Business Models

I saw this tweet today

New startup concept:

1. Make something of value
2. Charge money for it
3. Spend less than you make

I call it “business”. Thoughts?


I’ve been confused for a long time about why this isn’t how modern startups are run.   This is the exact model I had in my head in 2001 when I wanted to start my own business, and for every startup idea I’ve had. However, I’ve seen so many multi-billion dollar valuations of companies that essentially have no revenue that I’m starting to wonder…

Is this a class thing? 

I’ve gotten to know a few rich people in NY, and I can tell you that none of them thinks this way. I can’t tell if they’re rich because they see the world differently from other people (I sure see the world differently than my parents and have a lot more money) or are these people crazy and excited about no revenue business models because they don’t have to worry about making money?

It is difficult for me to maintain my view of the world (businesses should make money) with the data I’m getting about 0 revenue businesses being valued in the billions.  I’ve heard it put this way: Having zero revenue is great because it allows you to sell the dream of, when we monazite, just imagine how much money we’ll make. Where as having a single dollar of revenue changes the conversation to why do you only have $1? And then the dream is *poof* gone when it’s confronted by actual data” (mostly I’ve heard this from Felix Salmon) This makes me think that it’s about duping people and not about creating value at all. :-/