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The most fun thing about startup world is that it pretends that normal rules of economics and accounting do not apply to it (until a startup runs out of money)
by notyourday 9y ago
The most fun thing about startup world is that it pretends that normal rules of economics and accounting do not apply to it (until a startup runs out of money)
$X in CapEx makes balance sheet look better than $X in OpEx.
- lallysingh 9y agoAs generously as I can put it: It's a form of denial that people use when overwhelmed with everything else. There's typically too little real data on what the money's going to look like until a bunch of things are tried out, each essentially a random variable. So instead of freaking out about that, just bandage over it with some lies to yourself until you can actually start addressing it. Businesses in well-known markets can start estimating their costs + potential revenue early, and optimize early. But for a business that might "pivot" a few times before finding "fit", how do you do it? You just look at time (runway: burn rate * remaining capital) you have to try stuff. It's not great, but I can understand why some people do it.
- notyourday 9y agoIf you need to pivot before you are cashflow positive, then you dont have a business and you never had a business. I keep being amazed that total business failures that result in pivots are considered to be successes in the startup world.