Huffpost Small Business

Start-Ups Keep Revenue At Zero To Cash In On Acquisition

Posted: Updated:
Print
Getty Images
Getty Images

The gears of Silicon Valley continue to mesh and turn because of money, not necessarily technological innovations. And there are certain things about that money machine that denizens of the Valley would rather keep quiet.

First, they'll never acknowledge the possibility of a bubble. "Bubble? Ha!" venture capitalists often tell me. "Silly reporter, there is no bubble."

O.K., I get this spin. It makes sense from an investor's point of view. Acknowledging any possibility that tech companies aren't worth what you say they are worth would be followed by the sound of a giant pop, and the money and investments would dry up. The machine could grind to a halt.

Yet an even more bizarre activity in the Valley than shushing the talk of a bubble is how some start-ups are advised by investors not to make money. This concept may sound ridiculous from a business standpoint, but for investors, it fuels the get-richer-quicker mentality that exists her

Read the whole story at The New York Times