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What do you think the fixed cost structure of this thing was?When it comes to venture capital investing, does it really matter what a company’s margin profile is anymore? The definitive answer to this question is YES, in ALL CAPS, of course margins matter.However, in the old world (see: before transformer models), the beautiful thing (and somewhat scary thing) about venture capital was that the ASSUMPTION for the past 25+ years has been that venture-backable was synonymous with really strong gross margins. If you didn’t have at least 75% GM rate, you probably weren’t a scalable enough business to warrant venture capital. And that’s what matters to venture investors: scalability. If you have gross margins north of 80%, there is a good chance that your fixed cost base will remain relatively static, regardless of the size of your company. That means that as you grow revenue, your profits can scale at an even faster rate than your revenue. Thus, you can reinvest that cash aggressively in g...

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Peter G Schmidt

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