What are some ways in which Start-ups meaninglessly burn out their funding?
The #1 issue I see is not understand what investments really are accretive — and which aren’t.
Money is there to invest. You don’t need ROI in sixty minutes. But:
- A sales rep that can’t hit quota in a few months = cash drain.
- A VP of Marketing that can’t get you leads & opportunities = cash drain.
- A customer success team that can’t drive down churn and drive up NPS = cash drain.
- An engineer that can’t ship a core feature or upgrade on time-ish = cash drain.
- Etc. Etc.
I.e., hiring to fill an org chart drains all the cash – fast. This is what I see all the time.
Hiring still quickly … but where the hires, at least as a group, pay for themselves over the next 12 months or less … burns nothing net. And so that’s a great use of your precious, expensive, equity capital.
If you don’t understand how the next few employees are accretive, take a pause. You always know for the first 5, 10, 15, 20. But as you scale, after 40 or 50, sometimes you don’t know.