I find it an increasingly worrying trend to find more and more startups openly admitting that they don’t know how they will make money yet but expect to figure it out later. Perhaps even more worrying is that these startups are getting funded. Notable examples recently include:
- Geni – as admitted by CEO David Sacks on the GigaOM Show.
- Clipmarks (which recently got acquired by Forbes) – as admitted by CEO Eric Goldstein.
- Twitter – as admitted by funding VC
The argument tends to be that you can focus on acquiring and retaining customers first, then worry about making money later. This may sound like sound logic to some but I would expect investors to run a mile when there is no clear path to revenue in a product. I am no VC but even I know that your product is only a product and not a business until you start making money from it, or at least until you know how you will make money. It all kind of goes back to my recent reminder that a high user count is not the goal of business – making money is.