“Deep Pockets, Short Arms”
Wasabi Ventures has a friend, Hon, who has been unbelievably successful. He has built companies and had huge windfall successes and because of these wins, our friend has a hefty bankroll. But he also is uncommonly frugal — personally frugal and business frugal. He is also the king of one-liners, so he has self-described his approach with money as being, “deep pockets, short arms.”
The “deep pockets, short arms” approach to start-ups is something to which every entrepreneur should aspire. Having “deep pockets” affords you to have as much flexibility as you can. You can risk more of your time because you have a personal bankroll. Salary and personal cash flow are not as important as building an opportunity into a sustainable business. You also have the luxury of financing ventures yourself.
But you should also keep control of costs. Being spend-thrift not only preserves cash, but it also forces operations to be efficient. And it is in this efficiency that breakthroughs usually happen. You find faster, smarter, better ways to run a business and beat the competition.
Grow your “deep pockets, short arms”, and build your company today.
September 23rd, 2008 at 10:52 pm
Indeed this is a skill: being able to ignore the fact that you have enough money to pay for a lot of things, and expect rather that the business will pay for itself within a very short time.
I have seen several “serial entrepreneurs” fall into the trap of self financing their new venture to the point where they loose all the wealth they had accumulated in the previous one.
So it is not just an issue of keeping control of cost, it is an issue of imposing on yourself a limit to what you agree to spend from your own pocket into the business. After an initial investment to build a prototype, you should trust the market to tell you what this proposed solution is worth. And then try to fail fast if you are going to fail (it happens to the best).