Comment by geuis | Hacker News Reader

Comment by geuis | Hacker News Reader

Doesn't anyone have a problem with a company going public that has never turned a profit?

I live in San Francisco and have been using Zipcar for years. They're a wonderful company, with convenient car locations all over the city, excellent customer service, and a very forgiving insurance policy (I was in an accident a couple years ago that totaled their car. I just had to pay $500). So I REALLY want Zipcar to stay in business.

But this just really is beginning to remind me of the crazy shit that was going on 11-15 years ago. Companies back in the day that probably could have built interesting long term businesses imploded when they went IPO and built up massive amounts of capital they didn't need.

Please, someone tell me I'm missing something.

On Marketplace this morning someone stated they are profitable where they operate (DC, NYC, and SF?) but have been spending money to grow.

Ok, now that does indeed make sense if true. Thanks.

Not at all. I'd rather companies that weren't profitable but had a good chance of growing into profitability with more investment were able to IPO rather than rely on VC.

Another company that went public before ever turning a profit? Amazon.

an IPO is just a way to raise money (oversimplified, but still true), and unprofitable companies raise money from VCs all the time, so is this really all that different?

That's true, but something also that's true is that raising money through an IPO spreads the risk out to the public, whereas with VCs, the risk is contained.

That's why one of Peter Thiel's original arguments on why there was no bubble centred on the fact that there were no IPOs. No IPOs meant no general public irrationally driving up the price of a stock; rather, the rise in a stock's price in most of the big-name tech startups (or high-growth companies) today are from investment activity from savvy investors who are experts in the space.

exactly! their business model is rock-solid, nobody else can tap the market AND they have plenty of patents... NOT!

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