It's hard to conceptualize the value $500 when you've just raised a couple million from investors. The measly few hundred -- or few thousand -- dollar expenses seem to be too unimportant to even consider.
Over time, we've started looking at things in a way that can bring it all in perspective. Consider this: if you've raised $2M at an $8M pre-money valuation, that $2M is worth 20% of your company. Each time you raise money, you are giving up a certain amount of equity to someone else in return for that money. And each time you spend money, you're spending equity in your company.
While it might seem like a $20,000 couch isn't an expense to fret over, that couch cost you 0.2% of your company. Likewise, a $250/month expense, while seemingly too insignificant to worry about, represents almost 0.1% of your company over 3 years.
The lesson here isn't to be penny wise and pound foolish -- certain expenses pay for themselves many times over -- but rather to carefully consider where you decide to spend your equity.
Over time, we've started looking at things in a way that can bring it all in perspective. Consider this: if you've raised $2M at an $8M pre-money valuation, that $2M is worth 20% of your company. Each time you raise money, you are giving up a certain amount of equity to someone else in return for that money. And each time you spend money, you're spending equity in your company.
While it might seem like a $20,000 couch isn't an expense to fret over, that couch cost you 0.2% of your company. Likewise, a $250/month expense, while seemingly too insignificant to worry about, represents almost 0.1% of your company over 3 years.
The lesson here isn't to be penny wise and pound foolish -- certain expenses pay for themselves many times over -- but rather to carefully consider where you decide to spend your equity.
