How do you know that your rapid growth isn't a result of your service being unprofitable? Wasn't that the lesson that we were supposed to learn with pets.com and kozmo? Also I believe that profitability and rapid growth are not mutually exclusive. I understand the theory of operating at a loss, but it leaves very little room for uncertainty in the marketplace. If you have new competition, capital dries up, or you make any sort of mistake, the company could go belly up. I wouldn't want to invest in any company unless it could show a clear path to becoming profitable.
Accounting profit is not generally a great test of the long-term profitability of a business, because much depends on how revenue from customers comes in, how costs are timed, etc.
Generally, if you have a business where there is a significant growth opportunity / market opportunity, the right strategy is to run at an accounting loss to grow faster. What matters is the cash situation, not the accrual accounting situation (and they are not that closely tied to each other.) Growing slower so that you show an accounting profit would be the wrong thing to do and the market would not consider it a positive indicator for a company coming to IPO.
Pulling out 12 year old anecdotes is not a terrific defense. Yes, there is risk involved. But few companies have gotten huge without taking on that kind of risk. You are welcome not to invest but might want to step aside to avoid the stampede.
