| I really appreciate yours and the GP's comments because both describe different parts of the Everpix puzzle. You're right that capital should seek the highest returns, but one way to measure the likelihood of getting that return is by evaluating the marginal costs and revenues of a product. When a company sells each product for a loss, it is impossible for the company to provide a positive return on the capital. In those cases, like with Everpix, it becomes a question of "when" and not "if" the business will fail and the return will be zero. The only rational way to play the game that way is to hope for an acquisition. That's why I look at detailed parts of business models like this, it helps elicit the overall picture in the same way functional a test case elicits overall product health. There is an art to ensuring proper overall coverage with multiple tests. > I don't think they didn't know they were burning their reserves, that their cost structure was unsustainable. This is where I disagree and why I wrote the analysis. I think the company didn't understand they were selling their product for a marginal loss: > "Long story short, the infrastructure was paying for itself through subscription revenues." https://news.ycombinator.com/item?id=7041640 > "AWS infrastructures costs were already being covered by subscription income." https://news.ycombinator.com/item?id=6676906 From the numbers neither statement was true, and from the confidence in the tone it seems like they didn't know for a while. Subscriptions did not cover AWS costs. It looks like it might have become known internally when asked directly from others taking a look: > "The reason we were getting closer and closer to being positive on variable costs ... is, yes, improved monetization, but more importantly AWS optimizations." https://news.ycombinator.com/item?id=7043555 |