Re:Disruptions: With No Revenue, an Illusion of Value
by viscanti on Sunday April 29, 2012 @10:10PM
(#3907751)
There's a difference between a product and a feature. Both can be valuable, but they don't both make money directly. A product can be sold, and can lead to a profitable business. A feature can be profitable if paired with a currently successful product.
From the perspective of a potential acquirer, a feature might be a more valuable acquisition than a new product (especially one that might compete with it's current product). The problem with building a feature company rather than a product company is that your only real chance for an exit is to get acquired.
There's 2 different routes to the finish line. A product could be acquired or go public, but a feature probably can only be acquired. If a company is building a feature, it probably needs to grab as many eyeballs as possible to increase it's valuation. If a company is looking to go public, it's ability to generate profit is a much more meaningful metric.
From the perspective of a potential acquirer, a feature might be a more valuable acquisition than a new product (especially one that might compete with it's current product). The problem with building a feature company rather than a product company is that your only real chance for an exit is to get acquired.
There's 2 different routes to the finish line. A product could be acquired or go public, but a feature probably can only be acquired. If a company is building a feature, it probably needs to grab as many eyeballs as possible to increase it's valuation. If a company is looking to go public, it's ability to generate profit is a much more meaningful metric.