Earlier quoted context omitted.
Wait you're telling me you can't make the next trillion dollar industry by incinerating capital while making no money?
You have a point, but remember Amazon and Google did exactly that and figured out the business model later.
Amazon nailed high revenue growth from the very beginning, just reinvesting in growth & deferring the margin story. They could have stopped at any time.
Google nailed high traffic from the beginning, so ad sales was always a safe Plan B. The founders hoped to find something more aesthetic to them, failed, and the conservative path worked.
The reason I write this is misleading is b/c this is very different from a ZIRP YC era thinking that seems in line with your suggestion:
- Ex: JustinTV used their VC $ to pivot into Twitch, and if that didn't work, game over.
- Ex: Uber raised bigger & bigger VC rounds until self-driving cars could solve their margins / someone else figured it out. They seem to be figuring out their margins, but it was a growing disaster and unclear if they could with such an unpredictable miracle.
In contrast, both Amazon & Google were in positions of huge cash flows and being able to switch to highly profitable growth at any time. They were designed to control their destinies, vs have bankers/VCs dictate them.