The world’s most innovative and well-known companies. Tesla, Uber, Dropbox, and Twitter took more than a decade to turn a profit, in contrast to tech giants like Apple, Google, and Facebook (now Meta), which achieved profitability within five years.
The tech industry is significantly more competitive and saturated than it was 20 years ago when many of these companies were first launched. Amazon, whose slow growth took nine years to become profitable, was a cause for concern for its stockholders.
Tesla took 17 years to become profitable, which is significant compared to Ford, which reached profitability after just a few months. However, a boost in sales across Europe and Asia and a new car model that became a bestseller in the US were significant drivers behind Tesla’s recent success.
For businesses focused on meeting the ever-growing needs of modern consumers, such as Amazon and Airbnb, investments in long-term gains such as reducing shipping rates, tech upgrades, and increasing brand awareness can prolong the process of achieving profitability. Every business grapples with the decision and potential risk of investing in long-term gains instead of short-term wins.
The fastest companies to turn a profit
Ford
Henry Ford, after leaving his second venture, the Henry Ford Company, teamed up with an acquaintance to establish the Ford Motor Company in June 1903. The company was supported by 12 investors and had invested nearly all its capital of US$28,000 by the time it launched its first Ford model in July. Surprisingly, within just a few months, in October, the Ford Motor Company made a profit of US$37,000.
Apple
Apple’s Co-Founders Steve Jobs, Steve Wozniak, and Ronald Wayne faced difficulties securing a bank loan for their company, long before it reached a market cap of US$3 trillion this year. The concept of computers for the average person was unheard of at the time. In July 1976, the company sold 200 units of the Apple I for an initial price of US$667. The following year, the Apple II was launched with a slightly higher price tag of US$1,298. Surprisingly, within just two years of its founding, the company made its first net profit in 1978.
Alphabet (Google’s parent company)
Google became a registered domain in September 1997 and had an index of approximately 60 million pages by the end of the following year. In 1999, Co-Founders Sergey Brin and Larry Page tried to sell the business to Excite CEO George Bell, but he refused, even at a reduced rate. Google began selling advertisements associated with keywords (adwords) in 2000, which was initially introduced by Goto.com. This credit-card-activated self-service ad program allowed the company to generate its first profits by the end of 2001, with bids starting at US$0.05 per click.
Intel
Robert Noyce and Gordon Moore founded Intel, the company that invented the microprocessor, in 1968. With US$5 million in capital, the company introduced the DRAM in 1970, which was the first chip capable of storing significant amounts of information. After three years of launching, Intel achieved its first profit.
Facebook (now Meta)
Mark Zuckerberg launched Facebook in February 2004, and within 24 hours, more than 1,000 university students at Harvard, where he was studying, had signed up for the social networking platform. By September 2005, all high school and university students based in the US were able to sign up. Facebook.com became a global phenomenon and eventually became available to the general public. Although the site is free to access, the company earns its profits from advertising, and it wasn’t until 2009, five years later, that Facebook turned its first profit.
Companies yet to turn a profit
Epic Games
Although founded in 1991, Epic Games, the creator of the immensely popular online video game Fortnite, isn’t expected to turn a profit until 2027. The widely known legal dispute between Epic Games and Apple exposed losses amounting to millions of dollars in recent years. Despite this, the company invested close to US$500 million in the Epic Games Store front in an attempt to rival Apple’s App Store in the future.
Zillow
Despite having over two million visitors, a popular online real estate marketplace that connects buyers and sellers in the US recently announced that it would close its home-buying business and reduce its workforce by 25%. The company struggled to make a profit due to the unpredictability of the original purchase price, which is influenced by fluctuating house prices. In the second quarter of 2021, the company purchased almost 4,000 homes and sold just over 2,000 during this period.
The social news aggregation and discussion website Reddit was established in 2005 and has grown into one of the most popular online communities with a large number of active users. Although Reddit is yet to report an annual profit, the company has been focusing on attracting advertisers who are keen to tap into the platform’s diverse and expanding user base. Zubair Jandali, the former Vice President of Sales for Reddit, stated that the platform’s popularity and wide range of represented communities have attracted many brands interested in collaborating with them.
Airbnb
Airbnb’s reported loss of US$322 million in 2019 is not solely attributed to the service fee charged to both the host and the guest using the platform. The company has invested heavily in tech upgrades, safety initiatives, marketing spend, and acquisitions to expand beyond home-sharing. These investments have come at a high cost, and it is yet to see results in terms of profitability.
Grammarly
Grammarly is a digital writing tool founded in 2009 by three Ukrainian entrepreneurs – Alex Shevchenko, Dmytros Lider, and Max Lytvyn. The tool provides users with a free option, and they can upgrade to premium if they choose. Thanks to venture capital funding, the company has expanded over the years and helped professionals from various industries in their careers.
