In the last All-In Podcast, David Friedberg laid out a great rubric for business value creation. While visionaries get excited by a future state and entrepreneurs get excited by an idea, it takes all that, and more, to create real value.
David Friedberg’s rubric for value creation in a business All-In podcast episode 62 (at the 50 minute mark):
1. Can you make a product?
2. Do people want to buy your product?
3. Can you make a positive gross margin selling the product?
4. Can you make a return on the marketing dollars you have to spend to
generate the gross profit?
5. Can you scale the amount of money to grow your business such that
as you grow the return goes up, not down?
6. Can you transition to being a platform (multi-product company)?
This articulation of the business value creation journey is the best I’ve ever seen. Share this with every entrepreneur you know and ensure they think through it on their journey.
David Cummings on Startups 
Very nice share, David. I wish he would have started with the market/problem before the product. But I do like this direction.
I listened to this podcast and I want to ask you about “Facebook was always default alive. Facebook was always profitable. Unprofitable growth is…(paraphrase: not better for VCs who want to raise large funds and line their pockets with fees”
*Question* : what are your thoughts on unprofitable growth? What did you do at SalesLoft/Pardot?
Our last 3 years we’ve grown 2x, 50% and 50%. We’re cash flow positive and I’ve purposely kept our burn low (delayed hiring, pulled back on marketing spend, etc) to grow profitably. Yesterday a VC told me I need to grow 100% YoY to be attractive.
Well, my SFR (self-financing growth rate) is much less than 2x. So to hit a 2x growth target I’d need to grow unprofitably which would force me to raise.
Figure out what you want to be and follow that dream. Facebook isn’t a good comparison as it’s a once-in-a-generation business. If you can self-finance and achieve what you want, just do it. If outside capital is needed, go for it.
Unprofitable growth makes sense when a $1 invested in the business can generate $5 or more of enterprise value.