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Comment by themartorana | Hacker News Reader

This seems so odd to me. It's like working the odds to stay as VC-funded as possible and basically avoid growing up - and most of them must understand that profitability simply doesn't exist in their model (before they pivot to being another advertising billboard).

The first step is admitting you have a problem, and as long as people keep giving you money, there's no need to admit anything.

Heck. As long as people keep giving you money, is there really a need to make money in another way?

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The flip side of that coin is that some companies, under pressure to "grow up", become misguided—destroying their core product and user base in the process.

I would argue some business models aren't necessarily suited to generating significant or otherwise self-sustaining levels of revenue. However, that doesn't preclude these businesses from being incredibly valuable to larger, more established corporations with sizable cash reserves.

Of course, publicly admitting you're building for an exit is tantamount to suicide in the present climate, so it's no wonder the current situation is what it is.

>The flip side of that coin is that some companies, under pressure to "grow up", become misguided—destroying their core product and user base in the process.

If your core "product" is massively unprofitable, it's not really a product at all.

There is sellability and there is profitability. Two entirely different things, but ultimately that which is sellable will be exploited for financial gains, and often it is pro`fit`able

>If your core "product" is massively unprofitable, it's not really a product at all.

Tell that to Instagram or Snapchat.

> Tell that to Instagram or Snapchat.

This is no longer true for Instagram. It should generate $595 million in ad revenue this year, and is expected to reach $2.81 Billion in annual ad revenue in 2017. (Remember: this company was purchased for $1 Billion.)

So, to recap, Instagram was "massively unprofitable" for five years, after which it started bringing in revenue most easily measured billions.

In other words the notion that a product isn't "a product" until it's profitable is farcical.

"However, that doesn't preclude these businesses from being incredibly valuable to larger, more established corporations with sizable cash reserves"

A business that's burning 100's of millions a year and has valuations in billions of dollars is rarely going to be "incredibly valuable" to a bigger company.

Like it or not, this is part of the game that's played in Silicon Valley. It's a high-stakes game to be sure and a lot of companies (perhaps most) are not going to make it.

But I suspect many wouldn't have made it if they tried to build a profitable business anyway because they're operating services that probably can't be run profitably (or very profitably).

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