Today Tornado winds seem to blowing in SaaS business applications, where Salesforce dominates today, and companies like Workday and NetSuite are also growing rapidly. However, in the past month or so these companies and others like them have been shorted by investors unhappy with their lack of profitability. Interestingly, the Tornado is the one stage of adoption where a growth-at-all-costs landgrab economics approach actually make sense – to a degree. However, CEOs and management teams must demonstrate better commitment to profitability, and communicate their strategies to achieve it much more effectively than they are doing today.
The price paid by Facebook for WhatsApp caused widespread puzzlement and criticism from analysts and investors who wondered how on earth the company could conceivably offer $19bn for a company with 450m users but virtually no paying customers. This article describes the “landgrab economics” mindset that caused Mark Zuckerberg to take this step, and leaves readers to judge based on many pros and cons.