One would think profitability had inched its way to irrelevance in this new age of equity investing—when startup after startup was going to market without ever having made a penny in profits. The list of such companies is long and features many unicorns which have burned—not earned—money to grow.
Profitlessness is heavily criticised by the retail investor, who is ruthless. “They are brutal in their ask and they move month on month and quarter on quarter. That’s the nature of retail investment, very few will allow you to go many years before they start asking for returns,” says Sanchit Vir Gogia, Chief Analyst and CEO of Greyhound Research.
Many of these companies are ‘industry firsts’, says Gogia and are still defining the market, be it Paytm, OYO or WeWork.
“They need a lot more time from an establishment perspective. If we talk about a traditional business, like chemicals, or FMCG—these are well-defined categories with well-established players and metrics where the industry norms are set. Unfortunately, tech companies and these ‘industry firsts’ don’t have that.”Fortune
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