Don’t be too frugal when starting your company

Sep 7, 2014
2 minutes read

Most founders I’ve met are frugal, which is a great quality to have for building a successful business. The problem with it though is that I’ve seen too many founders optimise for expenses way too early.

At the beginning we don’t value our time highly enough and vastly overvalue small amounts of money we are spending.

I’ve had way too many discussions with people building the first iteration of their product who went with Hetzner or another server provider instead of Heroku or AWS because it’s cheaper. Rarely is the time it needs to set up the infrastructure and maintain it taken into account.

And we’ve certainly over optimised for expenses in the past. The number of hours I’ve spent debugging our worker processes on Heroku just because I tried every trick to optimise was endless. The saner way would have been to pay a little more money every month and spend those hours on building the product or finding customers. Or go out and freelance a little more so there’s enough money coming in to be able to afford the smaller amounts of money spent on company expenses.

So how can you break out of that cycle of over optimisation?

Come up with a reasonable amount of money you are willing to spend on your company monthly for your infrastructure and tools that help you build your company. Consider that money already spent. If you don’t spend it all give it to charity or go out with your co-founders and waste the money so it’s really gone.

Then once you hit that limit in monthly cost decide if you want to optimise or raise the limit. Make sure that everyone in your team is on board with the idea and does not use his time to not pay for small expenses.

You will build a better product faster and focus on building a better product and finding the right customers, the hardest part of starting a company

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