Burn Baby Burn via AVC
Yep, it is happening in the B2B SaaS sector as well and eventually there are no safety nets for these companies because they spent themselves out of existence. But what is driving founders to push the pedal and spend like no tomorrow? While Fred and Bill are not targeting valuations as the cause, in a frothy funding environment, entrepreneurs are under the belief (egged on by plenty of investors) that the money train will continue to roll on. It is the growth at all cost theory, and well, I remember that did not play out too well the first time we did this in tech fifteen years back.
Everyone is under the impression that it is raining money. That certainly is the case now, but nothing to bet the farm on long-term. I know it may sound all fuddy-duddy, but turning a profit and running a cash flow positive business is a good thing.
And one thing about sales & marketing. Achieving massive scale by blowing it out on sales & marketing is certainly one way to win a market. But you can also be much more intelligent about the process and executing with purpose and precision. That is what is going to win, more so than playing someone else’s game when they turn on the sales & marketing spigot.