With early stage companies, often what happens is investors subsidize an investment precisely because they know what the profit strategy is and because they thi

With early stage companies, often what happens is investors subsidize an investment precisely because they know what the profit strategy is and because they think it's strong. With Uber, Travis was attempting to undercut competition. Investors subsidize rides because when there is no competition they are in a better place to profit. Amazon (I believe?) was reinvesting the money in the business while subsidizing prices and package delivery to gain loyal customers. Many times an investor will subsidize a no-advertisement experience to gain an audience, and then switch on ads when the network effects are strong enough to retain the audience. This is basically Machiavelli's advice that new princes should give favors to the masses when they rise to power, so that their positions are stronger later. But the real goal is always to turn profit aggressively, even if investors are patient for a few years while they maneuver into the right position. Also just to be clear, no investor wants a business to pursue every profit opportunity. They want the business to focus on a strategy that will maximize profit given their strengths, and that always involves focus rather than being distracted by every possible opportunity.