When do tech companies need to be consistently profitable?

The social media company Snap recently announced it’s laying off about 1,000 workers — 16% of its employees. The company said these changes will reduce costs by more than half a billion dollars and help establish a path to net income profitability.

This move comes after one of Snap's investors, Irenic Capital Management, wrote a public letter to the company outlining what it needs to do to “save” the company and cut costs.

Snap has been a public company for nine years. It's had just a few non-consecutive profitable quarters. Sarah Kunst, a general partner at the venture capital firm Cleo Capital, explains more about when a company has to be consistently profitable.