The Responsible Unicorn

When Microsoft went public in 1986, it used to be an article of faith that a company couldn’t go public until it turned a profit. Not a path to profitability but profit. Then, massive investment banks took over the underwriting business. These banks have a different approach to risk. Also, they have different ownership structures and the capital they invest is not money from “someone” you have to say I’m sorry to if the investment goes sour.

Use your favorite search engine to search for tech companies that have gone public but don’t generate profit yet. You’ll be surprised. Why does a company that sells project management software and apparently is the market leader lose money every quarter?

The recent firings from several tech companies are an invitation to reflect on the consequences of our actions. If we don’t reflect on what’s happened, we’ll make the same mistakes again. Beware of public companies that have millionaire-from-IPO founders, announce quarterly results emphasizing revenue growth but barely mention earnings, or talk about gross profit but never about the bottom line.