If we take a trip back in time, and presented a tech startup or similar business model and outcome to investors and business owners in say… the 1960s, they would probably laugh in our faces. They wouldn’t worry about analyzing whatever wonders the app or business can achieve. Their attention would immediately go after the millions of dollars in seed or other series investments and how years after, these companies are not profitable.
Things have fortunately changed. Not that this example wouldn’t happen in the past, but if that indeed happen, then the company would sell off everything and close off, or if it continued, then it would certainly not rely upon virtual infrastructure to keep on going.
Today, is definitely a different story. Software is a billion dollar industry that creates thousands of jobs, and brings value to millions of users across the planet. That’s the primary goal for a tech startup. In order to do that, startups need significant investment that will later create exponential growth. Profits? Well, that’s a plus. As long as there is growth and sustainability, profits come later.
Take Twitter for instance. Their recent IPO filing brought focus to their finances of course. This year alone they have lost $67 million. The main reasons the press and Twitter themselves are giving, is that Twitter has made expansion plans and has bought several small startups. This in turn has rendered their finances a bit fragile. However, the main goal here is far from it, what other platform (except of course, Facebook) has been able to be the epitome of free information and rights throughout the world?
Take Foursquare as another example. Although they were founded a few years ago, they are still not turning a profit. This is the example of many other startups. Some of them don’t find value in other things like Twitter, and so finally close their doors. It’s entrepreneurship risk as always, but this time around, it also comes with other benefits. What do you think?