3 ms·

Gah, I get really annoyed by the "money means that you have to hire lots of people and spend money like a fucking idiot" mentality (popularized by 37Signals).

Gah, I get really annoyed by the "money means that you have to hire lots of people and spend money like a fucking idiot" mentality (popularized by 37Signals). Having money and careful money management are not incompatible (while we're at it, working more than 30 hours a week doesn't mean you spend your time inefficiently, either). When we raised our Series A, we didn't spontaneously start having long meetings and we didn't start hiring VPs. And we haven't had to appease our investors ONCE (but we have gotten some exceptional-- and optional-- advice from them). I'd also encourage the author to have a better marketing strategy than "Twitter and blogs". I can't count the number of entrepreneurs (YC companies and others) who realized that this strategy does not work and then started learning about SEO, adwords, and (gasp) sales and marketing. There are plenty of shiny exceptions to this rule, but they are so remarkable exactly because it's so damn rare.

dcheong 18y ago
Hi there, thanks for the feedback. I appreciate it. I don't mean to suggest that money == spend like crazy. All I'm suggesting here is there is merit to "embracing constraints". When you don't have money, you can't spend it. When you do have money, you may spend it. There is a difference between the two statements. This is especially important for people who think throwing more money at something is a solution. Some managers tend to think if a project is behind, simply throw more developers at it. We developers obviously know that isn't a viable solution in some cases. In fact, more people means more communication, training, procedural overheads etc which could actually slow down the rest of the team. Being money constrained, helps us focus on what's truly important so we deliver the best bang for the buck. We're small so we can't afford to spend 2 weeks on a feature nobody needs. The lack of money here helps us see that. Also thanks for the comment wrt marketing. I'm not marketing god by any means (and this blog post isn't about marketing anyway). I certainly do not know all the channels available to me to market my product. But that's part of the learning experience which is one part of why I'm doing this. Thanks again for the comment.
tptacek 18y ago
It's one thing for you to say you've never had to appease investors "once". It's another for you to imply that this is an irrelevant concern. I have several counter-anecdotes. I imagine I won't need them, though, and that you'll just concede that you have good investors --- for the time being --- and that bumbling or mendacious board members are indeed a real concern.
- aaronblohowiak 18y ago
  The parent's point cannot be overstated. The amount of waste that edicts from "on high" present is huge in many startups. That great network your VCs are part of, that they can use to pull favors and "make things happen" also means that your company sometimes has to pay its dues.
- dcheong 18y ago
  Hi tptacek - thanks for this comment. I'm in 100% agreement with you. Also, there's something to be said for a company that is totally autonomous and free from the pressures of an investor. Though not a hard/fast rule and clearly a generalisation - Building a company with investors shifts the focus to helping maximise shareholder value. Building a company free from investors encourage the founders to think about the customers. I've always believed if you focus on the customers and build solid products that add real value, the money bit will come naturally. While I don't deny the benefits and advantages of having investors (money, networking, advice etc), there are many ways to "skin the cat" and build a business.
- webwright 18y ago
  I'm not implying that (or at least, not on purpose). I'm railing against the implication that funded entrepreneurs are constantly appeasing (presumably moronic) investors. Listen, the money isn't free. It comes with a few protections (for them) and obligations (to them). If you've got good leverage when you set up your terms and go with a good investor, I don't think it has to be that bad. I know plenty of people who like their investors. Many people who take money seek investment for their second effort (even if they're rich and don't need it). Bumbling board members are a risk in the same way that (as the OP points out) a pile of money creates the danger that you'll hire too fast and build a meeting-heavy company. You need to be smart and disciplined. Desperate (or unlucky) entrepreneurs can end up with crappy investors and undisciplined entrepreneurs can end up with 12 VPs and day long meetings before they even have a product. Clearly, anecdotes abound and there's no hard data... But I think the only one who was implying that there were any rules was the author.
  - dcheong 18y ago
volida 18y ago
"money management" Actually money management is something a lot of people miss to understand.

dcheong 18y ago

Hi there, thanks for the feedback. I appreciate it. I don't mean to suggest that money == spend like crazy. All I'm suggesting here is there is merit to "embracing constraints". When you don't have money, you can't spend it. When you do have money, you may spend it. There is a difference between the two statements. This is especially important for people who think throwing more money at something is a solution. Some managers tend to think if a project is behind, simply throw more developers at it. We developers obviously know that isn't a viable solution in some cases. In fact, more people means more communication, training, procedural overheads etc which could actually slow down the rest of the team. Being money constrained, helps us focus on what's truly important so we deliver the best bang for the buck. We're small so we can't afford to spend 2 weeks on a feature nobody needs. The lack of money here helps us see that. Also thanks for the comment wrt marketing. I'm not marketing god by any means (and this blog post isn't about marketing anyway). I certainly do not know all the channels available to me to market my product. But that's part of the learning experience which is one part of why I'm doing this. Thanks again for the comment.

tptacek 18y ago

It's one thing for you to say you've never had to appease investors "once". It's another for you to imply that this is an irrelevant concern. I have several counter-anecdotes. I imagine I won't need them, though, and that you'll just concede that you have good investors --- for the time being --- and that bumbling or mendacious board members are indeed a real concern.

aaronblohowiak 18y ago
The parent's point cannot be overstated. The amount of waste that edicts from "on high" present is huge in many startups. That great network your VCs are part of, that they can use to pull favors and "make things happen" also means that your company sometimes has to pay its dues.
dcheong 18y ago
Hi tptacek - thanks for this comment. I'm in 100% agreement with you. Also, there's something to be said for a company that is totally autonomous and free from the pressures of an investor. Though not a hard/fast rule and clearly a generalisation - Building a company with investors shifts the focus to helping maximise shareholder value. Building a company free from investors encourage the founders to think about the customers. I've always believed if you focus on the customers and build solid products that add real value, the money bit will come naturally. While I don't deny the benefits and advantages of having investors (money, networking, advice etc), there are many ways to "skin the cat" and build a business.
webwright 18y ago
I'm not implying that (or at least, not on purpose). I'm railing against the implication that funded entrepreneurs are constantly appeasing (presumably moronic) investors. Listen, the money isn't free. It comes with a few protections (for them) and obligations (to them). If you've got good leverage when you set up your terms and go with a good investor, I don't think it has to be that bad. I know plenty of people who like their investors. Many people who take money seek investment for their second effort (even if they're rich and don't need it). Bumbling board members are a risk in the same way that (as the OP points out) a pile of money creates the danger that you'll hire too fast and build a meeting-heavy company. You need to be smart and disciplined. Desperate (or unlucky) entrepreneurs can end up with crappy investors and undisciplined entrepreneurs can end up with 12 VPs and day long meetings before they even have a product. Clearly, anecdotes abound and there's no hard data... But I think the only one who was implying that there were any rules was the author.
- dcheong 18y ago

volida 18y ago

"money management" Actually money management is something a lot of people miss to understand.