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Fred Wilson of Union Square Ventures tells startups they can become profitable early on and wants to see more founders pursue the path of sustainable profitability.
This conversation is only to get louder going forward.
It should actually be titled 'Profits AND Growth'. Wilson should be congratulated for blowing the whistle on this issue at this time. He's actually being very polite here as this piece will be a point of debate within the VC and startup community for the forseeable future.
He could have gone further. Some VCs are on record actually attempting to redefine the word 'profit' via their advocacy of subscription economy 'exceptionalism' i.e. that 'as a service' or SaaS startups should be measured by some set of rules other than GAAP profitability.
It will be interesting to see how this plays out. For growth practitioners in the GH community the larger issue he is advocating is discipline discipline discipline and don't buy in to every new 'model' or 'framework' that comes down the pike.
Appreciate Fred Wilson starting this discussion. Why can't we grow companies responsibility and towards profitability and sustainability. I have started two companies and bootstrapped them both. One of the grew quite fast landing us on the Inc. 5000 5 years in a row. The profits fueled our growth by investing back into the company. Trying to expand revenue too quickly without figuring out your business model and cost structure can be a recipe for disaster especially if you can't get more funding. Most entrepreneurs should be shooting to get their investments to break even as quick as possible, than and only then they can take additional investment to kickstart some more growth or expand the market they are playing in.
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