Time and money have a unique relationship in the startup world. The vast majority of startups have significantly more time than money. If you don’t have any money, every penny potentially spent gets scrutinized, as it generally should, and time is sacrificed to save money. Once a startup raises significant capital, the two suddenly flip flop. If you raise $10 million dollars in venture capital, expectations immediately change and the bar for success is significantly raised. The expectation is clear: spend the money to grow the business as fast as possible with the goal to achieve escape velocity and dominate the market.
Some items to keep in mind when thinking about the time and money relationship:
- Is this a winner-take-all-market like eBay or is more like email marketing where there are many successful companies
- Shifting the mindset from scrappy to putting money on the line faster is hard to do and shouldn’t be taken lightly, especially for bootstrapped companies
- Startups that don’t raise money but reach multiple millions in revenue will start to see the time and money relationship change as they make hard decisions around maximizing profits vs maximizing growth
There’s a distinct relationship between time and money in startups. Accordingly, it’s important to understand and be cognizant of it.
What else? What other considerations between time and money should be considered in startups?
David Cummings on Startups 