For the VCs to have a big exit the company eventually most be profitable, very profitable. That has to be the ultimate goal. But to get there you can't just keep giving things away for free and hope that one day you'll magically figure out how to make money.
Even if you'd rather shoot for being acquired, it still makes sense to try and reach profitability as soon as possible. If you keep living on VC money forever sooner or later you run 2 risks: 1) the VC money will dry up, like in a bad economy 2) the valuation of the company gets so high it doesn't make sense for anyone to acquire you.
For both of the companies referenced, the founders have been reported to have "cashed-out." I don't think either 1 or 2 is part of their thinking. Just follow the standard VC Web 1.0 agenda - get big fast. Home run or complete failure.
People seem to have forgotten all the failures that produced. VCs are fine with 9/10 complete failures, as long as there's 1 home run.
Comments
For the VCs to have a big exit the company eventually most be profitable, very profitable. That has to be the ultimate goal. But to get there you can't just keep giving things away for free and hope that one day you'll magically figure out how to make money.
Even if you'd rather shoot for being acquired, it still makes sense to try and reach profitability as soon as possible. If you keep living on VC money forever sooner or later you run 2 risks: 1) the VC money will dry up, like in a bad economy 2) the valuation of the company gets so high it doesn't make sense for anyone to acquire you.
For both of the companies referenced, the founders have been reported to have "cashed-out." I don't think either 1 or 2 is part of their thinking. Just follow the standard VC Web 1.0 agenda - get big fast. Home run or complete failure.
People seem to have forgotten all the failures that produced. VCs are fine with 9/10 complete failures, as long as there's 1 home run.