If you buy a house with a loan and pay it back, you haven’t turned a profit either - but you do now own a house that has a theoretical value. That’s basically how these things work, investing everything on growing the company in the hopes that some day what they have built can start creating profit, or be sold to someone who thinks they can.
I get that, but who would want to buy a company that’s never been profitable? It smacks of a scam. “Hey, bro! Buy my company! It never managed to make any money for me, but it’ll be highly profitable for you!” Sounds like the company founder is looking to pull a fast one and laugh all the way to the bank while their investor is left holding the bag.
The only way I can see this working is if the idea is to build a large user base by offering a good user experience, i.e. not monetizing the platform very much, just enough so that it barely pays for its own operating costs. Then you sell that user base to someone else for the express purpose of shoving tons of ads down everyone’s throat. In that case it’s still a fast one, only in this scenario the users are the victims. But even then I’m skeptical. If that’s the plan, why sell the company instead of enshittifying your platform yourself?
Still overvalued.
Right? How the hell is a company that has never managed to turn a profit worth more than $0?
because none of these numbers are tethered to reality
If you buy a house with a loan and pay it back, you haven’t turned a profit either - but you do now own a house that has a theoretical value. That’s basically how these things work, investing everything on growing the company in the hopes that some day what they have built can start creating profit, or be sold to someone who thinks they can.
I get that, but who would want to buy a company that’s never been profitable? It smacks of a scam. “Hey, bro! Buy my company! It never managed to make any money for me, but it’ll be highly profitable for you!” Sounds like the company founder is looking to pull a fast one and laugh all the way to the bank while their investor is left holding the bag.
The only way I can see this working is if the idea is to build a large user base by offering a good user experience, i.e. not monetizing the platform very much, just enough so that it barely pays for its own operating costs. Then you sell that user base to someone else for the express purpose of shoving tons of ads down everyone’s throat. In that case it’s still a fast one, only in this scenario the users are the victims. But even then I’m skeptical. If that’s the plan, why sell the company instead of enshittifying your platform yourself?