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Should Startups Focus on Profitability or Not?

Both Sides of the Table

Gross Profit (also called Gross Margin or sometimes “Net Revenue”). And assuming they both had the same net profit margins (profit / revenue) then the former company would be much better off at the end of the year. For example, look at the following graph. The example chart is not actually atypical.

Startup 419
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How much is that one additional unit worth?

Berkonomics

Every dollar of gross profit falls to the bottom line, increasing net profit faster with each transaction. An example to make this clear. A ten percent increase in revenues for a company with 50% gross margin and 5% net profit before the increase would double net profit for the period with that ten percent increase in revenue.

.Net 156
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Economics 101: If water flows downhill, then why fight it?

Berkonomics

Want examples in the “real world?” ” Examples of the proposition. Take for example, adoption of solar panels or electric vehicles in the mass market. Electric cars as an example. Back to the water flowing downhill example. Most of us want to do well for the environment.

Examples 156
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Water flows downhill. Why fight it?

Berkonomics

Take for example, adoption of solar panels or hybrid vehicles in the mass market. As solar panel efficiency increases from 20% to 40% and more, and as electricity prices rise, the net breakeven for solar panels should decrease dramatically. Money flows to the cheapest effective solution to a problem. Email readers, continue here.]

.Net 179
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Public and Open Debate is the Highest Form of Democracy (and Blogging)

Both Sides of the Table

The net result of my posts plus the comments forms a tighter view of my evolving belief system. But I think it’s fair to point out when I believe that the profit motive is a net negative for startups or for our industry. Apple has great products and occasionally bad motives driven by profit maximization.

Blogging 250
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Software Development Companies in Southern California

SoCal CTO

Most networking events tend to either focus on specific technologies (PHP,Net, C#, Microsoft, LAMP, MySQL, Open Source, Hadoop, Java, etc.) For example, an online retailer probably doesn't see themselves as a technology company. size of company (startup to very large), stage (early stage to established firms) vary widely.

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Playing the Long Game in Venture Capital

Both Sides of the Table

Invoca, for example, had interest in being acquired along the way at $300 million or so. The massive shift of dollars the moved from public markets to private markets has benefitted us and while at times can distort valuations as they themselves chase FOMO, the net results will be net positive for us all.