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Another consequence of this is the culture of "never be profitable and always aim to grow". Imagine what the world would look like if this was applied to every
by collaborative 5y ago
Another consequence of this is the culture of "never be profitable and always aim to grow". Imagine what the world would look like if this was applied to every type of business? It's unsustainable and prevents legitimate businesses from making a living
- marcus_holmes 5y agoFor private companies, profit is largely an accounting fiction. And re-investing every cent earned into the company while you're growing it is perfectly reasonable. The import metric is cashflow. Positive cashflow == sustainable. Aiming to be permanently cashflow-negative (because you're burning through VC cash) does seem a little crazy. But if your VC's handed you a huge pile of cash, then they expect you to spend it growing the business. Sitting on that pile of cash while carefully being cashflow-positive is not a good plan. Aiming for growth is also reasonable for most organisations. Aiming to shrink is clearly not a good thing, and aiming for stability is tricky and can backfire.