The Games People Play With Cash Flow

I will add one other thing:

A surprising number of comments on both HN and Reddit have focused on the logical flaws in the original ‘Startups Shouldn’t Raise Money’ argument. I can see why they’re nitpicking (the argument isn’t 100% watertight) but two things:

First, if you steelman the argument, it’s actually a rather reasonable way of looking at the issue. I can see where the author is coming from — like him, I’ve noticed that bootstrapped companies tend to be more conservative with their capital. And bootstrapped companies also ‘fly closer to the ground’ — in the sense that they are more wary of making expensive mistakes.

(Speaking as someone who has been in this situation — it’s a materially different feeling when you commit a business error, and burn hundreds of thousands of your own hard-earned capital.)

Of course, the broader point I’m making with the article is that I think it’s not even worth it to engage with the argument on its own terms. By this I mean that I think the right approach is to just toss out the entire analysis, because it builds up from the ‘wrong’ set of principles, or the ‘wrong frame’. And the ‘wrong frame’ tells us something about how first principles thinking can fail.

One actionable lesson here: when you lay out some logic to a more experienced practitioner, and you see them scrunch up their face and react viscerally and say things like “I don’t think that’s the right way of thinking about it”, you should pay close attention, for their experience is likely telling them something that you don’t yet understand.

The natural rejoinder to that is “Well, but what if their experience is blinding them to a better way of looking at things?”

This is a great question, and it lies at the heart of this discussion! My current position is that if you’re new to the domain, you should probably conclude that you have a better way of thinking about things if and only if you can understand the more experienced person’s reasoning and worldview first.

To be fair, I think most of the people who read the piece understood this, and I suspect what I’m saying is common sense. It’s just that I found the nitpicky comments rather surprising.