Hacker News Reader

Comment by jwingy | Hacker News Reader

This is definitely not a useless article. If you've ever read an article or blog post where someone is talking about how they built their business and said something about being profitable at some x point in time, then they proceed to NOT describe what they exactly mean, then I just end up disregarding the whole thing because I can't take what they say at face value. I'm glad someone spoke up about this because it should (hopefully) mean higher quality articles in the future.

View on HN

If you've ever read an article or blog post where someone is talking about how they built their business and said something about being profitable at some x point in time, then they proceed to NOT describe what they exactly mean, then I just end up disregarding the whole thing because I can't take what they say at face value.

Life is full of generalisations, do you expect every post made by every person, every day, on every blog, to contain every possible excruciating detail about every super tiny little aspect of exactly what they did, how they did it, when they did it? You're only short-changing yourself if you reject every communication from someone who doesn't happen to share your obsession with pedantry and trivia.

"I launched a startup today. First, I went to the bathroom, then read an article in Entrepreneur, then pushed the site code to production, but had to back that out because the db config was wrong, so we did another push, then we brought the site up... and we waited 7.323212 minutes before submitting a "Show HN" to HN, then waited 19.11111111 seconds for the first hit to our site...

...

7 hours later

...

and that's how we made $400.00 dollars on day one, which is way more than the $230.00 it cost to run the site, but since that doesn't include the cost of our own salaries, our startup isn't quite profitable yet. Check back tomorrow for the next exciting installment! Same bat time, same bat channel."

Well, sometimes saying you're profitable is important to the topic at hand, and sometimes it's not. If it is and you gloss over the details, people will find it less helpful, and I personally have less confidence the author knows what they're talking about. Everyone has their filters and this is part of mine since there's so much bullshit out there. If you want to call that pedantry go ahead. No sweat off my back.

Let's not redefined profits to mean "this busienss can pay for X people's salary".

What if I have five businessses, but none can pay for my salary individually, though in aggregate they make me fairly well off.

Can't I call any one of the busineseses (seperate entities, mind you, not just apps in the store) profitable?

In the context of this article, you have one business.

According to the article, if you have one business and still work for someone else then the business is not profitable.

It basically states that multiple-streams of income means the smallest stream doesn't deserve the definition "profitable".

So questions like mine are valuable to fleshing out this theory....

It's not so much a theory as it is a colorful way of explaining basic entrepreneurial accounting.

He's talking about the difference between paying yourself and not, in a round about way of getting to this concept: not paying yourself a sustainable wage leaves nothing for investors (even if the "investor" is just you.)

If you have five separate entities that combine to pay you a salary, you win. Any extra money can be used to grow one or more of those businesses. ..if they are all tied together in ownership (for example, they are all owned by one person).

If those 5 entities are not tied together in some way, then no, they are not sustainably profitable on their own. That is, each entity does not throw off enough cash so that there is some left over for reinvestment unless you combine them all together.

One of the key points in that article has to do with valuing your time. If you're running 5 businesses, then you're clearly not putting full-time 40hr/week into each one. Adjust accordingly.

If you could be earning a salary of $80k/yr from a BigCorp( ~$40/hr) and you have a business that you put 10 hours/month into, then a profit of $400/month from that business is breaking even relative to a full-time job.

One of my businesses can easily pay the wages of an employee for the time they are needed, but being highly seasonal work, it would not pay for an employee year round. Or to put it another way: On a per hour of work basis, it makes a programmers salaries look like chump-change, but amortized out to a yearly income it's not enough to sustain a living.

Is that profitable?

Sure - that's the same as "my business is profitable, but can't afford to hire another employee yet", only it's a fractional employee that you can't afford to hire.

What? Profitable is profitable, there is no ambiguity there. The post linked above is talking mostly about opportunity cost (your own) and growth. Is your business sustainable? Is it growing? Is it worth doing full time? Those are all critical questions but the concept of profit does not include them.

The disagreements in just these small sample of comments is a little bit of an example that people don't always have the same idea of what 'profit' means no matter how well defined you think it is in the lexicon. The alternative is to always take what people say at face value, but then that can be a little bit reckless as well.

Reply on news.ycombinator.com