tech-company, website, value, saas, business-capitalIn a startup, what has more value between having a million dollars capital or a million active users?
Type of business: Online Business
For the time being, the million users are paying nothing for the service. And let’s say maintain the service costs 1 million / month (Maybe too much).
In the case where a user bring you $1 a month and your service costs $1 per user, million dollars in capital is more valuable but that doesn’t seem like a business anyways.
A good business means, you earn more money from a user than the cost of acquiring the user plus the cost of keeping the user. Normally user value is worth more than a $1. Users are especially valuable in saas businesses.
Social network companies has lower value for users, when Twitch sold, it was worth $18 per user, Instagram $25 per user, Tumblr $8 per user. These companies make their money from ads which brings low amount of money per user compared to saas. Of course there is the network effect which increases the value of a customer as there are more customers using the service.
On the other hand acquiring a user changes for each sector but it is around $0.5 to $5. So it usually actually costs more than $1 to bring a user to your product.
What I am trying to say is, in the software industry x amount of users is almost always more valuable than x amount of dollars.
Even if they are not paying now, they will probably be monetized somehow in the future.
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