I am reminded of a quote from The Innovator's Solution about how to build a spinoff in a disruptive industry: Dumb money is impatient for growth and patient fo

I am reminded of a quote from The Innovator's Solution about how to build a spinoff in a disruptive industry: Dumb money is impatient for growth and patient for profit. Smart money is impatient for profit and patient for growth. That book has a lot to say about the dynamics of why this is so. But the lesson is worth thinking about. If you want sustainable returns, focus on being profitable and let growth take care of itself. However Venture Capital has a fundamental problem that leads to their being "dumb". It is in the interests of the people running the fund to get as much money in the fund as possible (so that they can get the management fees). But then they need to invest too much money in startups. Which forces those startups to search for big enough business opportunities to justify the investment. And if along the way they happen to find a smaller opportunity, they can't pursue it. Therefore they have to look for growth, growth, growth.