[d2]

I've heard of 3 out of 10 of these highly successful startups. I think we call ourselves successes prematurely to try to accelerate the arrival of true success. Again today a very good friend who runs a startup with great potential trumpeted the fact that he is profitable. Looking deeper, turns out he's no longer pouring cash into the company, but unable to pay himself a salary.

Lets cut the bullshit guys. You're "highly successful" when you're able to pay yourself and your employees above market rate salaries and retain profit for growth.

Edit: ...as well as being able to start making a dent in the debt you may have accumulated during the cash burning phase of your startup. If you want a really fucking scary exercise, plot your cashflows to date and do a NPV or IRR calculation on the flows. You'll have quite the come-to-jesus moment and will realize how deep the hole is you need to climb out of before you can call yourself successful.

[kinkora]

I'm not gonna say I know your friend more than I do but what I can say is I understand why he says he is "profitable" even though he is not. Ok, lets look at it this way:-

"Looking deeper, turns out he's no longer pouring cash into the company, but unable to pay himself a salary."

Replace "company" with property and "salary" with capital gains.

Does it make sense now? He (and probably many others here too, including me) sees his startup as an investment and once an investment starts paying off by itself (break even), I will definitely declare it profitable and trumpeted it as a huge achievement. Why? Cause this investment is paying for itself and I can potentially sell it or earn more off it without bleeding any of my cash into it. Trust me, when you reach that position, you will be a very happy man.

[d2]

Trust you?

You've failed to take into account the opportunity cost of your time spent working on the business. Lets assume your labor costs $120,000 a year and the company is not paying you. So it's costing you $120,000 a year.

Sell that "property" as you call it, to someone else and it'll cost them $120k a year to replace you or pay you.

The investment isn't paying for itself, there is no capital gain and the reality is that you would have to pay a buyer to take it off your hands so they could lose money at a rate of $120k a year.

At this point in a businesses evolution you're losing money at a terrifying rate and unable to feed your family because you're working for free, but hey you are profitable because you've managed to pay your $20 a month Linode hosting bill.

Dude, I don't want to crap all over your parade or the OP's. But unless we know what we're all working towards and what the definition of success is, we're lying to ourselves and each other and there's no way to measure whether we're making true progress towards meaningful goals or not.

A dire misunderstanding of business cashflow like this poster has demonstrated makes me worry for all the starry eyed kids on HN starting businesses. They read shit like this and gobble it up as gospel. Then they dedicate years of their lives to working their asses off for very little pay, thinking they've achieved meaningful milestones on the way to generating wealth and creating jobs, but the reality is they're wasting their time, wasting investment capital and are a distraction from truly productive endeavors and truly talented entrepreneurs.

What perpetuates this cluster fuck is the monthly talent acquisitions that Google, Facebook and other heavyweights make getting conflated with job creation, innovation and the creation of new cashflow. Building an entity that attracts top talent into a single room and selling that room full of new-hires to google for $2 million an engineer has nothing to do with entrepreneurship. Are you hearing me Levchin?

[abbasmehdi]

Agree with you on most points, d2, however I think you're confusing the terms "successful" and "profitable".

Successful in having their baby at least pay some bills is a milestone. Having it pay your bills as well is another, then having it pay for your future generations is yet another. Success is an arrival at a predefined milestone, may it be anything you so choose to predefine.