Thanks to Hollywood, most people think of waterslides and all-you-can-eat snackbars when they picture startup life. While it's true that startups are a fun and engaging place to work, there are many examples that debunk the myth of startup extravagance.
Why? Warren Buffett says it best: "If you buy things you do not need, soon you will have to sell things you need."
How Amazon and Microsoft Leveraged Resourcefulness
Experienced business leaders know the importance of having extra funds during stagnant economic conditions. Through operational efficiency, you can gain independence from funding environments that bubble and bust while you overtake competitors who spend themselves toward bankruptcy.
Here's an example from my own life: when Wattpad's co-founder Ivan Yuen and I travel together, we share rooms at lower cost hotels with free-wifi. It's an inexpensive way for us to get more face time and save money on travel costs--a win-win.
Investing our money and time wisely is so important to us that we've defined 'Resourcefulness' as a company-wide value: You do more with less, and only spend time on things that matter -- this breeds sufficiency and invention. And if you have questions, you ask.
If you make resourcefulness an organizational focus, effective money management creates savings that can be reinvested into your company to create faster growth. Entrepreneurs should lead by example and cut costs where they can.
Smart Spending Pays Off
To date, my company has raised almost $70 million in venture capital and every round secured is an exhilarating experience. If you find yourself in a similar position, you may find it to be an adrenaline rush that leads to an unsustainable burn rate.
Investors pay attention to a business's spending because a business's cash investments are the key to sustainable growth. Each item on a balance sheet needs to drive a company goal.
Having grown mobile-focused business through two big market crashes, I can testify to the benefits of smart spending. It's why entrepreneurs often come to me for advice.
A few years ago, the CEO of another tech startup came to me with a problem. A competing business had secured over $100 million in venture capital and began to drop huge sums of cash on unsustainable activities to drive growth. Their competitors were trying to sprint, so I recommended that their company prepare for the marathon.
It was an active funding environment and in these times stories like this are quite common. I advised the CEO to ignore the noise and execute on the business's goals. When the venture ecosystem normalized, their competition would be hurting for cash-flow.
What differentiates the winners from the losers isn't spending. Execution on company goals is what sets a business apart. If you focus on operational efficiency, your business can operate in the worst market conditions and outlast the competition.
Maintain the Right Attitude
World class companies are autonomous, they can control their own destiny. Develop the right attitude toward spending and you'll achieve autonomy faster. Remember that venture capital is not the goal. Capital exists to help execute a clear business vision.
To this day, the examples of resourcefulness around the office reinforce my positive outlook. I'm proud to explain why you can see computer monitors propped up on laptop boxes at Wattpad. It gives me a chance to explain to visitors and new hires why resourcefulness is part of our culture.
With a clear vision and resourceful attitude, a business can grow faster, generate more revenue, and keep costs under control. All this leads to growth and in business, the largest company is often the winner.
If you've got an example of how a resourceful attitude has benefited your business or personal life, I'd love to hear it. You can tweet me @allenlau, comment, or share your story with me on Wattpad.