131–140 of 150 posts
This is the golden line. The richest person on Earth (Jeff Bezos) followed this principle religiously since Amazon's inception (or should I say, Cadabra's inception?).
I am unconvinced that "first-principles thinking" is the problem here. Surely one can refute the original argument without having to debunk axiomatic logic itself. For example, one could argue something like this: Even though increased access to other people's money can cause founders to make irresponsible decisions, raising money has other advantages that tend to offset this.
I think the idea is, when you argue from first principles, you are implicitly assuming that you know all of the relevant first principles. Since you're human and imperfect, there is always a chance that you don't. How to know? Well, empirically, check whether the conclusions you get, seem to hold up to reality. The author's experience was that taking investment $$ was necessary (or at least often useful) in a startup…
1. Not raising money give you more skin in the game (valid observation)
2. Skin in the game is an advantage (valid observation)
3. There exists at least one advantage of not raising money (valid conclusion)
4. You should not raise money (NOT VALID conclusion)
Unfortunately I’m just a software engineer, who has never been able to put this in practice.
Earlier quoted context omitted.
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…
> ...that a government can print money and extract any resource it wants from any entity it wants to at any time at the barrel of a gun, and you and your CEO friend can't. 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 i…
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'd love to read something more about this line of thinking from someone more knowledgeable in the area.
[1] I think, but maybe not! It would be interesting to trace the "capital lineage" (made-up term) of various successful businesses from the late 1800s through today, for example.
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…
> 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. Isn't the exact opposite true? I work with businesses which import goods and sell them. The vast majority of these make a steady profit without any thought to cash flow management. Accounts receivable are a mess, paymen…
Earlier quoted context omitted.
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…
> ...that a government can print money and extract any resource it wants from any entity it wants to at any time at the barrel of a gun, and you and your CEO friend can't. 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 i…
I have a question. Interest payments. Unless you have a high enough revenue stream to cover the cost of interest, arent you eroding your capital ?