival is Spelled P-R-O-F-I-T

by Miki Saxon

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

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Users, users, we’ve got users.

Hypergrowth has been all the rage for the last few years, but is it enough?

Twitter’s Q1 revenues  were $595 million, but it’s still not profitable. The stock tanked 14% in after hours trading and is about $35 below its 52 week high and $11 below its IPO price.

The company continued to lose money in the first quarter, posting a net loss of $80 million. That’s less than the $162.4 million that it lost in the year-ago period.

Meanwhile, Etsy turned a surprise profit a year after it went public; the stock jumped 12% in after hours trading, but that’s still down nearly 50% from its IPO price.

The crafty online marketplace posted its quarterly earnings on Tuesday, and reported its first quarterly profit since going public in April 2015.

For years, the attitude, fueled by the likes of Paul Graham, has been who needs profit?

Bill Gurley’s recent post was not only a wakeup call, but scared the hell out of a lot of founders who looked to funding, instead of profits, for their valuations.

In Silicon Valley boardrooms, where “growth at all costs” had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue. Anxiety slowly crept into everyone’s world.

Harry Edwards, an emeritus sociology professor at Cal, recently made a very apropos comment, although he was talking about race and the NFL.

“Progress is one of those issues that’s like profit: It really comes down to who’s keeping the books.”

“They” keep saying that the problems today are different than those that caused the dot com crash. But I think at heart they are very similar.

In both cases the emperor had no clothes.

Granted, for a long time his clothes were described differently than in 2000.

But the in both cases, the clothes were strictly in the mind of the beholder.

Image credit: HikingArtist

One Response to “If the Shoe Fits: Your Survival is Spelled P-R-O-F-I-T”
  1. Change: interview post Says:

    […] on profitability as opposed to […]

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