Profit vs Growth — Part 2: What’s Best for your Business?

In part 1 we explored how tech unicorns are maximising growth and building up significant losses in the process. In this article, we will look at the benefits and costs of maximising either growth or profit.

By Sam Allen

The Modern Method

Uber, Lyft and Pinterest, all founded since 2009, each have valuations higher than $1 billion, making them tech unicorns. They also don’t make a profit, in fact, they operate at a significant loss. Fuelled by investment from large VCs, these tech unicorns can afford to rack up huge losses while growing at a breakneck pace.

Uber, founded in 2009, has raised a total of $24.7bn, but in 2018 ended the year with a net loss of $1.8bn. However, its growth has been stratospheric, it now operates in over 700 cities and 80 countries, having delivered more than 5 billion rides. The question is, why is growth being maximised with little consideration for profit?

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