Pro tip: I was sure those "growth at all costs" startups were onto something

Kept seeing articles about WeWork and Thoughtful (that grocery delivery one that folded) and figured the VCs knew better than me, a guy who trims poodles for a living. Then I looked at the numbers on five of them from their own pitch decks - negative 40% margins with zero path to profit. Has anyone else gone back and checked the math on a hyped startup before it crashed?

2 comments

2 Comments

paige_west1d agoMost Upvoted

oh man the "growth at all costs" thing was such a trap. i remember reading their pitch decks and seeing those negative 40% margins and being like wait this math is literally backwards growth means you burn more money faster. like how is that a good thing? you're basically paying customers to use your product and hoping they'll stick around long enough to maybe make it back one day. the whole thing was a ponzi scheme for hype. i think people finally woke up to the fact that gross margins under 20% with no path to 40% are just a race to the bottom. vcs were gambling on a lottery ticket, not a real business.

milap359h ago

wait, did you guys ever try the opposite approach of just keeping margins healthy from day one and growing slower on purpose? i worked at a startup that did that and honestly it felt like we were the weird ones for not chasing the hype. we had like 60% gross margins from the start and grew maybe 20% a year, but we actually made money and never had to panic when funding dried up. it really makes you wonder how many of those "unicorns" could have been real businesses if they just focused on the math instead of the story. idk, maybe it's just me but i'd rather have something that works than a flashy pitch deck that falls apart.