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Startup Building: Challenges & Opportunities
The Ben & Marc Show
The Importance of Profitability in Company Growth
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.
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