Quote: You’re much less likely to develop…

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Quoted by 37signals on May 27 2011:

You’re much less likely to develop a clue if you have a lot of cash. When you have a lot of cash, you can delude yourself for a very long time and still pay the bills. There’s nothing that will bring realism into your world as quickly as realizing that you’re out of cash. That is a smack of real life that will instill sense in almost anybody.

—

David in Episode #26 of the 37signals Podcast. Read the transcript or listen to it.

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5 comments so far

Rodrigo Guzman 27 May 11

this was in answer to a question about consulting for companies that somehow have a lot of cash and no clue. what david said is true; however, it misses a more important point and sets up a bit of a strawman. if you don’t have a clue it is exceedingly unlikely that your company has a lot of cash. investors don’t just hand out $1M checks to everyone that crosses their way.

Sean 27 May 11

You sure about that, Rodrigo?

Andrew 28 May 11

Actually, David often concentrates on entire companies, but the same can be said about departments in large companies. They get big funding up front and routinely take years to accomplish anything. That or they take 50 people to do the job of 10.

Jack 28 May 11

So what does that say about 37signals now that it has a lot of cash? Did you develop all your clues before the cash came in? Is it more difficult to come up with new product ideas for you now than before?

Kneale Mann 01 Jun 11

There are countless examples of companies that have cash and hire people who don’t have a clue. But if you step away (by choice or not) from the corporation, things begin to change. And if you choose your own path, the romantic notion can mask reality.

And you may reach that day when you realize that you have to rely on your ideas, not a on a pay stub every two weeks and you then may find out if you have a clue or not. But where you can carry that forward is when you do see the cash line grow to not forget those lean times and why you fought your way back up again.

That is why scaling is so tough but can be so rewarding. The start-up phase is exciting, it’s maintaining the excitement that requires work – and a clue.