The only way Tarsnap could have growth rate + profit margin equal to 40% is if it was losing money. Given that Tarsnap is bootstrapped, that's not an option for me.
>Given that Tarsnap is bootstrapped, that's not an option for me.
Indeed. I think the advice is for VC funded companies. Whole different ballgame. In the ideal case, VC funding lets you grow faster and ultimately make more money. Whereas bootstrapped companies are constrained by the requirement to make at least some money from the getgo.
On the flipside, this constraint of bootstrapping ensures that we actually do make money. Whereas in the less than ideal case for VC the outcome is zero for the founder.
(Bootstrapping can result in zero too, but you usually find this out faster than in a startup.)
There are tradeoffs to either method. I prefer the bootstrapped way. But you can apply that rule to a bootstrapped business to some extent: if your budget allows it, then it can make sense to trim margins if your growth rate is high and you can increase growth by spending.
