The Importance of Profitability in Company Growth

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Companies expanding into less profitable markets, extending product lines with low profitability, or making unprofitable acquisitions may experience apparent growth in earnings per share, but may also become less efficient economically with declining return on investor capital. This inefficiency can lead to big companies becoming giant inefficient messes. Running big companies efficiently involves strategies like those advocated by Andy Groth, which may need enforcement by activists. Growth is highly valued in small companies incentivizing growth, even if it leads to inefficiency in the long term. According to Groth, every company starts as a growth company, laying the foundation for their growth-oriented DNA.

"It turns out the spreadsheet is not actually the business, despite what you may have learned in business school." - Ben Horowitz

Welcome back to "The Ben & Marc Show" featuring a16z co-founders Marc Andreessen and Ben Horowitz. In this second episode of a two-part series, Marc and Ben answer MORE questions about startup building in the post-COVID world.

In this one-on-one conversation, Ben and Marc discuss how startups can think differently about organizational design and talent deployment, unpack the lore around layoffs, and even tackle the future of customer service. They also reveal some unexpected benefits of nicotine and Ozempic. That and much more. Enjoy!

*Watch the FULL EPISODE on YouTube: https://youtu.be/Fw4p85jSfQc

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