I guess this is a semantic issue. But essentially, yes, he's defining sratups as those things dependant on investment of some kind.
>>Our company costs $3,000/mo to run, including living expenses for two people, and we technically have a staff as well -- we just pay them with kickbacks instead of ridiculous salaries.
Is that an equilibrium? Without investment, exit or revenue increase in the mid-term future, are you still going to survive? Founders & employees living low in exchange for potential future earning are also investors. An they are also influenced by the same sort of things other investors are influenced by.
I'm not saying I agree with this piece, but would you admit that it might get difficult to hire someone with noodles & options if there hadn't been any exits in your vicinity for a while, little startups where going bust left & right, and a few big scares hit home (eg Facebook shuts down).
I agree with your basic premise. A business that makes more money then it spends is safer. If it's in the business of selling bread & butter, even better. But startups as a sector are less like that.
If we chose to hire someone full-time we'd pay them an above market salary. Luckily, we probably won't need to do this for a while (at least a year).
>>"Is that an equilibrium? Without investment, exit or revenue increase in the mid-term future, are you still going to survive?"
It's only temporary as not only are we already profitable, but our sales & traffic are growing every day and we've been launched less than two months. We could last two years without revenue anyways (even though it doesn't apply).
The launching of concerts, improved crawler speed, SEOism (once Google updates their PRs) and some other non-public things we're working on should improve revenue & traffic significantly as well.
We're almost certainly not taking investment, and we're certainly not exiting anytime soon. We're going to issue dividends without balance sheet risk - like real companies do.
A year or two of bad news & bad predictions could sour it. Employees & founders might start to favour corporate jobs.
Not saying it has to be drastic. VCs pulling purse strings a little tighter. Founders ready to bail a little earlier. Employees a little less willing to take stock. Angels preferring to take a year or two off. Most 'startups' would be affected by at least some of these.
It took them few years to be profitable.
Not being a VC myself I can't really comment with any certainty, but plain logic dictates that they would try to make investments based on the information they have available at the time.
I think what the original commenter was trying to say is that in times of economical uncertainty, a lot of people looking to invest will probably invest in places that have potential for larger than average returns.
So making those kinds of comments don't particularly add to the conversation I wouldn't have thought.
On the other hand, if you have a real business with revenue and lacking excessive costs I'm going to predict that you'll see a smaller bottom-line, but that's about it. Our company costs $3,000/mo to run, including living expenses for two people, and we technically have a staff as well -- we just pay them with kickbacks instead of ridiculous salaries.
Even given his actual prediction (which, again, the title fails to illustrate), I still think he's overreacting. VCs still have tons of investor money that they need to do something with and given the fact that many previously "safe" investments are becoming unsafe, giving money to VCs actually, at least to me, starts to sound like a better bet than it did previously.