Looking at growth viz-a-viz profitability has always been a huge challenge for consumer tech companies globally. Many companies feel that artificial growth distorts the company’s value proposition. “There was a time around 2015-16, when there was a lot of VC money chasing very high-growth start-ups similar to what we saw in last couple of years purely on growth numbers and the profitability had taken a back seat. For around 6-8 months we had actually gone on that path but there was a quick realisation that it was leading to a distortion of value proposition that we’d actually created for the consumers and also that it was not going to be sustainable,” Gaurav Singh, CEO, Bluestone said at one of India’s largest venture capital firms IvyCap Ventures’ annual flagship event IvyCap Day 2022.

“Since then we’ve been very particular about the kind of growth we want. We want to grow at 2x or 3x but the growth has to be right. It cannot be distorted growth. And once we realised that, profitability came naturally. What had led to loss-making 4-5 years back was obsessive focus on growth which we had been able to curb,” he adds.

Rahul Dash, co-founder and COO of Purplle says when you look at organic growth, you look at the 1:3 ratio in terms of revenue that we got to with respect to the capital that we consumed organically. “That’s one metric that we look at. We’ve been very clear in pushing back growth that we don’t consider as growth. For you to grow really fast, you need to break really well. What has worked for us is differentiating between what is investment and what is an expense. And we have seen people getting super-confused.”

Clovia’s Kant agrees. “Once you’re in the race, you’ve to go fast because growing slowly also means that you’re dying slowly. But the key to winning is also to time your pit stops. Through different stages when we kept raising funds there were times when we grew fast but we always maintained channel EBITA,” Neha Kant, founder and CRO of Clovia says. “We always stayed positive on a unit level. When the funding environment changed, we could easily ride that wave. There will be cycles, you need to time your pit stops well.”
Source: BusinessToday