Facebook has insane growth, even today. It had double digit revenue growth for over a decade. For instance, in 2021, their revenue grew 35%, the year before, 20%. You'll see similar numbers if you look at their MAU and DAU. With that kind of growth over a decade, pretty much any valuation is cheap today. Sacrificing even a little growth for revenue today is a bad tradeoff because of compounding effects.

https://www.statista.com/statistics/268604/annual-revenue-of...

And what's their profit for that decade+?

A shit ton: https://www.statista.com/statistics/277229/facebooks-annual-...

Similar growth in percentage terms (more actually as they're getting more efficient as they scale and have more user data). Pretty much all facebook numbers are up and to the right.

https://www.statista.com/statistics/277229/facebooks-annual-...

Yeah but you're changing the subject. Obviously if the business is garbage it is garbage. I'm not saying these businesses are good. I'm just saying you absolutely cannot make a blanket statement like "valued at 72x rev is bullshit" if my business is growing even 2-3x a year, it could be ok. In a few years (6-7) if I keep that up my revenue will outpace even my original valuation.

It means nothing to look at revenue and valuation alone.

You could argue the opposite. what's the point of great margins if you have no scale?

look at the Amazon example. they were unprofitable for a very very long time. and the retail business is still very miniscule margins

Please don’t use the “look at Amazon” example. Amazon had positive margins early on and was using cash to buy and build real assets. Amazon also pivoted to an entirely different business where most of its profit comes from - AWS.

No, AWS wasn’t born from Amazon selling excess capacity.

That’s just like saying that if every company rehired its first CEO it could be worth multiple trillions.

> what's the point of great margins if you have no scale

Profit? Niche ownership? Reliability? Durability? Expertise?

It makes sense to worship the Church of Scale in a VC-adjacent forum like HN, but it’s not the only way to business.

The point of profit is profit.

The whole premise of the VC/PE business is profits, just with different risk strategies.

Profit for who? All VCs want is for the company to IPO, because that's when they can get their money back with a nice profit. The company itself doesn't have to be anywhere near profitability to IPO. Look at Uber, Airbnb, Dropbox, etc.

VCs don’t care about profit. They only care about selling to the “greater fool” at unrealistic valuations.

Amazon never made any profit because they were always reinvesting. If they had scaled back to "normal business" levels of ambition at any point they'd have been "normal business" levels of profitable.

Isn't the Amazon the exception that proves the rule

I think the 'successful business' part has become less relevant for investors that are just looking to exit sooner than later. The business model for many apps has become: make a product > obtain users > get hype > IPO > exit. At the exit portion, the product gets littered with ads, competition starts to catch up, and the product begins to decline.

Obviously this is pretty reductive but this is generally what I have seen as a user of many apps in the past 10 years.

> What is the point of growth if you can't make a successful business?

Ideally? To leave retail investors and pension funds holding the bag when it all blows up.