There Is No Substitute for Profitability
General Douglas MacArthur was a quote machine. One of my favorite is “War’s very object is victory, not prolonged indecision. In war there is no substitute for victory.” What’s true in war is true in business. Swap “war” with “business” and “victory” with profitability and you have a statement we all should heed: ““Business’s very object is profitability, not prolonged indecision. In business there is no substitute for profitability.”
Why do we keep forgetting this? What’s wrong with us that we continue to focus on businesses metrics such as unique or concurrent users and growth in both? None of these matter if they don’t directly relate to profitability. Don’t fool yourself folks – don’t think that getting the “traction” of users is the hardest part of the business. Don’t think that you’ll just layer on advertising later and have a profitable business.
If you aren’t building in profitability from day 1 you are creating a cash incinerator. The folks at Google are still trying to figure out how to make YouTube profitable. Great idea? Maybe…if it ever becomes profitable. Anyone can build something to burn cash. After all, it’s just a free hosting environment for videos. Going to business without a plan for profitability is like going to war without a strategy to win. The only difference is that you’ll burn cash rather than lives.