Profitable on day one!

Jason Cohen argues that a business is not profitable just because its revenue covers its direct costs, and that founders who call a company "profitable from day one" are misusing the word. He proposes a stronger test: a company is profitable when it would still be profitable if a high-quality operator sold it and hired people at market rates to do the work. He says a founder earning less than the job they left, or paying themselves nothing, does not meet that test. He adds that most new businesses take a long time to become profitable, citing his own company WP Engine, which took nine months to start and then two years of chaos, and Smart Bear, which took 2.5 years before hiring its first employee.