Valuation expert Aswath Damodaran, in his blog post, disagreed with Indian-American billionaire and venture capitalist Vinod Khosla’s view that putting profitability before scaling up is okay for short-sighted companies and not for those aiming for great growth in the longer term.
Khosla, in a post on X last month, wrote that profitability is an admission by a company that they have no place to invest that is better than giving the money back to shareholders. “You can generate profits or assets for the future. Current situation around data centre investments is the same controversy around building assets for the future or keeping cash on hand,” he wrote, adding that this is okay for shortsighted quarterly Wall Street but not for companies planning great growth 5-10 years out. “Higher risk than keeping cash on hand, but substantially more upside. Pick what you want.”
