This is my third version of this post. The first attempt was a rant about how idiotic it is that so many people think it’s a good business practice to lose money and worry about profits later. Profits need to be a major part of any business strategy. I firmly believe that.
But it was an angry post so I started over.
The second version focused on the idea that you don’t have to make an investment in the future OR make a profit. You can, as Jim Collins says, embrace the AND – make money AND invest in the future.
It was a good post and you’ll never get to read it.
I shared it with a couple of close and trusted friends. They happen to be the founders of an LA startup business called Adomic. They’re sharp guys and their business received $1.7 million in funding back in January of this year. Both made the point that things are more nuanced than simply, “make a profit AND invest in the future.”
A lot of startup businesses can’t make a profit until they’ve built a product (which takes time and money), put together a team (more money, more time), and started to bring in paying customers (money + time). In short, there are legitimate reasons for a well run company to lose money.
I hate it when smart people make me reconsider my position. It requires actual hard thought and, in this case, admitting I was wrong. Not completely wrong, mind you, but a little bit wrong.
Now for my third attempt… (more…)