The naivety on HN is staggering sometimes.

Imagine your parents give you a $10 loan to start a lemonade stand. You think you need six years to make them an above market return on their investment of 2x.

You're gonna buy cups, lemons, sugar, and water.

In the first year you think you're going to spend $3 and make $0.

So you have $7 in the bank.

In the second year you think you're gonna spend $2, and make $1.

So you have $6 in the bank.

In the third year you think you're gonna spend $6, and make $4.

So you have $4 in the bank.

In the fourth year you think you're gonna spend $6, and make $6.

So you still have $4 in the bank.

In the fifth year you think you're gonna spend $6 and make $10.

And now you're profitable. In the sixth year you spend $6 and make $50. You pay back 2x your parents' money.

As long as you were hitting your targets, that loan looks like smart business from you and your parents are pleased that their investment outperformed the market and generated a huge return.

If you had trouble hitting your targets, or needed to raise more money unexpectedly, your parents might have said that they'd want a higher return or more security (equity) in the business. But if you're executing on your plan, then that's not gonna happen.

Businesses operate with debt all the time. Some businesses are lossmaking for a long time. Some businesses are lossmaking on billions of dollars of revenue. They have high central costs. They have high R&D costs. They have marketing strategies which require them to subsidise entry-level products and upsell.

The business is healthy provided the following things are true:

1. They've agreed a strategy and milestones with their investors and board,

2. They are hitting those milestones by executing on that strategy.

3. They aren't running out of money ahead of schedule, or running out of money on specific instruments ahead of schedule (for example they have debt financing with Goldman which I'm assuming is being used to acquire smaller companies or subsidise driver fares since that would be expensive to do out of equity).

4. The investors are prepared to honour their agreement to fund the company and truly believe in the milestones and objectives the board has voted on.

Uber has raised $15 billion to date.

In 2012 it lost $20m, in 2013 $15m, in 2014 it lost around $650m, in 2015 it lost $1.5bn, in 2016 it lost $2.8bn.

The business has burned $5bn give or take, or 33% of its total capital raise to date.

Let's say that the losses are understated and they've actually lost closer to $7bn.

They have ~$8bn in the bank or on credit. They have a team of 6,700 which let's say is 45% engineering, R&D, product and the remainder have a linear relationship to the busyness and scale of the business.

They don't have to think about raising money until the middle or end of next year. They could cut their workforce if they needed to get to profitability quickly for some reason.

You or I might not be comfortable running a business with a $2.8bn loss, but nobody on here bats an eye when a YC company loses a a million dollars on a couple of million of revenue with a few million more in the bank. But as soon as it's a b and not an m, people lose their minds.