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Which types of startups are most often profitable? – TechCrunch

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One answer: E-commerce, Chrome extensions, mobile apps, enterprise SaaS, SMB SaaS — in that order

I co-run an agency that teaches a hundred startups per year how to do growth marketing. This gives me a unique vantage point: I know which types of startups most often reach profitability.

That’s an important metric, because startups that don’t reach this milestone typically fail to raise additional funding — then die.

Here’s what we’ll learn:

  1. Companies are increasingly living and dying by ads. Because it’s the startup’s approach to customer acquisition — not its business model or market — that most determines its early-stage profitability.
  2. E-commerce companies lend themselves best to ads, and SMB SaaS the worst. Meanwhile, most startup founders in 2019 are starting SaaS companies. They’d benefit from the data we share in this post.
  3. In fact, our agency has found that every other type of business reaches profitability quicker than SMB SaaS, including mobile apps, Chrome extensions and enterprise SaaS.

Our sampling of startups isn’t as biased as startup valuation leaderboards, because we also see those that failed. That’s the key.

You can use our experience to de-risk your startup. That’s what this post explores: How to change your product roadmap to pursue a path more likely to reach profitability.

The startups that frequently reach profitability

Here’s the data my agency is referencing for this post:

  • We train 12+ venture-backed and bootstrapped startups every month. Half are Y Combinator graduates. This is how we study early-stage product-market fit trends.
  • We run ads full-time for between 20 and 30 mature companies per year. On average, each spends $2.5 million annually on paid acquisition. And, on average, each has 30 employees. Our clients include Tovala.com, PerfectKeto.com, SPYSCAPE.com, ImperfectProduce.com, Clearbit.com and Woodpath.com.
  • Our students and clients are roughly evenly distributed across D2C e-commerce, B2B, mobile apps and marketplaces.

When we try to control for founder skill and funds raised, the types of startups that first reach profitability do so in this order:

  1. E-commerce
  2. Chrome extensions
  3. Mobile apps
  4. Enterprise SaaS
  5. Small-to-medium business SaaS

On average, an e-commerce company is more likely to first reach profitability than an SMB SaaS company.

Before I explain why, let me explain how we’re differentiating startups: I use the word “type” instead of “business model” or “markets” because I’ve learned that business model and market are often not the best predictors of success. Instead, it’s your approach to customer acquisition. That’s what typically determines the likelihood of profitability.

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The First Tesla Semi Has Been Delivered After Lengthy Delays

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There had long been suggestion Pepsi would be one of Tesla’s biggest customers — with a subsidiary spotted installing charging stations at one of its plants and test driving the trucks earlier this year. Tesla also placed an order for 100 of the high tech trucks shortly after they were announced in 2017. In October, Musk confirmed the company’s first truck was almost ready for delivery, and it would be going to the soft drink manufacturer.

Today, Tesla finally made it official and delivered its first production semis to Pepsi. Speaking at the handover, which took place at a Tesla Gigafactory in Nevada, Musk described his motivation for designing the truck. The Tesla CEO claims that trucks make up less than 1% of vehicles in the United States, but are responsible for a large chunk of emissions. Musk said it will both help the environment and improve the health of individuals living near highways. At the end of the presentation, Musk thanked Pepsico and described them as a “great partner.” 

The trucks’ keycards were then handed over to Pepsi’s representatives, followed by several high fives. The trucks’ first cargo run involved “an enormous amount of Frito Lays” which were handed out to people in attendance. Pepsi’s Kirk Tanner then took the mic and said: “I want to thank the people who have spent countless hours to make this a reality.” before thanking Elon Musk and the other Tesla representatives. Other companies are also interested in Tesla’s electric semi. Budweiser, Walmart, and UPS are amongst those who have placed pre-orders — with Budweiser ordering at least 40 of the large electric vehicles.

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Kanye West Is No Longer Buying Twitter-Rival Parler

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It’s unclear whether West’s recent controversies have anything to do with the Parler deal falling apart. In a statement shared with CNBC, Parler’s owner notes that the “decision was made in the interest of both parties in mid-November.” Parler says it will be on the lookout for the growth opportunities, without clarifying if it was looking for investors to scale up, or full-fledged buyers. The latter seems unlikely to happen, given the current state of layoffs in the tech industry and the looming fears of a recession.

Parlement Technologies reportedly had high hopes from its acquisition deal with Kanye West. Soon after the agreement press release went out, Parler sent out an email to its “VIP” users, offering them perks like a gold badge for being valuable personalities on the platform. Politico reports that the email campaign inadvertently revealed the personal contact information of nearly a dozen lawmakers and some well-known conservative personalities.

Citing an insider source, Axios reports that West’s unstable financial situation following the cancellation of lucrative deals with the likes of Adidas played a role in his Parler plans falling apart. In the meanwhile, West has returned to Twitter, after his account was restricted for a few weeks ago over sharing anti-Semitic remarks. West currently has a huge follower base of over 18 million on Twitter, which dwarfs the total number of users on Parler, as of December 2021.

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Elon Musk Says Twitter’s Potential Removal From iOS App Store Was ‘Misunderstanding’

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Barely two days after Elon Musk feuded with Apple publicly, he met with Tim Cook to settle the differences. “We resolved the misunderstanding about Twitter potentially being removed from the App Store. Tim was clear that Apple never considered doing so,” Elon Musk tweeted last evening. This was a few hours after he shared a video of Apple’s HQ to disclose the location of the meeting.

However, Elon Musk didn’t reveal if Apple will continue advertising on Twitter. According to the Washington Post, Apple was the biggest ad spender on Twitter in Q1 2022. It spent an average of $4 million per week to run ads on Twitter between January to March this year — this added up to about 4% of Twitter’s revenue. However, Reuters reports that Apple reduced its weekly ad budget on Twitter to $131,600 a few weeks after Elon Musk bought the social media company. We also haven’t heard from Apple’s CEO, Tim Cook, about the agenda of his meeting with Elon Musk. 

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