We've been in a bubble so long that there were people who have worked only in the current tech bubble. People run companies now that think a stock market crashes ultimately means more money flows in from VCs. I once worked for a c-level that seriously thought he had discovered something amazing when he realized that a company that made more than it cost to run the business had unlimited runway... the very idea that a company could run without constantly running to investors begging for more cash was completely foreign to him.

This has been the consequence of increasingly cheap money and investor money having nowhere to go after the real estate crash in 2008. To be fair, if money is basically free then it does make sense to grow without worrying about a profit. If you've had an entire career without every having to worry about more investor money coming it, it would start to seem wasteful to not spend it all.

But that's why these current economic conditions have me very worried: money can't be cheap anymore. If interest rates continue to rise we'll see a massive contraction in tech. First it will be the smaller, direct to consumer startups, then it will be all of the companies that have those startups as a non-trivial portion of their revenue.

If I have a company with good cash flow, all employees (including me) are compensated well, and I'm spending a chunk of that cash flow on R&D and growth but have only marginal profits if any am I doing something wrong? Should I cut R&D to pay dividends? How about if the company is privately held?

There's a difference between 'not profitable' and 'losing money.'

If "profitable" is a switch you can flip, then what you're describing makes sense.

The issue is that many of these companies have never demonstrated that if they want to they can be profitable. The big assumption in these growth models is that there is a point where you can just magically flip that profit switch.

For example if I run a lemonade stand where I spend $3 to make a $1 glass of lemonade, even if I am able to use investor capital to keep growing my lemonade stand to be the only lemonade stand in town, or even the world, it's not clear that I can survive if I'm forced to make a profit.

I worked for a company that rented a new expensive floor in the heart of NYC to show "growth" to other investors. We were supposed to spread out for the optics, when potential investors did a walk-through.

Wild speculation has been a feature in capitalism for _centuries_. There are any number of interesting historical schemes to read about where investors lost their shirts, or, sometime won big! Every new business venture has risk that it will fail, even in "stable" industries. We should celebrate trying new business that might not work. We just need to ensure we don't socialize the losses.