> The world has evolved towards subscription models (SaaS, subscription commerce, etc.), and those are much more cash consumptive that the perpetual licenses or one time sales from before.
It might be obvious to the author, but why would these be more "cash consumptive"?
Generally, because all the sales & marketing cost (which makes up a big share of most large SaaS companies' expenses) is front-loaded, while the revenue is spread out over time.
When you spend, say, $10k to acquire a customer, and they pay you $25k for a perpetual license, you're cash-flow positive in year 1. When, instead, the customer pays you 10k a year and stays on average 4 years, the model is a lot more profitable over the long-term, but will cost money in year 1. Combine that with large growth rates, and the need for cash investment grows accordingly (even if the business model as a whole is perfectly sound).
It might be obvious to the author, but why would these be more "cash consumptive"?