What’s the best way to think about profitability?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Profitable: To Be Or Not To Be? – AVC

Many high growth companies can be profitable. They have enough revenue to cover their essential costs and could easily decide to show a profitable income statement. But they don’t make that choice. Instead they invest heavily in the business with the expectations that those investments will produce more revenue (by hiring salespeople), or additional products (by hiring engineers and product managers), or additional geographies (by hiring an inter… (read more)

What’s the best way to think about profitability?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Profitable: To Be Or Not To Be? – AVC

This is tricky stuff. If you are going to take all of your potential profits and reinvest them in the businesss in search of higher growth and greater profits in the future, you had better be right about those investments. And it is often hard for investors to see how those investments are going to pay off, so at times you can be penalized for making those choices. Right now the public markets seem to be paying companies more for long term growth… (read more)

What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

You either have to fire good people, get some or all of the employees to take less salary for a while, or increase revenues. Getting people to take less salary is a weak solution that will only work when the problem isn’t too bad. Which leaves two options, firing good people and making more money. While trying to balance them, keep in mind the eventual goal: to be a successful product company in the sense of having a single thing lots of people u… (read more)

What’s the best way to survive?

Paul Graham (Co-Founder & Partner at Y Combinator)
The Fatal Pinch

It may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I’m suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you wh… (read more)

What’s the best way to think about profitability?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Profitless Prosperity – AVC

Profits are critical to the health of a business, but that doesn’t mean a healthy business has to currently profitable. It needs to be able to be profitable if it wants to be and it needs to be profitable at some point in the future, at least hypothetically. So when you read that a company is losing money, don’t read that as a bad thing. It could be a very good thing. It all depends on why.

What’s the best way to navigate the fundraising climate?

Sam Altman (President at Y Combinator)
What to do if a bubble is starting – Sam Altman

The only thing that is cheap during a startup bubble is capital. Make sure you have enough money in the bank, and treat this money as the last money you’ll ever raise. Focus on a path to profitability. Resist the urge to ramp up to a crazy burn rate.