/ Startups

Reckless Startup Spending

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When a startup is having trouble its spending is reckless (see BeachMint article at Pando). When it’s doing well, that same spending is fun and culture building.

Nobody knows for sure the right path. I think Google’s continued belief that they should buy everyone breakfast, lunch and dinner is reckless. As a shareholder, I want that money. I am doubtful it’s really what keeps people there (“gee, I hate my job, but the food is good!”) That said, Google has created so much value in so little time (compare to something like Exxon) and so we give the founders leeway.

If I fed my team breakfast, lunch and dinner everyday I would probably get fired. Or at least I would run out of food really soon. Even on a budget that’s probably $3,000+ per person per year. But if you’re on a budget, what good is the food?

Benefits are easy to pick on, though. What about the rest of the business. Should I pursue a patent ($20,000 or more…seriously)? Should I acquire a bunch of user’s to juice my numbers? Should I size up my machines now or later?

If things go well, that was a great plan. You prepared ahead. You have your patent. If things don’t go well, you’re an idiot. You wasted money. You spent recklessly. You didn’t figure it out fast enough.

We all want to build a great company, with great people, great benefits, great products and most of all, great profits. How we get there will always be a matter of debate, but I think whether spending is reckless or not is a matter of where you are and your success. I am sure exceptions do exist, but the spending ALWAYS seems rational in the moment. It’s when you’re down in the trough of despair it seems reckless. Even to the CEO, you know that was mis-spent. Until tomorrow, when things are looking up again.