Valuation Is Vanity, Profit Is Sanity, Cash Is King

I read something recently in Start with Yourself that I haven’t been able to shake: “Valuation is vanity, profit is sanity, and cash is king.”

It landed because I see the opposite playing out constantly. Revenue is the number people lead with. It’s the number that gets you into rooms, onto stages, into the peer groups that are supposed to help you grow. And I get it. Revenue is easy to measure. It sounds impressive at a dinner party. It makes for good podcast content.

But revenue without profit is a performance.

Last week I attended an Acquisition Labs workshop with Alex Hormozi’s team on scaling. Someone raised their hand and shared that they’d grown from $5 million to $10 million in a single year. The room was impressed. Then the follow-up question: what’s your EBITDA? Zero. They had doubled their revenue and had nothing to show for it. Is that a saleable business? Not really. Is it an impressive growth story? Depends on who you’re telling it to.

This is the metric problem I keep running into. In most of the business content I consume, the drumbeat is always revenue. Scale. Top line. Grow fast and figure the rest out later. And a lot of that content is created by men, for men, in ecosystems where the revenue number is also a proxy for identity and credibility.

I’ve written before about the soft bias of low expectations—how women entrepreneurs are rarely socialized to think in terms of scale or serious money. That bias shows up here too, but in reverse. The founder groups that are supposed to support growth are often gatekept by the very metric that rewards performance over health. Both Hampton and Founders required a $3 million annual revenue minimum to even get on a call with us. We were turned down.

Here’s the thing. 85% of women-owned businesses never make more than $100,000 per year. Less than 1% ever surpass the million mark. If you want more women in your group, maybe don’t use revenue as the velvet rope. Getting in the room is how we get to $3 million, bro. That’s the whole point.

One of the things I genuinely love about Baby Bathwater Institute is that there are no revenue minimums. If you can pay the annual fee and afford the events, you’re in. You might be running a $500K business with 90% profit margins and this investment is a no-brainer for you. You might be the healthiest business in the room and nobody would know it from the top line.

This connects to something I wrote about in Sticky—the difference between playing the short game and the long game. Revenue obsession is a short game. It looks good on paper. It gets you through the door of the rooms that care about that number. But it doesn’t tell you whether a business is actually healthy, whether it can survive a bad quarter, or whether the founder is taking home anything meaningful at the end of the year.

Profit is the long game. Cash is the longer one.

Hoot is sixteen years old. We’ve never chased the revenue number. We’ve chased the work, the relationships, and the margins that let us take care of our people. That’s not a flex. It’s a philosophy. And I think it’s one a lot of women-owned businesses share but don’t talk about, because the dominant conversation is always about how fast you can scale to a number that sounds good on someone else’s scoreboard.

I’m not saying revenue doesn’t matter. Of course it does. But treating it as the primary indicator of business success is like judging a marriage by how many vacations you take. It tells you something, but it doesn’t tell you the important thing.

The important thing is: are you building something that actually works? That pays its people well, serves its clients deeply, and still has money in the bank when things get weird? Because things always get weird.

Valuation is vanity. Profit is sanity. Cash is king. And the businesses that last are the ones that know the difference.