RE: Will this company ever make a profit?31 Dec 2021 10:47
British electric bus company Arrival opted to do IPO in the states, the CEO says something like "British investors do not understand that the plan is to lose money ...". Yes, that's the plan, lose (spend) money in order to capture market share. ALL tech companies lose money at first but the reward could be huge.
Software is a winner takes-it-all game. Why it is important to capture the market at the cost of profitability:
- AI algorithm need data to train, the more customer data you got, the better the software will become. So it is important to get more customers now. That is the go-to strategy for all AI companies. Without data, any algorithm is useless.
- As I understand, Darktrace solution require customer data to create unique solution for the customer, so the onboarding process is more cumbersome. However, it should be better than off-the-shelf, one-size-fit-all solution. This can create stickiness, the customers are unlikely to move to other platform after all their trouble of software integration.
- Whether a startup company will succeed or not depend on the problems they trying to solve is a 'hair on fire problem'. Cybersecurity is not a good to have thing, very soon, it will be standard in IT departments. More and more of assets are moving to the cyber world, including money, bitcoins, movie collections etc. If there's a product out there that can guarantee the safety of all my online personal assets, I'd probably buy it now.
- Sometimes, the end goal is not to make tonnes of money, being acquired by big companies with 50% bump in SP is not a bad thing either.
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