Why Is an 80% Growth Software Business Worth Less Than a Faster One?

Christina Cacioppo says a business growing 80 percent with 80 percent margins returns more cash over a long stretch than one growing 160 percent with 30 percent margins, yet the faster business is valued at three or four times the multiple, and the gap can reach ten times. She calls living through that cognitive dissonance.

Patrick O'Shaughnessy sets up the market side: Vanta is still growing very fast, with the high margins that looked like the best model four years ago, and nothing about that got worse, yet the multiple on a business like it is a third or a quarter of the old level. She still wants to do what customers want, which may or may not be token pricing that pushes a company toward the faster, lower-margin shape. Investors who will fund the next round often act as AI maximalists, backing the labs and robo-tractors and almost nothing in between.