Create a profit & value driven company

Profits are a good measure of how much people admire your products and services.

Good profits give you financial freedom to work on what you want to and live a decent lifestyle for maximum amount of time.

It is a very important concept that many startups fail to understand.

Eyeballs / Revenues / Valuations don’t mean anything unless they ultimately lead to profits.

For example:

• I can spend my (or some naive investor’s) money on ads & PR to get zillions of eyeballs on a new social networking app for wild animals
• I can start selling goods (like gold, dollars or toothpaste) for half the cost price to “acquire” users and drive up revenues (like Groupon or many e-commerce companies give coupons to acquire users)
• I can raise $10 from an investor (or my friend’s friend) by giving 0.00000000000263% stake in my company (and a pizza) to create a multi-billion dollar valuation — and think of myself as the richest person in the world in terms of valuation.

But will it ultimately lead to profits and my financial freedom? I don’t think so.

Companies like Apple, Nike & Basecamp are profit driven and they create tremendous value.

There are other industries like tobacco, alcohol, junk food, soft drink, etc. which are profit driven but destroy value by ruining health and/or environment.

So, if you are starting up or running a startup, keep in mind to create a company that is profit driven and that creates value.

Go ahead and make a dent in the universe.