I remember one of my first classes of Finance in business school (Darden Business School)…”Growth creates a funding need”. Nowhere is this more true than in a startup.
Most early stage firms are torn between trying to grow as fast as they possibly can, and conserving cash so that they can achieve and sustain profitability. Which one is more important? Unfortunately, the answer is….it depends. 
The objectives of an early stage company are manifold:
- Achieve profitability to get out of the “valley of death” so that you are a self-sustaining business not dependent on external funding/fuel
- Increase in size to get benefits of scale, make a bigger splash with potential clients, and provide investors with a good return and an exit
Most often a company has to trade-off #1 vs. #2. Do you spend on the expensive sales guy or do you keep the money in the bank to harvest cash? Do you spend to improve or enhance your product (product company) or add headcount (service company) to be ready for more demand, or do you hunker down and wait for demand to unfold. Never easy to choose.
To some extent, i think some of the critical factors are the type of company you are (product vs. service), and the kind of investors you have (institutional vs. non-institutional/self-funded). If you are a startup who has raised money from institutional investors, the expectation most often is for you to deliver outsize returns — most often funding rounds are precisely so that you can take the bigger size risks to shoot for the outsized returns. To some extent, you are being given the financial backing precisely so that you can swing for the fences, and not for you to focus on stealing bases (go for sixes, not hit leg-glances for a single if you prefer the cricket metaphors).
From my own experience, having largely been involved in service businesses, i have always steered more towards the profitability than the growth axis. Think that is largely driven by the fact that service business don’t have the same low variable-cost dynamic as a product or especially an e-commerce business does. To (over) simplify, service business = high variable cost, low fixed cost. Product/internet business = low variable cost, high fixed cost. Nor are they typically as skewed in terms of winner-takes-all competitive landscapes (service industries aren’t typically as concentrated as product industries). Thus, investing significantly in revenue growth is more appealing in the case of product/internet businesses. Magnitude of potential success (think massive profit potential if your online business becomes a winner) is much higher in the case of successful product/internet businesses (even though likelihood of being successful is much lower)
Aman Chowdhury. May 2014.