How Quickly Should Your Startup Become Cash Flow Positive?

One of the craziest things I’ve ever heard from an investor (and I’ve heard plenty of crazy things) was, “I hate high margin businesses.”

The managing partner of the fund, we’ll call them “Donald Ventures” said this to me at the beginning of our final meeting. I was taken aback.

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I thought to myself, “That statement makes absolutely no sense.” So instead of reacting to his crazy comment, I just moved on with the pitch.

After the meeting, I didn’t know what to think. Fortunately the partner who was leading the deal, “Raul”, was probably the most successful investor in our sector ever. Better yet, he had just joined Donald Ventures after running a very well known fund.

Fast forward one year later. I was back in front of the whole Donald Ventures partnership for a review meeting (they had decided to invest), and about five minutes into my presentation Donald said again, “I hate high margin businesses.”

And yet again, I ignored Donald’s crazy comment. The only problem is that Donald’s not crazy. Here’s why:

In the Ponzi Scheme, growth at all costs era we live in, profitability doesn’t matter.