Venture capital is returning to an old formula: Doling out money for expansion to already-profitable businesses. That's why AdMob, a mobile-advertising startup, has gotten $15.7 million from Sequoia Capital. Sequoia, the backer of Apple, Cisco, Yahoo, and Google, summoned portfolio-company CEOs to an emergency meeting, warning them to cut costs and become self-sustainable. So why did AdMob get the cash?Because, Sequoia partner Jim Goetz says, mobile advertising is potentially a large market, and the startup, he claims, already generates more cash from its operations than it spends. Never mind that Goetz, shown here, was spewing a grow-at-all-costs investment philosophy a year ago; mental flexibility is the hallmark of a venture capitalist. Goetz's indecisiveness shouldn't matter to AdMob's founder, Omar Hamoui, who didn't need a flip-flopping VC to know he had to run his business like a business. For entrepreneurs more used to spending someone else's money freely, this must all seem a puzzle on the order of a Zen koan: How do you raise venture capital? By not needing it.
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