By Aaron Pressman and Adam Lashinsky
September 6, 2017

If you crave further confirmation that Silicon Valley is a magical place where magical thinking reigns, consider the tale of Roku, the video streaming company that filed to go public Friday, when alert people everywhere were headed out for a long weekend.

Roku, as it relates in its IPO filing with the U.S. Securities Exchange Commission, is 15 years old. That time span omits an interesting detail, nowhere present in the filing, that Roku once was a part of Netflix. According to a fascinating history in Fast Company, Netflix’s visionary CEO Reed Hastings suddenly decided in 2007 that a hardware device to stream the Internet didn’t fit inside video purveyor Netflix. So he spun it off, a shrewd move considering that Netflix has been far more successful without Roku.

Some data points to consider, from Roku’s filing:

* For its entire history Roku has an “accumulated deficit” of $244 million. It doesn’t make money now, either.

* Roku collects money two ways: by selling hardware, which it calls “players”; and by selling advertising and taking a cut of revenues from the video publishers on its platform. The player business, which constitutes the majority of Roku’s revenues, is declining. The ad business is growing, but …

* Roku gets next to no revenue from Netflix, which accounts for a third of its usage. It gets no revenue whatsoever from Google’s YouTube, “the most viewed ad-supported channel by hours streamed” on its platform. (Video publishers everywhere chagrined by the paltry payouts they get from YouTube can rejoice in comparison.)

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For all this, Roku has a future. Its “long tail” business of providing an on-ramp to streaming video publishers without their own networks shows promise. Roku also has consistently surfed the technological streaming wave and managed to stay afloat over an impressively long time.

It’s an oft-told story of Silicon Valley. Neither a success nor by any means a failure, Roku will nevertheless ask public investors for money because they too have a right to dream that magic will become reality one day.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

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