A (much) better way

tiny thoughts Mar 08, 2022

“I have heard that no company is ever profitable in their first eight or so years,” a friend recently said to me, challenging my suggestion that it’s best to be profitable from year one.

I understand why she would say that – we’re inundated with stories of unprofitable companies going public. Uber, Airbnb, Dropbox, Asana, Palantir… I could go on and on. All making a loss. And of course, someone needs to pick up the bill – VCs before these companies go public (which, as a founder of such company, makes you completely dependent on being able to raise – if you don’t, you’re dead), and then public market investors (that includes your grandma, if she buys their stock, and you, if your pension provider does) once they actually IPO.

That’s why I’ve been really enjoying reading about the recent Squarespace IPO.

The website-building company has been going for 17 years, and has been profitable for the majority of them. What’s the secret? Let’s hear from the founder, Anthony Casalena, himself: “I disagree with many VCs who encourage people to raise as much money for their business as they possibly can during each funding round. I've actually tried to minimise the amount of money we've raised for the business, not maximise it. We've operated the business very efficiently as a result. That mindset has forced us to be operationally efficient and has helped avoid situations where we're throwing cash at a problem that actually requires time and people to fix.”

Amen. The full interview where that quote came from is also worth a read.

So yes, it can be done. And profitable growth is not just for those who want to build a unicorn, it’s for everyone who wants to be in control of their own destiny.

Love and cash flow,

Jana

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