121–130 of 150 posts
Earlier quoted context omitted.
After a "collapse" you are still left with mindshare and a market. If you increase prices by 30% you'll still be the largest player. Maybe later investors are not making returns but you are not going bankrupt.
I agree for the mindshare, in some cases at least. Pets.com is still in the minds of many of us. And we will still remember MoviePass in 20 years. But, hey, WeWork still exists!
Earlier quoted context omitted.
The point is that improving the cash position of the restaurant (traditionally a low float, low margin business), by moving customers payments forwards in time, allows them to improve their margins by pre-paying their food vendors. This is in contrast to the example right before, where speedy deliveries from a lean manufacturer motivates downstream distributors to switch suppliers, despite taking a margin hit, becaus…
So why isn't there a futures market for selling these meats? The farmer/producer would like certainty of sale, at a certainty of price. This is exactly what a futures option gives them - they can offload the risk of price fluctuations (and demand reduction/changes) in the future, and someone else can speculate on this (and make more profit, or loss). It seems stupid for a farmer/producer to take on this risk, rather…
The proposition can be disproved very early in the chain of logic, actually. 1. Startups are risky. True. 2. Raising capital to do a startup reduces skin in the game (you’re spending other people’s money, after all). Arguable, but not a given. Raising capital does not eliminate risk, especially if one has their own money in it, and/or are using it as a job. Just because someone else invested doesn't necessarily reduc…
Having more money can also increase the set of (good) choices available to you.
How many stories of startup founders blowing money on booze, cocaine, prostitutes and lavish parties do we need to read before we realize that startup founders are humans and behave, well, like humans always have?
Great Article. A lot of people don't understand how important cash flow is. Even Elon pointed out that having factories close to customer is very important for a fast growing company like TSLA because if you grow too fast you'll be putting so many cars on boats before they are paid for that you will have no cash. I disagree with the framing of both articles somewhat. The question should be "What is limiting your grow…
There were some old ideas about how an interplanetary civilization would work, and in particular shipping, and now I understand better why we are still stuck on the ground. We are a long way from having ships so cheap that we can have them just floating around on ballistic orbits.
I just happened to be trying to learn more about David Friedberg before stumbling upon this article and I watched this lecture he gave on entrepreneurism which I think complements the contents of this article incredibly well. Highly recommend for those looking to learn more
This may be true for small lifestyle type businesses. But some problems can only be solved with VC money. Because of time limitations. You may only have a small window of opportunity to capture a certain market. If you grew linearly, and built up product idea A, in order to fund product idea B, in order to fund product idea C, then by the time you’re done with product idea B, a decade may have passed by. You’ve also…
Earlier quoted context omitted.
That's always been my conflict with the deficit the US government runs. - I believe we are approaching unsustainable levels of public debt - If a CEO were offered debt on the terms that the US Government gets, they would be fired for not taking it - If a CEO allocated funds the way the US Government does they would probably also be fired. - Using debt for growth capital is great - Using debt to get better terms from…
People always compare government finance with business finance or household finances. It's an analogy everyone seems to just love. Problem is government finances work completely differently in ways that are so fundamental as to make the analogies completely useless. It would take more than an HN comment to enumerate every subtlety of why that's the case, but if you were to start you could probably begin with the fact…
This is just factually false. The French government can't extract any resource it wants from California. The US government cannot extract any resource it wants from China.
The ultimate limit of what a government can extract value from is the land it owns, whatever fraction it can extract from its residents without starting a revolution, and whatever land and residents it can conquer of its neighbors.
That's why I suggested debt financing to fund infrastructure makes sense; infrastructure investments can increase the wealth of the residents, which is the ultimate limiting factor in the future revenues.
Earlier quoted context omitted.
Or you might prefer not to tax corporations at all, only distributions to shareholders. “Profits” or “cash flow” kept in the corporation is reinvested capital. It’s creating jobs and growing businesses, even if it’s kept in an interest bearing bank account.
We need to tax capital gains as income as well then, because stock-buybacks become a tax-loophole otherwise.
But to do this you absolutely need to index capital gains for inflation. That’s the reason they get special tax rates in the first place, because when inflation is high a significant part of capital gains are illusionary and you don’t want effective rates to reach over 100% in real use.
So don’t tax profits if reinvested. Task them as income if returned to shareholders (or used as excess compensation).
Earlier quoted context omitted.
Where do people store their money but in government bonds? There is just a finite amount of gold and company shares and commodity available. If you want people to save money for the last part of their life, they need something to buy.
It is (unfortunately) more efficient for those of limited means to buy lifetime annuities than hold Treasuries. (Those will, in turn invest in bonds, but typically not exclusively government bonds.) It is much more efficient for those who will leave an inheritance to invest primarily in equities (meaning they will invest relatively little, perhaps 0-30% in government/municipal bonds).
Or if everybody is starting companies, competition would be so fierce that nobody would be making a profit.
The author creates a false dichotomy when they write that business is either about making profit or managing cash flow. Making a profit requires cash flow management, but managing cash flow does not require making a profit. This article does talk about managing cash flows in a way that involves never making a profit. First, and tangentially, it's interesting that real estate developers do this all the time. Second, i…
I don't think he's presenting a dichotomy at all, false or otherwise. To paraphrase heavily, he's delving into the fact that these are simply different things. Profit, free cash, EBITDA, etc. These have different implications. Particularly, they translate into capital very differently. Ability to borrow. Ability to raise equity. Pay dividends. This translates into radically different trajectories and outcomes. In 202…
So long as you're running a profitable business, cash flow management does seem to be a pretty trivial problem. The difference between positive and negative float is just a loan. And, if you can show a bank that cash is guaranteed to come in at a future date, you will have no problem bridging the gap with a loan or line of credit.