Dyson vs Netflix: who is more successful?
If you were asked which company is more successful, Dyson or Netflix, you may feel they’re either similar in their success or that one is a little more successful depending on which you use more. It is obviously true that Netflix is a hugely visible company and has more users around the world. For instance, in 2017 it had over 100 million people using its services and made over £9 billion in revenue. Whereas in the same year, 14.5 million people used a Dyson and the company generated a revenue of £2.5 billion the year before.
So it would seem settled…Netflix is a bigger and more successful company. However, to look closer at the two companies shows up some stark differences. For example, because Netflix is a publicly listed company, we know a lot more about its finances than we would do otherwise. This means we can see Netflix’s debt has gone from $300 million in March 2016 to $9 billion at the end of the May this year. In April, it issued its fifth bond in three years, adding an extra $1.9 billion of debt alone. By the end of this year, Netflix will spend more on content, marketing and other costs than it will receive in revenue from subscriptions by $3 billion.
Now, its much more difficult to ascertain the financial position of Dyson, though the fact that James Dyson owns 100% of the company suggests that he has never been in such dire straits as to require offering equity to outside investors. Furthermore, Dyson was making a profit on their vacuum cleaners from the first month of manufacturing and had an annual turnover of over $100 million in just two years.
In broader terms, I sometimes find it startling that the financial crisis was only ten years ago, and yet we perceive companies such as Netflix, Uber and Tesla, who have amounted vast sums of debt, as nothing but a success. When they talk about their finances, it is the revenue which they speak about rather than their profits, which is often a more sobering affair.
As a result, start-ups looking to emulate these “successful” companies begin also chasing impressive revenues. This pushes new businesses, who by their very nature are in a financially precarious position, to teeter on the brink. And it is therefore no surprise that only 20% of new businesses in the US survive for just one year. I would hope we aspire for start-ups to do better and I believe a move away from these eye-catching revenue numbers is a good place to start.