Profitability is a Decision
b'Today and tomorrow are a two for one AMA episode. That is Ask me anything. \\n\\nI love to answer your questions, if you have a question, send it in, I\\u2019ll answer it live on the air.\\n\\nDavid from Pittsburgh has a great two-part question. His question is about the number of crowd funding startups that have launched in recent years. On tomorrow\\u2019s show, I\\u2019ll answer David\\u2019s main question. On today\\u2019s show we\\u2019re going to take a look at Crowdfunding startup RealtyShare, which announced that they were shutting down due to lack of funding. \\n\\nFounded in 2013, the California-based company claims to have raised more than $870 million for more than 1,160 real estate projects. Here is my take on why they went bankrupt. If they needed more funding after 5 years of operation, then they were not running a profitable business. \\n\\nThere is no reason for a company to burn through 63 million dollars in the process of raising $870M dollars. They clearly did not have a profitable business model. I believe the reason they didn\\u2019t attract funding is because investors were unimpressed with their inability to turn a profit. You can\\u2019t run a business that just burns through investor cash and hope that investors would come back for more. \\n\\nThe company reported that they needed the extra funding to grow. But in truth, they needed the funding to stay alive, irrespective of any growth. \\n\\nThat tells me that the company wasn\\u2019t even close. If they could not be profitable having raised $870M, why would they be profitable in the future when they were larger? Something in the math didn\\u2019t add up. When a company loses that much money over 5 years, it\\u2019s because they decided to do so. It\\u2019s not like they intended to be profitable in year 1 and missed the target.'