Like most "new" ideas in the Startup world, what's new is old already. This is just people not understanding how their cash flows affect their balance sheet. Does the business turn a profit? Is the profit greater than their payroll? How many founders know their EBIDTA?
And even more, when growing the business, are you growing costs faster than profits? Yes, this employee is necessary. But will they add more profit than they cost, at this stage in the business; or should we hire this person in a few months?
This is because many founders get used to being able to go back and ask for more money if things aren't going well...right up until they get turned down. I'm being unfair, but it's always seemed like investors play a parent, and the founder plays a child, and it's just a child asking their parent for more money. And I honestly believe this level of entitlement is necessary to be a successful founder.
> Does the business turn a profit? Is the profit greater than their payroll? How many founders know their EBIDTA?
The first two questions are considerably more important than the third. That many founders do not know answers to the first two is less excusable than knowing a fairly specific accounting metric.
And even more, when growing the business, are you growing costs faster than profits? Yes, this employee is necessary. But will they add more profit than they cost, at this stage in the business; or should we hire this person in a few months?
This is because many founders get used to being able to go back and ask for more money if things aren't going well...right up until they get turned down. I'm being unfair, but it's always seemed like investors play a parent, and the founder plays a child, and it's just a child asking their parent for more money. And I honestly believe this level of entitlement is necessary to be a successful founder.