In business school, we'd say that, for growth to be value-creating, the return on invested capital has to exceed cost of capital. All that means is that a dollar invested in a company has to turn into something more than a dollar in earnings, by how much more depends on what rate you estimate your cost of capital to be.

With respect to money-consuming, high growth tech companies, we have to figure out if they're cable companies or airlines. Cable companies required lots of capital to grow for a number of years. Once they built out their networks, their capital expenditures went down and they could post major profits. But airlines, probably since deregulation and perhaps even since their invention, have likely been net capital destroyers: they keep having to buy/lease new aircraft to keep up with the competitors. Even prior to COVID, airlines had to buy new planes or risk losing money on each flight due to higher operational costs vs. the competition.

Tech companies that lose gobs of money, if they want to avoid becoming airlines, need to be building some sort of moat. Too often, investors and founders look at 20+% revenue growth and think that's good in itself. Or they think "industry X is going to be huge in the future" and they invest willy-nilly in companies in that industry (often at seemingly any implied valuation). But even if they're right about massive industry growth, they could still lose money if competition is high enough. In 1999, tons of people believed the internet was the future and they were right. But very few people realized which companies would succeed and even fewer people held on long enough to realize the gains of the ultimately successful companies.