Daily Entrepreneur

Startups have it all. Except a path to profits.

From an investor point of view; start-ups are not primarily seen as young companies headed for a sustainable market position, but as financial investment vehicles to be hyped up and then passed along to the next stage.

UBER, WeWork, and biggest part of the startup ecosystem wear a mask. They have millions of users, cool brands and charismatic bosses but that is not enough. What is missing? Profits. But in order to grow, startups reduce the margins to a point that it’s not sustainable.

It simple, money; profits, are the oxygen of business. Without it, it will not survive.

For example; Deliveroo ‘riders’ do not earn enough by riding for Deliveroo to buy the smartphone or the bike that they need for work. It only works if they already have these things and are ready to make additional revenue at the margin.

‘Or take the average early stage incubator. It attracts numbers of young educated knowledge workers who, motivated by a small seed grant, tend to invest their savings along with those of their family and friends to work long hours — nobody changed the world working 40 hours a week as Elon Musk claims. All of this to generate the kinds of hype that can make their innovation stand out from the others (and in the process justify investment and public financing in the incubator that they work for). They fail in 99 per cent of the cases and then go back to the kind of corporate bullshit job that they came from, or if things go well, see their innovation be bought up, and, in most cases closed down by some corporate giant.’

Read the whole article: Taking not Making. Has Silicon Valley failed at Digital Innovation?