This is one of those vanity blog posts, a ālook at us, weāre openā blog posts without actual openness, or rather, limited openness where it helps their image and not openness that could backfire.
Businesses donāt operate based on revenue. They operate based on profit. They operate based on operating expenses. They operate based off of free cash flow. Showing off revenue and number of accounts is showing off a tiny portion of the picture, and says nothing about the health of a business.
If youāre looking to ābe openā about the health of your business, then the operating costs would be shared, the amount the founders are ātaking outā of the business in dividends would be shared.
There are businesses that operate 20MM a year in revenue, but practically speaking are broke, because of the way the business is being run.
So for folks that donāt know better, this is a very cool thing ente is doing. For folks that run businesses and know better, this is a way to show off and āgain credā without actually having to be open about how the business operates.
> "Showing off revenue and number of accounts is showing off a tiny portion of the picture"
Showing revenue is not "tiny" by any means. Considering that the vast majority of businesses hide this from the public, I think it's very notably "something larger than tiny".
> "but practically speaking [they] are broke"
How do you know this?
>> "but practically speaking [they] are broke"
> How do you know this?
They were not claiming a fact, they were posing a hypothetical.
satvikpendem
today at 3:40 PM
They mean even in the hypothetical how would they know, without open books? They're just theorizing, same as with revenue.
Iām speaking of things I have personally witnessed; but wonāt go into more detail than that, for various reasons.
Batman8675309
today at 4:38 PM
Man I love this kind of "evidence" that can't be dismissed, that is ultimately just a big "just trust me bro".
Iām going to give you just one way that a business could do just what Iām saying.
Did you know there are whole businesses that lend money through āreceivables financingā? Basically if you have outstanding invoices, you can get the money for those invoices now, and you pay (letās say) 15% in interest to get that money now. https://www.allianz-trade.com/en_US/insights/receivables-fin...
All else being equal, your profitability just went down by 15% taking that receivables loan; but businesses are willing to lend money at varying degrees of interest while the company that took that money still looks like theyāre in great shape if you were to look at their revenue, but 2 or 3 of these sorts of advance loans can hurt a company really quickly.
The issue is that it takes a long time, if a business is engaging in shady business practices, for them to be held accountable (if they ever are), and there are lots of ways to keep a business afloat while effectively robbing Peter to pay Paul.
thevillagechief
today at 6:00 PM
Does this really need any evidence? There's lots of businesses that are in this situation, ambling along for years until they run out of runway. Not saying anything about the original blog. There are even actual fraud cases you can look up.
Yeah I don't understand why people jumped on this. Thread-OP was saying pretty obvious if not trivial things. Without knowing how much they spend knowing how much they earn is a useless data point.
>...won't go in the more detail...various reasons...
I wish you had said that in your opening comment. Would've helped me consider where you were coming from.
I'm just making an overall remark, wondering what you're inferring, and more widely still digesting this entire post.
Is it really hard to imagine a business with 20MM revenue and 21MM expenses?
0xbadcafebee
today at 8:15 PM
Not hard at all, virtually every tech unicorn spent more than their revenue. Famously today it's all the AI companies.
18 employees on <$100k is not exactly rich.
I once worked for a company where they operated in the red for 95% of the year as they paid for project material costs up front. The CFO was quite open about how finances worked in our niche sector.
A client would pay an invoice and the balance would swing from -Ā£20M to Ā£0 and back down to -Ā£15M for the next project within weeks! Revenue was in the Ā£100Ms per annum.
As someone with almost zero business background it was a real eye opener how much we depended on a healthy relationship with the local bank manager. The business model clearly worked as they passed their 30th anniversary during my employment!
This is very common in a lot of industries especially physical goods and medicine.
You end up leverage for all the goods but the final settlement of payment happens much later, making them hard to survive in without a lot of capital and good relationships.
You can screwed very easily and understanding the model and not scaling faster than your capital allows is a skill in itself.
My friend failed at it while I was working with them.
thevillagechief
today at 6:06 PM
I worked for similar company. And yes, it basically depended on the relationship with the local bank managers and suppliers. Unfortunately, it wasn't so successful.
What's wrong with that? This is a post to show users that other people are paying for it (social proof) and that the project is developing well, similar to other projects sharing how many contributions or first time pull requests they got this month. That doesn't mean that you have to show everyones salary, how much the lunch in the office is costing and include a raw export of their bookkeeping setup.
There's room for both.
Grombobulous
today at 8:33 PM
Iāll also add that private companies donāt have to do this at all.
So, yes, by comparison, this is very open.
Is it marketing material? Also yes. People who are considering using a small scale alternative to tech giant products will probably look at this and say āoh, this product has some traction, and this isnāt a fly by night business.ā
The accompanying blog post says "The one thing you couldn't see was how well Ente is doing as a business. Now you can."
To the parent commenter's point, we don't have enough information to know if that's true.
EDIT: the founder is on this thread (https://news.ycombinator.com/item?id=48933905) providing more info and explains that adding expenses on would be too burdensome.
What an unnecessarily negative and cynical reaction to what is neutral at worst and positive at best
> Businesses donāt operate based on revenue. They operate based on profit.
This does not bode well for the entire AI industry.
Public IPO as Ponzi scheme/shell game is a time-honored tradition. You can operate at a loss so long as you can get folks to bet theyāll get a return. The more people you can convince, the better you can do for yourself without being left holding the bag.
All you saw on that page was the revenue?
For a potential customer deciding whether to trust a relatively small app (compared to Google and Apple) with their memories, these are useful numbers. 50% increase in paying customers this year. Nearly half a million registered users, with a 40% growth in the last 6 months. 5% of their users are paying customers. Revenue topping a million. That's stuff I want to know if I'm subscribing and uploading all my pics to their servers. I want to know if they'll be around, and my stuff is safe.
> So for folks that donāt know better, this is a very cool thing ente is doing. For folks that run businesses and know better...
Oh please. Perhaps work on not jumping to conclusions too quickly.
>Businesses donāt operate based on revenue
Well, you have that right. But apparently they IPO based on even less.
> Businesses donāt operate based on revenue. They operate based on profit.
The most difficult part of a consumer SaaS or really selling anything on the internet is acquiring customers.
Zero revenue = zero profit automatically with no ability to ever make a profit.
If a startup has paying customers there's at least the chance to become profitable.