Can you strike a balance between scale and profitability? In a debate between investors Laith Zraikat of Arzan VC and Yana El Dirani of Modus Capital, and founders Mohannad Ali of Hotjar, Nida Sumar of 60 Day Startups, Lloyed Lobo of Traction Ventures, and Yousef Albarqawi of Alfii, moderated by Shubham Yadav of Strategy Connect, they delve into the definition of profit from the standpoint of investors and entrepreneurs. They also discuss the difference between scale and growth, the rule of 40 for sustainable growth, and the challenges of advocating for scale over profitability.
Sign up for Step events https://stepconference.com/
Subscribe now to the Step Feed newsletter for a daily roundup of the top tech & business news https://subscribe.stepfeed.com/
_____________________
HIGHLIGHTS
(5:37) - Definition of profit
(8:00) - Difference between scale vs. growth
(13:00) - How to get to profitability in B2B
(17:23) - Scaling is a methodical approach
(23:18) - How do you deal with scale vs profitability?
(28:43) - How to say yes or no
(34:40) - Do you see this changing for VCs?
(39:49) - Questions from the audience
_____________________
QUOTES
"If scale is done correctly, it should ultimately lead to profit. Otherwise, it was not done correctly."
"So you could be growing 80% year on year and burning minus 40%. Or you could be growing 20% and making a 20% profit margin."
"Growth is more about capturing more customers and increasing transaction volume, while scale is about operational metrics and capturing all the revenues."
"That topic should really be profitability versus blitzscale. Because you can scale profitably, right, but you can't blitzscale."
"Overspending is also just as bad as under-spending, in my opinion."
"As an entrepreneur, you have to be willing to take risks and make tough decisions."
"I would never invest into a startup that doesn't own the IP because then the potential growth of it, whether scale or profit, is really technically non-existent or dependent on third parties."
"Finding the right team is crucial for the success of a startup."
"Investors are looking for startups with a strong value proposition and a clear market opportunity."
"Scaling a startup requires a combination of strategic planning and agile execution."
_____________________
If you’re enjoying this podcast, please subscribe to Step Podcast and leave us a review!
Spotify → https://spoti.fi/3LIG8wj
Apple Podcasts → https://apple.co/3PxIXU5
Anghami → https://bit.ly/3lDKxG4