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Take that, strawman! Seriously, nobody "eschews profit for potential". If I give you the choice between a dollar today and two dollars tomorrow, you aren't "es
by peterbonney 10y ago
Take that, strawman!
Seriously, nobody "eschews profit for potential". If I give you the choice between a dollar today and two dollars tomorrow, you aren't "eschewing profit" if you choose the latter: you are weighing the potential gain (an extra dollar) against the potential risk (I can't/don't pay you) and deciding that the reward outweighs the risk.
Or you can rationally decide that the risk outweighs the reward. Whatever. Optimizing current income isn't "right". Optimizing terminal value isn't "wrong". Nor vice versa. They are just different choices. Rational disagreements over risks and returns are how markets form.
Now, if the author wants to say that many companies are too optimistic about their actual future potential and therefore aren't doing the right risk/return calculation, I won't disagree. But this is where boards and investors (theoretically) serve to impose that reality check on the inherent optimism of most entrepreneurs.
- simplehuman 10y agoWell, What if I for sure give you 1000 bucks today OR I may give you 2000 tomorrow. Which would you pick? What if you had this choice for 30 days straight?
- charlesdm 10y agoIt would depend on how the "OR" is determined, so you can assess the risk?
- simplehuman 10y agoI think that's the point of the post. If risk is hard/impossible to assess which would you take?
- charlesdm 10y agoWell, you would still have certain data points to make a decision from. If you've been part of an industry for a while you'll start understanding it. Second, if you already have a ton of money, you might take on the additional risk to get 2x instead of 1x. Say you have $20mm in the bank, generating 10% a year, then getting a $10mm payout instead of a $5mm is probably worth it, since an extra $5mm won't change your life. If however, you have $100k in the bank, then you should probably take the $5mm.
- peterbonney 10y agoExactly. Two people can face at the same choice with the same facts and same assumptions and come to different conclusions because of their individual risk preferences. Neither is necessarily wrong.
- dasil003 10y agoYou're splitting a hair in a way that's not advantageous for Basecamp to do. They are painting themselves as an ideological antipode to the SV/VC world. Never mind that within SV it's not all big VC moonshots and there is quite a bit of nuance. That subtlety is noise that dilutes Basecamp's David vs Goliath message. I'm not going to complain too much about Basecamp's blunt marketing message though, overall I feel it's a positive message to see in the world. For those are new to tech or whose understanding is based on tech journalism, this is probably a good thing to hear despite how shallow it is.
- notahacker 10y agoHyperbole is 37Signals' schtick, but it's not that much of a distortion of a situation where many startups don't simply raise far more than they earn to grow but actively avoid adding revenue streams in the belief they might be inimical to growth and hype.