Don't Bury Your Piles of Gold

No matter what the VC's say.

My Take:

It's a little vexing when VC’s start serving up painfully obvious advice, always with gusto. “Got to grow sales!” Thanks. Who knew? The latest obvious and not-at-all helpful advice VCs are treating entrepreneurs to is, “You’ve got to tighten your belts!”

It’s ironic considering five minutes ago too many of them were demanding to know from those same entrepreneurs, “Where’s the ramp?” I get it, there have been too many companies that spent money like drunken sailors on shore leave in recent years.

But I was sitting in a meeting recently for a $5M ARR company with 28 months of forward runway and fewer than 60 employees that tripled ARR the last two years and is on track to double this coming year. By any early-stage standard, it's lean, efficient, and high-producing.

And the advice coming down the wire to the CEO was “Where can you cut here? We gotta extend the runway!”

It's possible that I'm off and that they know something I don’t know, but it sounded like rotten advice to me.

There’s a New Testament parable about a master who gives his three servants bags of gold. Two of them invest the money; the third buries the gold in the sand. When the master returns from a long trip, he asks his servants what they did with the money he gave them. The third one says, “You’ll be proud. I buried it!” The master throws him out. The lesson was that he wasn't supposed to hoard it, he was supposed to have *done* something with it. If you're growing efficiently and responsibly and your VC is asking “what can you cut?", the question I have for you is: How are you going to lean forward? How are you going to continue to grow the company? Build and grow. Don't bury your bags of gold.

🕸️ Around the Web 🕸️

Exploring Data Privacy & AI

Why It Pays to Start Companies in Recessions by Lisa Ward VIA WSJ

I’ve long argued that starting a company in a bust and building into a boom is the ideal timing — certainly preferable to the alternative. A new study backs this up. Companies started in the 2007-2008 recession were better able to retain talent, were more innovative and survived longer and grew faster in the long run.

TikTok Sues U.S. Government Over Law Forcing Sale or Ban By Sapna Maheshwari and David McCabe VIA NYTimes

It’s hard to say whether the lawsuit will be successful or not BUT the lawsuit will likely be in the courts for years. That means that those fearful of CCP intervention in US Politics probably can’t pop the champagne for a good long while AND, meanwhile, those who consume or create on TikTok don’t have to fear TikTok’s disappearance any time soon.

From Suitcases to Startups: Why Immigrants Innovate by Peter Wang

Lots of great points from Peter Wang on why Silicon Valley is run by immigrants but I think this is my favorite: “We know that most rules are artificial. The rules of communist China were wildly different from the rules of suburban America. My mom and I both had to learn new ways of thinking and being in order to better integrate ourselves into our adopted country. For me, it was a lesson: most rules aren’t hard and fast, they’re cultural constructs. If you spend your whole life in one country, you might assume that things are the way they are for good, sound reasons. When you’re an immigrant, you see that many rules and systems are built how they are arbitrarily – or maybe they were built the way they were for a reason that’s no longer relevant. That knowledge empowers you to both navigate the rules and know when there’s an opportunity to blow them up entirely in favor of something more efficient, more profitable or more equitable.”