"Growth at All Costs, Mostly Costs"
Dear Limited Partners,
This was the year we discovered growth. Not profit, not revenue, not users who pay — growth. We learned that a company losing $10 on every sale can simply do more sales, and through the magic of scale, lose $10 million. This is called a flywheel.
Our portfolio embraced this philosophy wholeheartedly. One company tripled its headcount, its office size, and its monthly burn, while its revenue remained a rumor. We led the follow-on round at a higher price, because the losses were getting bigger, which we took as evidence of momentum.
"At all costs" turned out to be the operative phrase. The costs arrived. The growth did not. We are now exploring a bold new concept our analysts have heard about called "unit economics," though we suspect it is a fad.
Onward and downward,
Chadwick "Chad" Burnsworth III
Managing Partner