Thursday, October 13, 2016

Unicorn strangling

Loved this Bloomberg article: How Not to Strangle Your Unicorn.

Way back in the mid-1980's, we used to sit around in the office and chuckle at computer companies whose strategy was clearly:

OK, we may lose money on each sale.

But we'll make it up in volume!

OK, it's an old joke, certainly it goes much further back than the 1980's.

But isn't it delightful to read this:

“We kept getting new customers, but we started to see that the profit margins were zero to negative,” said Howard Morgan, an investor at First Round Capital who was on Fab’s board. “The only way the model made money was if people bought multiple items. If you could lose money on each customer, you’re not going to get money out of the whole, and it took us too long to understand that’s what was happening.”

Or this:

Investors swarmed. Goldberg's ideas and charisma helped the e-commerce site raise at least $325 million in venture capital from such firms as Andreessen Horowitz and China's Tencent Holdings, fueling expansion in Europe and plans to tackle Asia.

I mean, these are guys who run multi-billion dollar investment funds, not just some dumb schmuck coders who sit around in the office critiquing stupid business plans that can't ever work.


No comments:

Post a Comment