[VBprogrammer]

This was one of the biggest takeaways from the "Startup podcast". If you haven't heard it, it details Alex Blumberg (of this American Life fame) attempts to create a company producing high quality long form podcasts.

At one point he and his partner are getting excited that they are on the road to profitability in 6 months. One of their VCs gets upset by this saying that targeting profitability is a sure way to end up with a lifestyle business.

[sarah180]

The VC isn't exactly wrong about this. If you want a valuation in the hundreds of millions or billions, your goal is to figure out how to grow fast and capture defensible territory in a market. Profit is less important than growth—as long as you have a path to profit based on that growth.

If you're not aiming for this kind of territory, you're not really compatible with the VC financial model, which is designed around high risk and high reward. 30–40% of startups end up in liquidation, and 95% never meet their projections. Unless some your successful companies have fantastic returns, your fund will fail.

This is something you should understand before you take VC money.

[VBprogrammer]

This has been the SV narrative for the last decade or so but I'm not sure that it will stand the test of time. It seems likely that the bubble will pop on these companies going public without having returned an honest penny.

But there is probably a reason I'm not drowning in money like most investor types.

[whyenot]

For anyone that doesn't know, the startup (Gimlet Media) was purchased by Spotify for $230M this past February.