The New Trend With Startups: Actually Making Money

I happened upon a recent Bloomberg.com article that really warmed my heart. As many of you have probably gathered, I'm a pretty avid follower of tech companies and find myself interested in tracking startups and new businesses in a variety of industries.

As you've also likely gathered, I have a beef with companies that get touted in the media without any logical or practical path towards generating revenue and profitability. Now, I understand that there is some value in gaining and sustaining a critical mass of users, but I find it difficult to believe that companies like Instagram and others can justify billion dollar+ valuations off of potential ad revenue alone. Especially if they've never even run an ad or been able to generate a dollar of revenue.

Well, according to Bloomberg, I'm not alone in favoring revenue over users. In fact, I'm joined by a radical new group:

The Internet Entrepreneurs themselves...

Y Combinator, one of the top startup incubators in the world, recently selected its new class of companies. Y Combinator has had some true home run success stories come out of its ranks, including Airbnb which recently raised $112 million on a $1.3 billion valuation.

Unlike social media giants like Foursquare and Facebook that focused on a growing user base as they developed and matured, a number of Y Combinator's current companies are focused on existing and growing revenue.

For instance, travel startup Vayable is generating upwards of $40,000 in revenue per month and is continuously growing. For any travel buffs on the site, I recommend checking this company out, rather than booking plane tickets and hotel rooms and figuring out what to do from there, you book curated experiences. Thinking of going to Thailand? Well, Vayable might just be able to connect you to a local who can give you a real tour that's way more authentic than anything you'd get out of a guide book. It also allows people to sell curated experiences in the Vayable marketplace, and as more and more people sign up to offer unique experiences, there will be more and more options for travelers to choose from.

BufferBox, another company in Y Combinator's latest class, is another company that's highly focused on generating revenue. It's one of those ideas that's truly great and solves a real problem for a massive amount of people living in cities. Namely, the difficulty of getting packages delivered to you when you aren't home to sign for them and you don't have a doorman. BufferBox places kiosks in select locations throughout a city, you can sign up to the service and have packages you order sent to a BufferBox that's convenient for you, and when it arrives, you receive a unique PIN that you can use to pick it up, anytime day or night. It's one of those awesome, slap yourself in the face, "why didn't I think of that" ideas that you want to see succeed. While Amazon is starting to roll out a similar offering, it'll be interesting to see how BufferBox competes and grows, and given the need for boxes of this kind at many locations, I imagine there's room for more than one player in the space.

Most telling of the focus on revenue growth is a quote from one of BufferBox's founders, Aditya Bali, which is worth hearing in full:

It’s looking like the funding market won’t be as great for the next 6 to 12 months because of the macro economy...If you’re just going to run through a whole bunch of money over the first couple months, but you haven’t actually figured out how you’re going to make money, we’re seeing less of those companies

I imagine I'm not alone in feeling like this is a potential sign of sanity returning to the funding market. It's honestly great to hear tech and internet entrepreneurs focus on creating real value and not having to throw out buzzwords and user growth to get funding.

Does anyone here have any other interesting examples of young startups that are generating and growing revenue? Has or would anyone use a site like Vayable or BufferBox in the future?

 

BufferBox, is it not just a fancy name for a 24/7 post office?

CNBC sucks "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up
 
Working9-5:
BufferBox, is it not just a fancy name for a 24/7 post office?

I mean, in essence, I suppose it is. Still, all it requires is a location and a specialized PIN given to each person for each delivery. It's safe and convenient. I also don't think they get eaten, but rather I could see copy cats popping up since it's very much a real estate game (getting your BufferBox in the best locations possible.)

 
TheKing:
Working9-5:
BufferBox, is it not just a fancy name for a 24/7 post office?

I mean, in essence, I suppose it is. Still, all it requires is a location and a specialized PIN given to each person for each delivery. It's safe and convenient. I also don't think they get eaten, but rather I could see copy cats popping up since it's very much a real estate game (getting your BufferBox in the best locations possible.)

Yeah, it sounds like an okay idea. Just don't understand why the US Postal Service doesn't outsource its physical presence to a major supermarket in one area. Let them train the staff, but let's say the guys at WalMart and Whole Foods are staffing it. Pick up packages and your groceries. Did I just find synergy? Haha.

BufferBox' biz plan could easily be copied and they will end up as the next Groupon.

CNBC sucks "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up
 
Working9-5:
TheKing:
Working9-5:
BufferBox, is it not just a fancy name for a 24/7 post office?

I mean, in essence, I suppose it is. Still, all it requires is a location and a specialized PIN given to each person for each delivery. It's safe and convenient. I also don't think they get eaten, but rather I could see copy cats popping up since it's very much a real estate game (getting your BufferBox in the best locations possible.)

Yeah, it sounds like an okay idea. Just don't understand why the US Postal Service doesn't outsource its physical presence to a major supermarket in one area. Let them train the staff, but let's say the guys at WalMart and Whole Foods are staffing it. Pick up packages and your groceries. Did I just find synergy? Haha.

BufferBox' biz plan could easily be copied and they will end up as the next Groupon.

I disagree with much of what you said here.

1.) One of the strongest points that BufferBox has is that it involves no human interaction. There is no need for staff on hand to handle your packages. The Postman delivers your package to the box, and you pick it up anytime you are free.

2.) I really don't see why outsourcing the handling of packages to supermarkets makes any sense at all. For one, it still requires people to do the physical labor, as opposed to simply having a box that you enter a secret passcode into to get your package. Second, the skill set and workload of people in a supermarket doesn't coincide with the skillset used in a postal office. Third, this doesn't really solve the problem that BufferBox is solving because (most) supermarkets close at some point, the BufferBox is always open for you since you have the passcode to get into it. Finally, you presume that people are picking up packages with the same frequency as they go to the super market (or vice versa) or that a supermarket is in a convenient location. Frankly, for your idea to work on any level, you would need to have tons of super markets doing it or else it's about as convenient as going to the actual post office.

3.) Most businesses are easily copied. Everyone has this idea that they need to keep their ideas a secret because they'll be stolen. For one, most people don't want to run a business, let alone the exact business you want to start. Second off, BufferBox actually requires a legitimate capital investment in the boxes, as opposed to being a daily email blast and digital coupon that you print out. Third, again...who cares if it can be copied? What matters is execution. If this is the next groupon, I suggest you go out and start a knockoff (PickupStation?) and raise capital. If anything, it's a pretty great idea because it requires an actual initial capital investment, and then you can sit back and pop the bubbly as you collect a fee on every package delivered to your boxes.

 
TheKing:
Saying something cool

I see your points, they are more than valid.

1) I go to the supermarket whenever I'm free, picking up multiple items at the same place is a win-win. People picking up packages might also pick up other stuff they need. Your stuff is kept safe and it's the same as Redbox, just on a bigger scale http://www.nytimes.com/2012/03/22/us/to-cut-costs-post-office-offers-se…

2) Don't you think that FedEx or UPS would be more than happy to drop off everything at local post offices in supermarkets? A kind of a reversal of what they are doing now, but it works both ways. http://printmediacentr.com/2011/09/shipping-with-the-enemy-usps-partner… Workload, skillset, etc. is just a bunch of whataboutism. They'll adapt their business if they think it will increase their customer base.

3) I'm not bashing the idea. Just pointing out that FedEx, UPS, USPS and others have a scalability, IF they decided that its a great idea, that BufferBox will never have.

Otherwise an interesting idea.

CNBC sucks "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up
 
Best Response
Working9-5:
TheKing:
Saying something cool

I see your points, they are more than valid.

1) I go to the supermarket whenever I'm free, picking up multiple items at the same place is a win-win. People picking up packages might also pick up other stuff they need. Your stuff is kept safe and it's the same as Redbox, just on a bigger scale http://www.nytimes.com/2012/03/22/us/to-cut-costs-post-office-offers-se…

2) Don't you think that FedEx or UPS would be more than happy to drop off everything at local post offices in supermarkets? A kind of a reversal of what they are doing now, but it works both ways. http://printmediacentr.com/2011/09/shipping-with-the-enemy-usps-partner… Workload, skillset, etc. is just a bunch of whataboutism. They'll adapt their business if they think it will increase their customer base.

3) I'm not bashing the idea. Just pointing out that FedEx, UPS, USPS and others have a scalability, IF they decided that its a great idea, that BufferBox will never have.

Otherwise an interesting idea.

Agree that it's a good idea...just think the threat is Amazon, not USPS getting it's shit together to do any partnerships with WholeFoods or other chains...

24 convenience is key here.

 
Working9-5:
TheKing:
Working9-5:
BufferBox, is it not just a fancy name for a 24/7 post office?

I mean, in essence, I suppose it is. Still, all it requires is a location and a specialized PIN given to each person for each delivery. It's safe and convenient. I also don't think they get eaten, but rather I could see copy cats popping up since it's very much a real estate game (getting your BufferBox in the best locations possible.)

Yeah, it sounds like an okay idea. Just don't understand why the US Postal Service doesn't outsource its physical presence to a major supermarket in one area. Let them train the staff, but let's say the guys at WalMart and Whole Foods are staffing it. Pick up packages and your groceries. Did I just find synergy? Haha.

BufferBox' biz plan could easily be copied and they will end up as the next Groupon.

Amazon already has lockers and have the scale and distribution to expand much faster. After they roll it all out they can start offering for non-Amazon purchases or just say fuck it yo sell yo shit on Amazon and u can have access to the the distribution centers and lockers.

 

zocdoc is another startup that is generating revenue and not just a social media startup. However, big as they may be getting their revenues are suspect to trialing revenues. Still a nice idea but I think the business model is flawd, check it out though for those who've never seen it before; it's the open table for doctor appointments.

 

Or i guess they can change their business goal stop thinking about getting Bufferbox to the top of the market, but rather try to get it to a certain scale and sell it, together with themselves, to companies like Fedex or UPS From Fedex/ UPS' perspective, they might want to just buy something like Bufferbox rather than start everythging from scratch Who knows, they might even make it a spinoff later on

(lol)

 

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