From Blog
Profit fuels progress
Published
Profit is an indicator that what you are charging clients is the right price for building a service/product. You have something to show for your efforts without needing any investors to foot the bill in the hope of sharing in the future riches that may or may not come.
No one will miss Cred when it eventually dies. Except the fools who pump money into building it thinking everyone will capitulate to Cred’s service. Which to be honest, I still don’t understand. There will always be a way to pay my bills without Cred. And it will be free. I still use HDFC’s perma-cluttered and dated interface to pay my credit card bill. My bills are puny enough that i get like 600 bucks off once a year in some cash back. So maybe i am not Cred’s target audience.
The silly rational behind the billions pumped into building Byjus, Cred, Educomp, Flipkart, Cult and every other silly, dispensable service is straightforward: they believe that they are building something exceptional that clients will eventually pay a premium for after the funded company manages to kill every other service or product with their subsidised pricing that does not factor for the actual cost of building the product.
They really believe they have a moat. But if history has taught us anything it is that once you get a customer, especially Indian, used to paying next to nothing for a service, they will be unwilling to suddenly pay for that service.
They will uninstall the app and move on to the next best thing in a heartbeat. This is true for profitable businesses too. If I jack my fee up by two-fold, my clients will bail on me. They will find the next best thing for a reasonable price.
And it’s delusional to think that q-comm, e-comm and payment apps have irreversibly changed our behaviour. If those companies charge us a silly enough premium for their service, there will be more local grocery stores to compete for your wallet. And if the UPI chaps suddenly charge us a whopping convienience fee, it’s a sure thing that we will flee to cash again.
No one will miss Cred when it eventually dies. Except the fools who pump money into building it thinking everyone will capitulate to Cred’s service. Which to be honest, I still don’t understand. There will always be a way to pay my bills without Cred. And it will be free. I still use HDFC’s perma-cluttered and dated interface to pay my credit card bill. My bills are puny enough that i get like 600 bucks off once a year in some cash back. So maybe i am not Cred’s target audience.
The silly rational behind the billions pumped into building Byjus, Cred, Educomp, Flipkart, Cult and every other silly, dispensable service is straightforward: they believe that they are building something exceptional that clients will eventually pay a premium for after the funded company manages to kill every other service or product with their subsidised pricing that does not factor for the actual cost of building the product.
They really believe they have a moat. But if history has taught us anything it is that once you get a customer, especially Indian, used to paying next to nothing for a service, they will be unwilling to suddenly pay for that service.
They will uninstall the app and move on to the next best thing in a heartbeat. This is true for profitable businesses too. If I jack my fee up by two-fold, my clients will bail on me. They will find the next best thing for a reasonable price.
And it’s delusional to think that q-comm, e-comm and payment apps have irreversibly changed our behaviour. If those companies charge us a silly enough premium for their service, there will be more local grocery stores to compete for your wallet. And if the UPI chaps suddenly charge us a whopping convienience fee, it’s a sure thing that we will flee to cash again.