At what point does a tech company just have to start making money?

From American Public Media, this is Marketplace Tech. I'm Stephanie Hughes.

The social media company SNAP recently announced its laying off about a thousand workers,

16% of its employees.

The company said these changes will reduce costs by more than half a billion dollars

and help establish a path to net income profitability.

This move comes after one of Snap's investors, rent-at capital management, wrote a public letter

to SNAP, outlining what it needs to do to, quote, save the company, including cut costs.

Snap's been a public company for nine years, and's had just a few non-consecutive profitable quarters,

and this all made me wonder, at what point does a company have to be consistently profitable?

I talked about this with Sarah Kuntz, a general partner at the venture capital firm, Cleo Capital.

What investors want to understand is why is this company not profitable?

Is there a path to profitability, but they're spending too much of their money on sort of other

projects, like in this note, some of their glasses projects, their physical projects that just

really haven't taken off over the years? Or are they not profitable because they just are in an

industry or in a space that is incredibly low margin.

Like grocery stores, we often see that it's incredibly hard to turn much more than maybe a

couple single digit percentage profits.

So I think it matters more what they're doing and how they tell that story than just

profitable good, not profitable bad.

Are there examples of other companies that took a while to become consistently profitable,

but then really kind of turned it around?

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