21–30 of 32 posts
Another supplementary reading to this has been covered by Mark Suster: http://www.bothsidesofthetable.com/2011/12/27/should-startup...
In that article, Mark Suster cover a counter example where instead of pushing to become profitable when revenue is almost overtaking cost, companies that are in a fast growing market should consider forsaking profit today for higher growth tomorrow.
Obviously, that depends entirely on the investment climate.
I suppose sometimes you have to suck it up to attain the finances but it's still an issue that needs to be addressed as an investee.
Guy Kawasaki says it best about this "VC are not your friends so don't treat them like one." http://www.wamda.com/2013/10/guy-kawasaki-11-mistakes-entrep...
Cash means controlling your own destiny. This is as important in your personal finances as it is in business. With enough cash, you can decide for yourself what you want to do and when you want to do it. I call it buying my time, but in reality, you are buying your freedom to choose. For both people and businesses, it is about getting to the point where your income, assets, and liabilities are in line such that you h…
While I agree with this statement in general, it is a bit of a tautology - do cash reserves come from success, or cause it? I agree that cash reserves help, but I think it's hard to ascertain how big a driver of success it is, given that it is also the result of success.
Yes, there's a balance to be had between doing things that generate revenue now and doing things that matter in the longer run ... but guess what ... that is exactly the nature of every business out there. From the biggest multinationals to the smallest corner shop - they're all balancing between generating shorter term revenues with longer term growth.
If you are spending time only doing long run ("strategic") stuff, you are not a business. The funny thing is, the opposite is not true: i.e. if you're only generating revenue but have little to show for long term direction.
I'm a firm believer that a core team of smart, hungry engineers is all you need to create a profitable, growing company today. Venture capital helps you get there faster, but it shouldn't be a crutch.
This is why it always feels funky to me for companies to raise money at insanely large valuations. To me it should only be enough money to cover expenses (employees, office space if necessary, business deals, salary for the founders, r&d costs) for just long enough to where you can afford those things without outside money after. For instance, if you do everything by the business plan, and your business plan says you…
Earlier quoted context omitted.
Oh yes. We do live in slavery. Money is the only key to our chains.
is money the key, or is money the chain that binds us? The only good that comes out of this is that you get to decide which of these worldviews you want to live in, then make the best of it.
- If you have more money (wealth, the key), you are freer, because you don't have to earn a wage for longer (with enough money, you are retired and don't ever have to earn a wage again.)
- If you have lower costs (lifestyle, the chains), you are freer, because any wage you earn can be lower, and you have more spare money to put towards your wealth.
You don't need to chose between being a wage-slave or a hippy. Investing a good fraction (say 10-80%) of your income is something most middle-class westerners can afford, attacks both ends of the problem, and leads reliably to freedom.
It reminds me of the presentation that Sequoia Capital gave to its portfolio company CEO’s back in Oct 2008 with the title "RIP Good Times" found here: http://www.scribd.com/doc/73886447/R-I-P-Good-Times-10-7-08-...
At the time the slides were shocking to me and completely altered how I think about building my start-up.
For starters the economic analysis at the start of the presentation made me aware that 'best practice', aka what Sequoia Capital does, is to track and analyse the wider macro and micro global economic forces. Since then I've learnt a lot more about economics and I track key economic indicators.
The other takeaway was the the two slides titled "Survival" and "Survival of the Quickest".
The "Survival" slide had the following bullet points:
* Must-Have Product * Established Revenue Model * Understanding of Market Uptake * Customer's Abilities to Pay * Assessment vs. Competitors * Cash is King * Need for Profitability
...which is pretty much the criteria I'm constantly assessing myself on.
And lastly the "Survival of the Quickest" side was making the point that unless a massive cut in costs was made right at the beginning of the recession your company would die in a Death Spiral. I can't stress how freaked out I was when I saw that Death Spiral diagram.
I know those slides are 5 years old but even now for my own start-up I keep those slides in the back of my mind as I pursue growth from my balance sheet and keep my burn rate as low as I can.
Earlier quoted context omitted.
is money the key, or is money the chain that binds us? The only good that comes out of this is that you get to decide which of these worldviews you want to live in, then make the best of it.
Both. This is not some metaphysical bullshit: - If you have more money (wealth, the key), you are freer, because you don't have to earn a wage for longer (with enough money, you are retired and don't ever have to earn a wage again.) - If you have lower costs (lifestyle, the chains), you are freer, because any wage you earn can be lower, and you have more spare money to put towards your wealth. You don't need to chose…
What in the world? Investing 80% of your income will leave you substantially in arrears with the IRS.
Earlier quoted context omitted.
Both. This is not some metaphysical bullshit: - If you have more money (wealth, the key), you are freer, because you don't have to earn a wage for longer (with enough money, you are retired and don't ever have to earn a wage again.) - If you have lower costs (lifestyle, the chains), you are freer, because any wage you earn can be lower, and you have more spare money to put towards your wealth. You don't need to chose…
> Investing a good fraction (say 10-80%) of your income is something most middle-class westerners can afford What in the world? Investing 80% of your income will leave you substantially in arrears with the IRS.
Cash means controlling your own destiny. This is as important in your personal finances as it is in business. With enough cash, you can decide for yourself what you want to do and when you want to do it. I call it buying my time, but in reality, you are buying your freedom to choose. For both people and businesses, it is about getting to the point where your income, assets, and liabilities are in line such that you h…
I couldn't agree more with you. The timing couldn't be better because I just finished a spreadsheet for a new family budget. Once I got past the scary big numbers, I realised that in a couple years we could be completely debt free. The next thing that crossed my mind was what we could then be able to do: save, travel more, be more selective in jobs, etc. When you have cash, you have freedom.