[orangethirty]

I'm curious. My understanding of anything-first startups is that you do everything manually to test a market, grow your clientele, and turn a profit. In your post, you mention not being profitable yet, even with the injection of around 7.5 million dollars. As someone who is now used to building businesses that turn a profit before they launch, your situation is interesting. Note that I'm not looking to start a flame war, just genuinely interested.

[vacanti]

That's a good question. If you can create a startup that's profitable day one, that's great.

But, there are lots of businesses that need a fixed cost base that only turn profitable after millions of users. But, they turn very profitable with tens of millions of users.

If you restrict yourself to just ideas that are profitable day one, that's great though you may miss out on some great ideas.

[orangethirty]

This is the way I see it:

If I have to scale to millions of users then my business plan is not as good as I thought. Why? Because as much as I'd like to think otherwise, tech startups do not produce a tangible product. Unlike automobile manufacturers, or hardware folk, we don't need a lot of money to build something big. All we need are people to write the code. Then we just focus on selling it. For me, a software product that requires millions of users to be profitable, is simply playing the lottery. I can play the lottery for $1 and not have to deal with investors and TC.

Someone might say that I lack experience doing so. Well, not really. I've been there, and done that. Online and offline. Nowdays, to me, its a matter of trying to win the millions lottery, or building something that makes me money without the drama of SV.

I know I'm wrong on various points. If you will, explain.

[dpritchett]

OP left a quarter-million a year hedge fund job to swing for the fences. I'd guess his floor for "acceptable" exits is in the multiple millions. Your personal mileage my vary.

http://viniciusvacanti.com/2011/08/03/why-i-quit-my-job-to-s...

[vacanti]

I don't think you're wrong. It's a personal choice based on one's perceived strengths. Some people don't think it's a lottery. They think they can replicate success.

Personally, I do think there is skill involved unlike a lottery. But, I still think there's a fair amount of luck, too. In the end, I'm not sure I would start another company that didn't have the option of becoming profitable right away.

[mcguire]

As an aside, you say,

"In your post, you mention not being profitable yet, even with the injection of around 7.5 million dollars."

Investor's money has nothing to do with profit. You're profitable when you have customers giving you money, i.e. revenue, in excess of your expenses. The injection of capital is not revenue.

[orangethirty]

True. My point is that if you can't make money with 7.5 million dollars, then something may be amiss.

[kees]

This business was riding on the wave of Groupon like deal sites.

The start-up was not so much about running a profitable business but about capturing the funding possibilities that came up due to the popularity and profitability of Groupon and its numerous clones.

[orangethirty]

It may seem that way, but we cannot simply say that this is a fact. The founders might have some plans that would turn this market on its head. Though, at the same time, I see where this sort of behaviour comes from. Its the same reasons Dropbox clones got millions of dollars in funding, even though their product is a straight copy (and crummier).