I'm no big investor or VC or anything, but trying to at least come close to a positive cash flow also helps proof the business against turning out to be selling dollar bills for 95 cents. Scaling a business that's selling dollars for 95 cents is really, really easy (in relative terms), and also a really bad plan.
I remember people discussing whether Groupon boiled down to that. I see it's not dead, but I see it's not exactly living up to promises either: http://finance.yahoo.com/echarts?s=GRPN+Interactive#{%22rang... (and have a look at the "news" section there, too...)
The profit motive can also keep firms from blowing money and attention on stupid things. (Example: Team A and Team B have a 50% overlap in code they're writing. The profit motive will shut this down. An overfunded company will preserve harmony, waste money and push the problems down field)
I remember people discussing whether Groupon boiled down to that. I see it's not dead, but I see it's not exactly living up to promises either: http://finance.yahoo.com/echarts?s=GRPN+Interactive#{%22rang... (and have a look at the "news" section there, too...)