Get to profitability — here’s how

Edited excerpt from How We Got off the Addiction to Venture Capital and Created Our Own Way to Profits by Rafat Ali:

I focused on revenues and revenues alone. That meant doing things today that brought in revenues today. That meant media, branded content, subscription reports, a conference. We knew how to do this from experience and our team knew how to wrap their heads around it.

We learned to focus on the efficiency of our effort. It meant doing one big thing a year that brought in big revenues in one go, instead of four small things which took almost 4X more effort but perhaps all added up equal in revenues to that one big effort. That meant we would only do one big multi-million dollar franchise conference a year, not 10 one-day smaller conferences like I did in my previous company.

I learned to say no, again and again, to anything that deviated me and our company from the focus. It meant we would only entertain the enquiry if it brought us direct revenues, or emails to build our newsletter list.

It meant saying no to going to random media or startup conferences for us founders. I created a rule that if we didn’t have any customers at a conference (which for us meant the travel industry), we wouldn’t even consider it, and even then we would only go to if we could see direct revenues coming out of spending time there.

(1) Rafat focused on growing revenue and profits so Skift wouldn’t be dependent on outside funding. See Profitability = control of your own destiny.
(2) There’s more to it than that, though. Many startups are struggling to achieve dramatic user growth, for two reasons: (i) search, social and other user acquisition channels work less well now than they did a few years ago, and (ii) many companies — I’d include Seeking Alpha in this — aren’t willing to dumb-down their product or generate link-bait to attract a mass audience. Since growth rate in revenue or active users are the only metrics that matter, this has pushed high quality companies to focus on revenue growth, ie. to deepen value for their current users and target users.
(3) For the case against focusing on revenue as opposed to user growth, see Is revenue a good metric for early stage startups?
(4) Even if you focus on revenue growth, Don’t be satisfied with sales, seek love.

6 thoughts on “Get to profitability — here’s how

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