David Cummings on Startups

Time vs Money Trade-off for Startups

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David Cummings

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When I started my company I would pinch pennies whenever I could. I still do. The big difference now is that I’ve come to realize that many things are better done by paying full price instead of laboring through different strategies to save a few dollars. Here are a few examples:

  • There are many do-it-yourself kits to incorporate a business, but it is worth paying a lawyer to walk you through the many considerations and setting it up right the first time. This is a tough one because it can easily be $1,000-$2,000 dollars – it is money well spent.
  • Yes, I can design my own logo with Photoshop or a free logo generating site, but paying a couple hundred dollars to one of the many excellent outsourcing sites gets a professionally done design that shows you’re serious about the business
  • The difference in quality between a business class cable modem and dedicated T1 line is dramatic. For us, paying several times more for high quality bandwidth and Internet access is more than worth it.

These are just a few of the areas that I’ve found it is better to spend money instead of trying to save a buck and spend more time. Building a frugal mentality into the corporate culture is important, but the old saying that you have to spend money to make money still rings true.

Comments

4 responses to “Time vs Money Trade-off for Startups”

  1. Adam Wexler Avatar
    Adam Wexler

    based on what you said above (i know many variables could affect), how much money would you advise an entrepreneur to go in the hole before his company starts to move? a couple thousand?

    Reply
    1. David Cummings Avatar
      David Cummings

      That’s a really tough one. I think it depends on where you are in life, your risk tolerance, etc. I had $50k in personal credit card debt at one point.

      Reply
  2. Stephen Avatar
    Stephen

    The willingness to pay (or realizing that sometimes you have to pay) is one thing that I look at in startups to divide what is just going to be fun to talk to and what might actually be worth my time. Entrepreneurs realizing that there are costs and investments that they need to make is a lot better sign than “we’d like to bring you on as partner, but have no ability to pay you at this time.”

    One of the designers that I regularly refer people to will not work with groups paying less than $300; because if you’re not willing to spend $300 on your future, then you probably aren’t really optimistic for it.

    –
    And on the T1s; you can’t run a business without some sort of Quality of Service guarantee. Whether it’s servers or T1s; residential or entry commercial will not work. I had a client once move from a 144k isdn to business class dsl bc the download speed was higher : they could only access their server for a few requests at a time.

    Reply
  3. Nigel McNie Avatar
    Nigel McNie

    I applied this to buying a desktop for my business, and I couldn’t agree more.

    I didn’t buy top of the line, but I have a quad core phenom, 8GB RAM, an SSD and three monitors (luckily I already had those). You’d be amazed at how much more productive you are when everything is another level faster than what you’re used to.

    8GB RAM means I never worry about RAM-intensive programs like browsers/java, and an SSD makes the entire desktop that much more responsive. Everything starts quickly too. Until you experience it, you can’t understand how much more productive it makes you.

    Maybe it’ll cost you $2K, maybe a bit more. But it’s your tool of the trade. Don’t skimp.

    Reply

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