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>I feel frugality is one of the most important points for startups and entrepreneur. If you look at some startups, it seems like they're simultaneously frugal

by jasode 6y ago

>I feel frugality is one of the most important points for startups and entrepreneur. If you look at some startups, it seems like they're simultaneously frugal and not frugal. E.g. early Google 1999 paid for meals cooked by a chef and onsite massage therapists even though they had no revenue and profit until 2002 -- but on the other hand -- they were very frugal with spending the least amount of money for computer parts[1] and datacenter rack leases. Likewise, Amazon was famous for being cheap by having employees make desks out of doors but they were bold in spending money on acquisitions that were strategic to their goals or taking expensive risks on Prime's "free shipping" getting abused by customers. The way to reconcile the inconsistency is that being frugal can't be applied in every area of the company. So maybe a more realistic tactic for a new YC company is ... it's ok to splurge $5000 on an automatic cappuccino machine in the office for employee well-being, but at the same time, be ultra frugal in AWS costs and analyze the line items like a hawk to make sure the developers are not leaving up idle EC2 instances and wasting money. [1] https://commons.wikimedia.org/wiki/File:Google%E2%80%99s_First_Production_Server.jpg https://commons.wikimedia.org/wiki/File:Google%E2%80%99s_Fir...

Blahah 6y ago
Yup, it's far too easy to hemorrhage money on cloud/hardware without actually achieving anything, and it's similarly easy to undervalue employee satisfaction, motivation, and loyalty.
joefourier 6y ago
Here’s what I don’t get. Being frugal with AWS costs seems to be another contradiction, like having a Michelin starred chef cook for your employees every day yet penny pinching the cost of the ingredients... Sure it’s great that you’re saving money somewhere, but you’re still handing the limited runway money hand over fist for unnecessary luxury, no matter how much you save on the little details. If you were actually frugal, you could have much better service without having to worry about each line item as much.
- afarrell 6y ago
  Penny-pinching the cost of the ingredients makes sense if and only if you don't value the impact or you want to pay a team which has "maintaining food supplier relationships" as 1 out of 3 ongoing focus areas. If there is a team with that ongoing mission, it can build the skills needed to reduce the cost of inputs without reducing the quality of impact. Penny-pinching AWS cost makes sense if and only if you want to pay a team which has "responsively manage compute resources" as 1 of 3 ongoing focus areas.
- raverbashing 6y ago
  Yeah, agreed. Especially when they try to "save costs" by spreading itself over several AWS services ensured they're locked in the most to the ecosystem. Though yes EC2 is not the cheapest but if you're using "only that" (or maybe S3/R53, etc) and being cheap I can accept you're being frugal.
- throwawayboise 6y ago
  Having the chef prepare a great meal allowed them to have people working 12 hour days instead of 8, and saved them the cost of hiring more staff. It probably was worth it. Frugality =/= cheap. Frugality is about spending wisely; getting good value.
malavwarke 6y ago
great insights, instead of going all out on frugality, it can be strategically optimized in various departments depending upon the overall impact. Thanks for sharing your perspective:)
cmenge 6y ago
+1. I think it is the same on spending and income: you must understand what scales with what. The number of coffee machines scales with the number of employees (and office layout), but the cloud service spend depends on many factors. If nobody ever was asked to keep an eye on that, it can run away quickly and it will be hard to regain control. I've seen people routinely reserve entire vCPUs in Kubernetes for tiny test systems, instead of 150m which would have easily sufficed.
adamnemecek 6y ago
> make desks out of doors This is such a stupid idea. At some point it would make sense to start making your own optimally designed desks.
- akhilcacharya 6y ago
  We all use automatic standing desks now, fwiw. Allegedly for period the door-style desks were actually more expensive than normal desks but they were kept as a "cultural statement". Don't know how true that is.
- jonfromsf 6y ago
  This was corporate myth-making. They did it to drive home the point that Amazon was a scrappy place. Obviously it wasn't a logical decision from a pure cost basis. But from a story-telling perspective it was a heckin' home run.
- fakedang 6y ago
  It's pretty easy to make desks out of doors. Especially if you don't need drawer or rackspace. I read somewhere that they got the doors as salvage from a waste disposal firm. Putting a few screws here and there would have sufficed. Not to mention door-length desks would be really spacious, for leg space and desk space.
akhilcacharya 6y ago
> least amount of money for computer parts Didn't this bite them too, via a lack of ECC and associated software development costs? Meanwhile, Amazon used off-the-shelf expensive Sun/HP machines for many tasks.
- imhoguy 6y ago
  Well, I suppose back then Google’s and Amazon’s risk tolerance was different. What would be an impact of bit flip in repeatable crawling and search results vs product listing and atomic financial transactions?
shalmanese 6y ago
Have a good sense of what the O(1), O(logN) and O(N) costs of your business are. O(1) costs are stuff like incorporation and legal compliance, O(logN) costs are stuff like the product team and O(N) costs are stuff like server costs and customer service staff.

by jasode 6y ago

Blahah 6y ago

Yup, it's far too easy to hemorrhage money on cloud/hardware without actually achieving anything, and it's similarly easy to undervalue employee satisfaction, motivation, and loyalty.

joefourier 6y ago

Here’s what I don’t get. Being frugal with AWS costs seems to be another contradiction, like having a Michelin starred chef cook for your employees every day yet penny pinching the cost of the ingredients... Sure it’s great that you’re saving money somewhere, but you’re still handing the limited runway money hand over fist for unnecessary luxury, no matter how much you save on the little details. If you were actually frugal, you could have much better service without having to worry about each line item as much.

afarrell 6y ago
Penny-pinching the cost of the ingredients makes sense if and only if you don't value the impact or you want to pay a team which has "maintaining food supplier relationships" as 1 out of 3 ongoing focus areas. If there is a team with that ongoing mission, it can build the skills needed to reduce the cost of inputs without reducing the quality of impact. Penny-pinching AWS cost makes sense if and only if you want to pay a team which has "responsively manage compute resources" as 1 of 3 ongoing focus areas.
raverbashing 6y ago
Yeah, agreed. Especially when they try to "save costs" by spreading itself over several AWS services ensured they're locked in the most to the ecosystem. Though yes EC2 is not the cheapest but if you're using "only that" (or maybe S3/R53, etc) and being cheap I can accept you're being frugal.
throwawayboise 6y ago
Having the chef prepare a great meal allowed them to have people working 12 hour days instead of 8, and saved them the cost of hiring more staff. It probably was worth it. Frugality =/= cheap. Frugality is about spending wisely; getting good value.

malavwarke 6y ago

great insights, instead of going all out on frugality, it can be strategically optimized in various departments depending upon the overall impact. Thanks for sharing your perspective:)

cmenge 6y ago

+1. I think it is the same on spending and income: you must understand what scales with what. The number of coffee machines scales with the number of employees (and office layout), but the cloud service spend depends on many factors. If nobody ever was asked to keep an eye on that, it can run away quickly and it will be hard to regain control. I've seen people routinely reserve entire vCPUs in Kubernetes for tiny test systems, instead of 150m which would have easily sufficed.

adamnemecek 6y ago

> make desks out of doors This is such a stupid idea. At some point it would make sense to start making your own optimally designed desks.

akhilcacharya 6y ago
We all use automatic standing desks now, fwiw. Allegedly for period the door-style desks were actually more expensive than normal desks but they were kept as a "cultural statement". Don't know how true that is.
jonfromsf 6y ago
This was corporate myth-making. They did it to drive home the point that Amazon was a scrappy place. Obviously it wasn't a logical decision from a pure cost basis. But from a story-telling perspective it was a heckin' home run.
fakedang 6y ago
It's pretty easy to make desks out of doors. Especially if you don't need drawer or rackspace. I read somewhere that they got the doors as salvage from a waste disposal firm. Putting a few screws here and there would have sufficed. Not to mention door-length desks would be really spacious, for leg space and desk space.

akhilcacharya 6y ago

> least amount of money for computer parts Didn't this bite them too, via a lack of ECC and associated software development costs? Meanwhile, Amazon used off-the-shelf expensive Sun/HP machines for many tasks.

imhoguy 6y ago
Well, I suppose back then Google’s and Amazon’s risk tolerance was different. What would be an impact of bit flip in repeatable crawling and search results vs product listing and atomic financial transactions?

shalmanese 6y ago

Have a good sense of what the O(1), O(logN) and O(N) costs of your business are. O(1) costs are stuff like incorporation and legal compliance, O(logN) costs are stuff like the product team and O(N) costs are stuff like server costs and customer service staff.