ZestyHamster

Sudden profits in all startups

Startups which were loosing hundreds of millions last year are now annocuing PAT and planning for IPOs. What has changed really or were they uselessly burning money

26mo ago

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DerpySushi

Stealth26mo

Law of diminishing marginal returns would be the answer here. Companies CAC was greater than LTV and they were spending money because they had to show top line growth to get the money. Now with focus on profitability, companies have done 3 main things-

Cut marketing and infrastructure spends to focus on efficiency
Fire high paid people and hire people who were fired from other companies at a lower cost
Add hidden charges or platform fees to drive up margins