It seems that everyone is writing about best practices these days, and I certainly agree they should be followed whenever possible. There has been a disturbing lack of guidance on one of the most common activities of early stage companies: throwing money out the window. So, I’m here to help.Of course, this is a huge topic that can’t be covered in just one post. So, for today, we’ll focus on just three key ideas that, if followed correctly, can essentially guarantee you’ll be looking for another round much sooner than anyone expected.
First, attend lots of conferences, especially when accomplished without extensive pre-event work to ensure a solid calendar of meetings. This can be a fantastic way to run up expenses. Just airfare, hotels and food for several people for several days will make a significant dent. However, when you add in conference fees, union labor at the site to set up your booth, and company materials that will never be looked at, this is a “best practices” home run. The number of genuinely useful relationships actually developed for the first time at large conferences—and which couldn’t have just happened through LinkedIn – is statistically insignificant, so don’t worry that they’ll upset the cost/lack-of-benefit ratio.
Second, try to develop business overseas. This has the benefit of seeming perfectly logical to investors and cohorts alike: after all, its called the world wide web, right? What few folks appreciate is how profoundly the matters of culture, language, fulfillment, and competition impact your offering, and how much harder it is to figure out what’s really working, and not, in places you aren’t familiar with. The strain on management, always underestimated, makes this a particularly effective way to reduce velocity. If you actually hire a team in a foreign jurisdiction, you win: just go ahead and start applying for jobs yourself.
If, however, those two strategies fail to deplete the bank account adequately, you can always resort to my favorite, fail-safe, and shockingly common approach: retain a PR agency. You and I both know that if the company has a great story, it doesn’t need an agency; and that if it doesn’t, an agency won’t help. Even significant PR rarely delivers benefits beyond ego gratification. To the outside world, this can look like a totally reasonable expense, which earns it extra points as a best practice… hey, with luck, the investors won’t even ask why you didn’t invest the dollars in paid search.
Even used sparingly, these best practices should turn your burn rate into an inferno in no time. Good luck.
All opinions expressed are those of the author, and do not necessarily represent those of Gust.