Re:Ask HN: Is frugality underrated in startups?
by throwawayboise on Sunday January 17, 2021 @05:09PM
(#25815615)
Worked for a company like this in the first dot-com boom. VC funded. Spending money like mad. Lavish offices. Big sales staff. Top-of-the-line Sun servers and Cisco networking gear. It was all focused on being ready to scale. Never had one paying customer. When the last funding round didn't materialize, the burn rate killed them in a matter of weeks.
If this were true, everyone would do it. This isn't, actually, true at all.
You might say "in theory," but there is a finite amount of money, most of it isn't available, and of what is, most of it won't be interested in any single thing
Besides, more importantly, in practice, you can't just generate revenue. At all. Generating revenue takes the investment of work and money.
All you're doing is failing your null hypothesis using stories.
I can name a startup whose founders talked like you.
They burned more than $50 million in about four years. But they were always talking about how you can just scale revenue, so they needed to spend everything they had to scale sooner.
They had a staff of almost 150 people.
They never had 150 concurrents on-site.
They'd still be searching for product market fit today if they had had even some remote frugality. They'd probably have found something by now.