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So you're saying that an early stage company trying to grow exponentially is spending the majority of its early funding on salaries? I find that hard to believe

by wallawe 15y ago

So you're saying that an early stage company trying to grow exponentially is spending the majority of its early funding on salaries? I find that hard to believe. Especially for some of the biggest tech players in the industry today. I'm trying to figure out the nuances of spending for these companies in their early stages and how important certain things are relative to others. As a founder, what would you have spent more money on and what less?

benologist 15y ago
People cost a lot. We raised a bit of money, and about 80% of our budget is for salaries. We spend a few grand a month on hosting and services, and all of that is less than a single month's pay for someone. Computers and software ... unless you're using some very expensive software it's not even going to add up to 1 month's salary for a person. Office rent etc is negligible compared to the people in that office. It's not even a competition really ... one person can cost you more than your hosting, office space and computers and stuff combined, and you're probably hiring more than 1. You don't even have to go to extremes and hire a ton of people like silverbax88 mentions, if you're hiring 5 people that's 100s of thousands of dollars.
silverbax88 15y ago
Yeah, but that's why so many companies in the Valley fail. They hire way too fast (and often they hire too fast because investors are pushing them to hire so it looks like they are growing like crazy). As an example/comparison: I worked for one startup on the East coast in the financial sector that had about $800 million in backing. We were profitable in 4 years and still had less than 100 people on staff. Compare that to Digg, which had well over 100 people on staff, with only $40 million in backing and much less revenue. There's no reason a company like Digg needs 100 people, or even 50 people.

by wallawe 15y ago

benologist 15y ago

People cost a lot. We raised a bit of money, and about 80% of our budget is for salaries. We spend a few grand a month on hosting and services, and all of that is less than a single month's pay for someone. Computers and software ... unless you're using some very expensive software it's not even going to add up to 1 month's salary for a person. Office rent etc is negligible compared to the people in that office. It's not even a competition really ... one person can cost you more than your hosting, office space and computers and stuff combined, and you're probably hiring more than 1. You don't even have to go to extremes and hire a ton of people like silverbax88 mentions, if you're hiring 5 people that's 100s of thousands of dollars.

silverbax88 15y ago

Yeah, but that's why so many companies in the Valley fail. They hire way too fast (and often they hire too fast because investors are pushing them to hire so it looks like they are growing like crazy). As an example/comparison: I worked for one startup on the East coast in the financial sector that had about $800 million in backing. We were profitable in 4 years and still had less than 100 people on staff. Compare that to Digg, which had well over 100 people on staff, with only $40 million in backing and much less revenue. There's no reason a company like Digg needs 100 people, or even 50 people.