Revenue vs. Value
daniellemorrill.com
daniellemorrill.com
Buzzed about tech companies where their founders are giving talks, they get mentions on twitter, they're talked about on HN, etc., but that are actually going nowhere are a dime a dozen.
Revenue actually changes the underlying economics of your business so it's close to the essence of what a non-vanity metric is.
This article takes a really short-term and dismissive view of revenue. If you're at $1M ARR after a year, throw a party and invite all of your best friends -- you've done something that less than 1% of startups will ever accomplish. If you're at $1M ARR after a year, imagine where you will be after 5 years.
Of course, revenue is just part of the picture. You have to look at revenue growth, whether it's transactional or recurring, how monetization happens, the market opportunity, etc. etc. But I'm pretty confident that revenue is a better indication of how a company is doing than Facebook likes, Twitter mentions, web traffic, etc. that currently comprises the author's startup momentum index.
As to SxSW, lol I can't deny I did enjoy taking that dig at all the attendees who should be at home working on their startups.
P.S. I've figured out you don't like me by now codex, but somehow I'm gonna win you over
Companies exist for one reason - to make money. It's their oxygen.
Interesting PR strategy.
Your lack of knowledge of Midwest startups doesn't equate to there not being any.
Why does it only matter if you're famous?
If you are in a market with network effects, you need to acquire users FAST. What would grow faster: Facebook monetizing each user from day 1 at $1 a user or Facebook growing fast, kicking in network effects, and delaying monetization. What would ultimately have more value?
So this isn't saying "don't make money", it's about examining the market you are in and making a strategic, thoughtful choice.
I think dmor's point is that revenue can be a lagging indicator, and that some startups can suddenly turn on a revenue pump that makes watching revenue silly.
I agree with her - in 1% of cases. The problem is that for dmor, that 1% of cases is all that matters - because those cases are going to be the all or nothing billion dollar company cases, which is what she's aiming for. Facebook, AirBnB etc - all would have terrible numbers while starting up, then suddenly their numbers start to look great.
If you're trying to build one of those shoot for the moon startups (the kinds VCs like), this idea won't be it.
Not being a hater.
Why raise 20k if you you'll make that next month?
Early Revenue is only bad for pump-and-dump startups that KNOW they'll never be profitable, but hope they can fool everyone long enough to get funding and make the company somebody else's problem.
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If the data _was_ in fact available, I have no doubt in my mind that it'd be one of the most important indicators.
This seems like an interesting way to justify shortcomings of dmor's momentum index. So:
- Mentions in TechCrunch > Revenue - Conference presentations by CEO > Revenue - Klout score > Revenue
This is some combination of naive, farcical or dumb.
Of course, you can throw out Facebook as an example of what over-optimizing for revenue would have done to them but this is survivor bias at its best. You could also look at Pets.com, Webvan and Kozmo from a bygone era to see what a poor monetization plan does. Note: it's not just revenue that is important but revenue > COGs.
(Note: Yes I know. This time is different. I'm an idiot.)