A Profit Problem

One of the most pressing problems that plagues start-ups is to generate profit. Many tech startups have enormous user bases but are actually losing money. A good example of this would be Twitter. Despite a 1 billion dollars IPO, twitter is revealed to have “lost $79.4 million on about $317 million in sales in 2012”. This failures of tech start ups like Twitter to generate profit demonstrate a down fall in the idea of the lean start up. The concept of a lean start up address the issue meeting the needs of customers. It, however, does not address the problem of generating income. For example, Tech start ups like Twitter did an amazing job addressing the customers’ need to share information but, so far, it hasn’t generated any profit for the company. Therefore, it is very exciting when online scrapbooking platform, Pinterest, announced its strategy to monetize its services. In the Fortune article, Pinterest has announced various mechanism that has strong revenue generating potential such as “promoted pins” and “real-time data software”. Pinterest’s monetization strategy showed great potential for revenue, setting it apart from other unprofitable startups.