Under Armour CEO doesn't get why Silicon Valley startups are so happy to lose money

AP/Under Armour

Under Armour CEO Kevin Plank has one piece of advice for young entrepreneurs: Go make the sale.

For many young companies, especially in Silicon Valley, being unprofitable is considered a right of passage. Companies can burn through cash as they build a great product, and making money comes only after testing for a good fit. Twitter, one of the best examples, has been public for more than two years and has never been profitable.

Speaking at the festival South by Southwest (SXSW), Plank argued that profitability is one of the most undersold things in tech. At a tech conference the previous week, the Under Armour CEO watched as startup CEOs joked about the lack of profitability, and the crowd chuckled at it.

Plank, though, was shocked.

"And I'm going, what are you doing? Winning is cultural. Losing money is cultural. If you get used to losing money, it's really hard to stop," Plank said. "Go let the other guy lose money and fail off."

Instead, Plank says that entrepreneurs need to push themselves out of the safe testing mode while burning through money and prove that they have businesses.

"Get out of the hypothesis mode, and go find out if your product will sell. Is someone willing to take good, cold, hard cash out of their pocket and exchange it for what you have?" Plank said. "Go make the sale."

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