Cash Flow Valuation Envy

Craig Fuller shares insights about the tension between venture-backed companies and cash flow businesses, drawing from his unique position of having both. He discusses how each type of business owner envies what the other has, while explaining his preference for building sustainable cash flow businesses.

Key Points:

• Venture vs Cash Flow Dynamic:

  • Venture-backed founders are jealous of cash flow businesses
  • Cash flow businesses are jealous of venture valuations
  • Most venture founders don't see money until exit

• Cash Flow Business Advantages:

  • Provides regular income without waiting for exit
  • Allows for reinvestment in growth
  • Creates more operational flexibility

• His Personal Strategy:

  • Values having consistent cash flow
  • Uses cash flow to fund new acquisitions
  • Maintains venture-backed business (FreightWaves) as long-term nest egg
  • Leverages bank debt because it's "relatively cheap"

• Business Philosophy:

  • Prefers building sustainable revenue streams
  • Not focused solely on exit potential
  • Views cash flow as enabler for further opportunities
  • Uses bank financing strategically to grow while maintaining control

• Balanced Approach:

  • Maintains high-growth venture business
  • Builds cash-flowing media empire simultaneously
  • Uses profits to fund expansion rather than taking outside investment
  • Values operational control over quick exits