Is it important to get more users and higher traction or is it important to grow profitably? This is a debate which is ongoing in the startup world. You have startups like Google, Facebook, Amazon etc. which have scaled tremendously and now have started turning in huge profits. However, the flip side is that all these businesses needed tremendous amounts of money during their respective journeys, failing which they would have probably not survived. On the other hand, there have been plays which have been generating profits from the initial period itself, which has helped these businesses stay afloat and grow slower but at a slower pace.
I feel there is nothing right or wrong. It all depends on the vision of the entrepreneur and the nature of the business he/she is in. Take my startups as an example. We wanted to make Bitequest an eating out discovery and discount website. The intention was to scale geographically and capture as much information as we could. In this model, we could see minimal revenue for a long time to come. However, we are targeting scale and looking to expand into as many geographies as possible. The model which we finally pivoted to was that of a call center and we started making small profits from it immediately. The flip side is that Bitequest still exists in 2 cities and the profits are still quite limited, though it's still alive and sustaining.
In Beveragewala, we were offering discounts and free shipping to attract customers. This ensured that we make a loss on every order, but our primary target was to get in as many customers as possible, which we could monetize later. Using these discounts, we were able to scale upto around 10,000 customers with minimal marketing expense. On the other hand, if we would have not offered any discounts and would have charged customers for shipping etc., our scaling would have been limited, though me might still have been in the market.
So it is important for an entrepreneur to have short term and long term goals. In the short term, he/she can look at getting scale or getting profit, based on what he/she feels is best for the business. In the longer term though, I feel profit has to be a focus as a business should not be always dependent on external funding and profit is the only thing which can keep a business afloat.
I feel there is nothing right or wrong. It all depends on the vision of the entrepreneur and the nature of the business he/she is in. Take my startups as an example. We wanted to make Bitequest an eating out discovery and discount website. The intention was to scale geographically and capture as much information as we could. In this model, we could see minimal revenue for a long time to come. However, we are targeting scale and looking to expand into as many geographies as possible. The model which we finally pivoted to was that of a call center and we started making small profits from it immediately. The flip side is that Bitequest still exists in 2 cities and the profits are still quite limited, though it's still alive and sustaining.
In Beveragewala, we were offering discounts and free shipping to attract customers. This ensured that we make a loss on every order, but our primary target was to get in as many customers as possible, which we could monetize later. Using these discounts, we were able to scale upto around 10,000 customers with minimal marketing expense. On the other hand, if we would have not offered any discounts and would have charged customers for shipping etc., our scaling would have been limited, though me might still have been in the market.
So it is important for an entrepreneur to have short term and long term goals. In the short term, he/she can look at getting scale or getting profit, based on what he/she feels is best for the business. In the longer term though, I feel profit has to be a focus as a business should not be always dependent on external funding and profit is the only thing which can keep a business afloat.
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