
All Revenue Is Not Created Equal (2011) - prostoalex
http://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club/?utm_campaign=Mattermark+Daily&utm_source=hs_email&utm_medium=email&utm_content=21369491&_hsenc=p2ANqtz-81yyCVpIOE9DmFaZpXGRW3aW651WpVLXfDeKj_aLGUTEROz_PyJOAEhsSvH3OySc4zHA2YiBq4N9YiZ3efdViv-nz10g&_hsmi=21369491
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mbesto
I find these two statements so contradictory and fundamental that I don't know
which statement to believe:

 _There is a reason to save growth for last. While growth is quite important,
and even thought we are in a market where growth is in particularly high
demand, growth all by itself can be misleading. Here is the problem. Growth
that can never translate into long-term positive cash flow will have a
negative impact on a DCF model, not a positive one. This is known as
“profitless prosperity.”_ \- Bill Gurley

 _If you want to understand startups, understand growth. Growth drives
everything in this world. Growth is why startups usually work on
technology—because ideas for fast growing companies are so rare that the best
way to find new ones is to discover those recently made viable by change, and
technology is the best source of rapid change. Growth is why it 's a rational
choice economically for so many founders to try starting a startup: growth
makes the successful companies so valuable that the expected value is high
even though the risk is too. Growth is why VCs want to invest in startups: not
just because the returns are high but also because generating returns from
capital gains is easier to manage than generating returns from dividends. _ \-
pg [0]

P.S. - Dang can you add the (2011) tag?

[0] -
[http://www.paulgraham.com/growth.html](http://www.paulgraham.com/growth.html)

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sbuttgereit
There's a contextual cue that's missing between the two, but a strong hint is
in the, "Growth that can never translate into long-term positive cash
flow...", statement. That context is growth for what duration and what
investing purpose.

If I'm investing into a business for the longer haul, like a pension fund
might or maybe looking at a company to take a senior position in and stay in a
job for years and years, etc. the viability of the business as a business
becomes more important than if I'm investing for an exit 2-5 years down the
road. If I'm a VC or similar looking for a relatively quick turnaround, in
short two to five year window the company might become recognizable enough or
have a popular technology etc. that the long term viability of the business
qua business becomes less important than does who might want it for reasons
other than current revenue or profitability.

Once you get the context, the quotes aren't so much contradictory as much as
referring simply to different goals.

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Retric
An interesting counter point, VC's as an industry average significantly lower
ROI than the boring old S&P 500. One way to look at the VC industry is to
realize VC's can make millions even if there portfolios have negative ROI.
What they need is to manage lot's of money and being in on the ground floor of
the Next Twitter buy's lot's of credibility.

In that context, a company that reaches 50 billion in 30 years is far less
valuable to a VC than a company that hit's 10 billion in 3 years and then goes
bust in 10 years.

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dylanjermiah
The VC industry, like many others, follows the power law. The top ~5-10
firms(Benchmark, Sequoia, A16Z etc) will realise 95%+ of the returns for the
entire industry. If 'they'don't at least return the fund, and just coast on
management fees, 'they' will never be able to raise another one.

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jjtheblunt
Title is a total fail at DeMorgan's Law, because the following two statements
differ in meaning.

    
    
       "All x is not y"
    
       "Not all x is y".

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xophe
Post is a total fail at semantics, because the following two statements differ
in meaning.

    
    
       "All x is not y"
    
       "Not all x is y".

