The Startup Therapy Couch: What's the TRUE Startup Unicorn?
I'm sure you've read the same types of stories I have: Startup ABC raises hundreds of millions in venture capital and is called a "unicorn", successful beyond the wildest dreams of the original founders. And in order to be called successful, these unicorns must have profit, right? NOPE.
Let's examine two very popular, well-known companies that fall in this camp: Uber and Lyft. Both have received hundreds of millions of dollars from investors through various vehicles (HA). Both have never turned a profit. Not. Once. You see, Uber and Lyft are surviving on their investor capital because they are still subsidizing every single ride delivered through their model. Everyone loves their idea and is using it because it's so cheap... But it's not actually covering the costs of running the business. So how on EARTH will a business like that continue to exist in the long run? How will these investors ever get any kind of return on their money if the company is always losing?
The TRUE Startup Unicorn is a company that MAKES MONEY. Earn a profit in your first 3-5 years of operation, and you'll beat out 90+% of all the other startups out there who are focused on raising money and not looking at whether their financial models can actually work as they on-board more customers.
Profit = Unicorn Status. Venture capital should only be a tool used as a stepping stone to get there, not to subsidize a business model or revenue model that can't make money!
Remain profitable and carry on.