ServiceTitan Burned $170 Million in Cash in 2022
Stripe Burned Through More Than $500 Million in Cash Last Year
Those were two headlines in The Information this morning. This reminds me a little of the late ’90s, when everyone was burning through cash. Eventually, you burn through all your cash and you shut down. Or you raise more cash from investors. Some companies can burn cash for a long time because investors are willing to sustain them in the hopes that they will someday stop burning cash.
Uber has lost money from the beginning. It was founded 14 years ago, and has burned through $33 billion. Now Uber has a market value of $71 billion, so investors believe that at some point it will be profitable and generate cash, rather than burn it. I don’t know what the plan is. If there was ever a service business that didn’t have economies of scale, it is Uber. Every transaction requires a car and a driver. Maybe the thinking is that Uber will be able to raise its price enough to at least break even, or maybe it will replace human drivers with self-driving vehicles. Or maybe Uber can figure out how to leverage its ride-sharing business into more profitable B-to-B services. That is how Amazon did it. It may never make much money on its retail business, but it leveraged that into the very profitble Amazon Web Services, because all the computer infrastructure it built out to do retail turned out to be perfect for a cloud service it now rents out to companies.