The Entrepreneurial Mind: Talking the Talk and Walking the Walk to Bootstrapping
Teluu is a bootstrapped company. Being "lean" is not a slogan, it is a necessity. But I wonder if you can take things too far. Can the time saving of going by plane be used for something that generates revenue? Maybe close a sale? Make a customer (or more) happy?
This is what they call "opportunity cost". I think executives like in the example above should be good in driving their company, not a van (except if it's a parcel delivery company maybe, but I digress).
To be fair though, if I were in the same situation, I would probably drive as well. The two of them probably talked about the company anyway, coordinating, creating new strategy, away from the pressures of day-to-day management. It's like an executive retreat, a management challenge: how to get two people to Chicago as cheap as possible.
So although I would have quoted the example with a bit more context, not just "saving hundreds of dollars", I totally grok their way of thinking.
What do you think? Do you have examples where the financial savings is not worth the opportunity cost?
could easily have taken a flight to a conference in Chicago, a little more than an hour away by plane. Instead, they drove five and a half hours in a van, saving Fastenal hundreds of dollars.
Teluu is a bootstrapped company. Being "lean" is not a slogan, it is a necessity. But I wonder if you can take things too far. Can the time saving of going by plane be used for something that generates revenue? Maybe close a sale? Make a customer (or more) happy?
This is what they call "opportunity cost". I think executives like in the example above should be good in driving their company, not a van (except if it's a parcel delivery company maybe, but I digress).
To be fair though, if I were in the same situation, I would probably drive as well. The two of them probably talked about the company anyway, coordinating, creating new strategy, away from the pressures of day-to-day management. It's like an executive retreat, a management challenge: how to get two people to Chicago as cheap as possible.
So although I would have quoted the example with a bit more context, not just "saving hundreds of dollars", I totally grok their way of thinking.
What do you think? Do you have examples where the financial savings is not worth the opportunity cost?
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1 comments:
Commenting on a post over a year old seems a bit like yelling at the wind, but your point was a valid problem faced by the entrepeneurial leader. Businesses at all stages have competing places to put their resources, both personell and money. The early stage start-up needs to put its money into product development (i.e. developing something that customers want) and product promotion (i.e. telling the customers that it is available). Anything else is probably a distraction. At this stage sharing a room in a motel in the suburbs is a good use of money. As the business grows you get employees who are brought in because they provide more value to the company than they cost in pay. These employees (unlike the early ones) are not going to get rich on their stock options so giving them a single room in a city center hotel is a nice immediate reward that thanks them for their part of the contribution to the company's sales. And since they are not driven by the long term possibility of riches a little expense like a hotel room can make them more productive than the same employee after a draining long drive. What is productive in this case? Being a better sales presenter or being more alert at a conference and thus more likely to catch the important subtexts in a presentation. Making a smooth transition from money manager to resource manager as your enterprise grows is important in making your employees feel like their work is of value instead of that the purpose of their existance is only to enrich the investors and top managers / founders.
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