--- > A business exists to generate more money than it consumes. An asset exists to become more valuable. Startups are assets first, businesses second — if at all.[^1] As long as their value keeps appreciating, whether they make more money than they burn is beside the point. That's because the people funding them — the VCs — aren't interested in making incremental gains every day. They aren't looking to pocket healthy dividends every quarter. They don't want to make just *good money* every year. They want to make a fuckton of money all at once.[^2] Now, returns like that don’t come from steady profits. They come from convincing the next investor to pay more than the last. And what does the next investor pay for? The expectation that someone else down the line will pay even more. It's a _chain of belief_ — each link priced higher than the previous, held together by the promise of future returns. But if future valuations are all that matter, what explains the rise in VCs' obsession with profitability? Why the pressure on startups to behave like businesses? You see, the final link in the _chain of belief_ is the public markets. Convince them, and they'll reward you with a blockbuster IPO. And guess which metric do public markets love the most? Profit. So the drumbeat for profitability isn't about building a healthy, self-sustaining machine. Profit is the last squeeze of the lemon — a final attempt to wring out every drop of value from the asset before the handoff. Because startups are assets first, businesses second — if at all. [^1]: [This blog post](https://open.substack.com/pub/benn/p/startups-still-arent-businesses-yet?utm_campaign=post&utm_medium=web) by Benn Stancil nudged me to write this note. I see things slightly differently from Benn. He suggests that startups aren’t businesses _yet_, but that could change with AI — as the cycle from PMF to scale compresses from years to months, and the capital required drops from hundreds of salaries to just a few, VCs might start chasing profits directly. I'm not sure. I think faster, cheaper scaling will simply become the new normal. The real game will still revolve around growing startup value — because that's still the fastest path to big returns. No steady flow of profits can compete with the multiples that come from soaring valuations. [^2]: "I don't want to make a little bit of money everyday. I want to make a fuckton of money all at once." — Russ in [Silicon Valley](https://www.youtube.com/watch?v=BzAdXyPYKQo&t=52s)