Issue 10: Should Nigeria tech start-ups chase growth or profit?
Growth or Profit
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In this issue, we asked the mafia:
Should Tech start-ups chase growth or profit?
Here’s what the Mafia had to say 👇
Abe Marvellous
Jack of all trades.
Profit vs Growth.
Silicon valley’s start-up manual says growth. After all, most of the popular start-ups like Airbnb, Uber, and Amazon didn’t make any profit until after they had spent a few years in business; these start-ups pursued growth as they burnt through runways of cash, of course, investors were always available to provide loads of cash via another round of funding for them to survive.
As a Nigerian startup, the fastest way to the graveyard of tech companies is to follow this manual word for word, if you doubt this, look at the news emerging from the tech ecosystem lately; startups closing up shop after burning through funds and not being able to secure extra funding, others have been massively laying off workers.
In an ecosystem like Nigeria with a high rate of failure despite shining products, profitability is paramount because it signals the acceptance of such products by the market it is being built for and it also shows that the business model the company can survive in our volatile business environment. More importantly, start-ups should seek to have positive cash flow, and earn more in revenue. In a space like ours, staying alive is all that matter and profitability might just secure that survival.
Beck Kanno
(Product Designer who equips his trusty finance cowl and ventures into the market from time to time)
I believe startups should chase profitability as quickly as possible, after all, it is critical to the existence of the business, its lifeblood. Startups should already have a clear roadmap and a tested product/service on the market. They are taken more seriously by venture funds, although there wouldn't be any need for outside funding since the business already has generated sales, profitability, a low burn rate and best of all, managerial independence. Profitability in tech startups serves as a proof point that a disruptor has a viable business model.
Though profitability is the key to the sustained longevity of a startup, it goes hand in hand with growth which expands the business, usually in the area of operation, or the target market, which in turn leads to profitability and long-term success.
Bottom line, maintaining profitability and growth is a critical skill every startup should possess in case of a declining economy or whatever life may throw the way.