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Maximilian Tayenthal, co-founder of Europe’s most valuable fintech, N26 (valued at $3.5b), was recently quoted as saying “profitability isn’t a ‘core metric’” for today’s innovative companies. For companies like N26 the goal is to eventually amass enough scale to make unprofitable services profitable, or move into sectors that can carry the unprofitable ones, but in the meantime does that mean it's smarter to be purchasing services from a profitable company? or to be purchasing services from a competitor that is losing money?
Izabella Kaminska reports that according to a fintech executive “profitability isn’t a ‘core metric’” for today’s innovative companies (July 23). Extending this logic and applying common sense, if I purchase a product or service from an innovative company that is profitable, I must be overpaying. Therefore, as a consumer, it is better to buy from a competitor company reporting losses, and the higher the losses, the better. If this is confusing, remember we are also living in a world of negative interest rates. Ira Sohn Professor of Economics and Finance, Montclair State University, NJ, US
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