Divya introduces herself as a visiting partner and two-time YC founder, setting the stage to discuss growth versus profitability in startups.

• Divya has 16 years of experience with startups and has been through Y Combinator twice.

Divya explains why growth is essential for startups, signifying product-market fit and differentiating them from small businesses.

• Growth is the only true signal of product-market fit, showing that a product is in demand.
• A startup is expected to grow consistently and reinvest profits into innovation.

Divya emphasizes the necessity for startups to continually show growth in their numbers.

• At any stage of a company, demonstrating growth is crucial and no other metric can substitute for it.

Divya discusses profitability, stressing its plausibility and the importance of a compelling profitability narrative at scale.

• Profitability needs to be plausible, with a clear explanation of how the business will become profitable as it grows.
• Startups should avoid assuming that scale alone will fix margins and should demonstrate how profitability will be achieved.

Divya provides insights on how early-stage startups can approach demonstrating profitability with real-world scenarios and simulations.

• Seed-stage startups should use back-of-the-envelope calculations, real-world simulations, and examples to show potential profitability.
• These examples should illustrate how profitability can be scaled, without the need to constantly increase margins.

Divya describes how as companies grow, the burden of proof for their profitability story increases, especially as they near an IPO.

• As a company approaches an IPO, de-risking the profitability narrative becomes more critical.
• Companies should continually update their models, ensuring assumptions are sound and accounting for real-world complexities.

Divya summarizes the balance between growth and profitability, highlighting the need to focus on growth while also addressing profitability questions.

• Growth is non-negotiable for demonstrating product-market fit, while profitability requires a clear and realistic narrative.
• Startups should seek feedback, address hard questions, and continuously refine their profitability model.