3 ms·
Because it has money in the bank, and it wants to invest it into growth. Let's put it this way: if 9 people can only produce enough revenue to pay for themselv
by lhorie 8y ago
Because it has money in the bank, and it wants to invest it into growth.
Let's put it this way: if 9 people can only produce enough revenue to pay for themselves, it would be risky to take on a new large client if doing so required an upfront investment that completely depleted your cash reserves.
If things went south and you couldn't capitalize on your investment, you'd have no way to fund a pivot or a recovery strategy. If taking a new client only required a 10th of your bank and things went bad, it would still hurt but you'd have some breathing room. A new hire poses a similar risk.
- R_haterade 8y agoYou obviously live in inflated-margin land. I'm going to guess NY, SF, CS, or greater Denver (maybe austin) or worse, Academia. Startups don't work this way in heavy industry, especially when jobs are on the line. I envy you, actually.
- lhorie 8y agoThis is finance management 101. Don't put all your eggs in one basket, don't bet money that you can't lose, etc. > Startups don't work this way Just because it's common nowadays to offload risks to early employees in startups doesn't make it less scummy. It's one thing to operate in guerrilla mode when it's two dudes in a garage struggling to get ramen profitable, but it's an entirely different ball game when one's hiding their inability to deliver with angel money and cruising on the back of a dozen employees. My wife was let go from a startup shortly after returning from mat leave. The company went belly up a while later. It was already clear to me from her descriptions they were toying w/ people's expectations given there was no path to profitability, and a completely illogical hiring spree. That's simply not how the vast majority of successful companies survive.