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EDIT: I’m going to retract this comment for the time being. I think it doesn’t give justice to the complexity of an S-1 and I want to revisit this in the future to add more color. I don’t want anyone to get the wrong idea or take this the wrong way. Probably a good blog post, one day. :)

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Thanks for sharing this insight! I’ve always wondered the same - why did that X startup I worked at choose to stay unprofitable when they could have paused growth for Y months and turned profitable?

Another reason can be - investors are more interested in growth multipliers. X% YoY etc. As long as the potential for profitability exists on paper.

One thing that is missing is the unit economics and customer subsidization. If the company sells a product worth $5, for $1 (essentially subsidizing the customer), then it cannot become profitable just by a decision to stop growth.

So in your example, and offer of 13% annual yield but with %400 commission is not a profitable one.

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