Revenue gets all the glory in the land of tech. The unlimited upside! Growth cures all! The next digit unlocks the next round! Don't get me wrong, without revenue, without paying customers, there's nothing. But once there's something, costs count just as well to the bottom line as does revenue – if you care about profits, and you should. Profits equal independence, sustainability, and, ultimately, prosperity.
But costs aren't just about the bottomline, they're also a measure of efficiency. I have a distinct distaste for waste. Money spent on the frivolous or the ill-considered is money that can't be spent elsewhere. Like an engine drinking too much oil just to run. Tight tolerances (but not too tight!) are a joy in themselves.
I think part of the reason many entrepreneurs have a strained relationship with cost control is that they've seen what happens when you leave it to the bean counters. And many companies do. Cost hammering left entirely to folks who like spreadsheets a little too much is a dangerous recipe. Cost needs to be everyone's concern.
That doesn't mean haggling with employees over purchases they need to do their job. That's moronic. I once had to spend several days navigating the expense maze at a company to buy a $35 book. It must have cost the company hundreds if not thousands of dollars in lost attention and motivation. That's not cost control, that's cost myopia.
It does mean going through every large line item with regularity and asking yourself "is this really worth it?". It's so easy to let costs slip, and suddenly you're looking at a disturbingly large monthly nut, thinking what the hell? This counts triple if you're a startup, not yet firmly settled in profitability.
At 37signals, we celebrate cutting costs on everything but people and their wellbeing. Don't spend money on vendors that you could spend on employees. Vote with your dollars for a lean ship that can sail for as long as it pleases. Control thy costs, matey!
But costs aren't just about the bottomline, they're also a measure of efficiency. I have a distinct distaste for waste. Money spent on the frivolous or the ill-considered is money that can't be spent elsewhere. Like an engine drinking too much oil just to run. Tight tolerances (but not too tight!) are a joy in themselves.
I think part of the reason many entrepreneurs have a strained relationship with cost control is that they've seen what happens when you leave it to the bean counters. And many companies do. Cost hammering left entirely to folks who like spreadsheets a little too much is a dangerous recipe. Cost needs to be everyone's concern.
That doesn't mean haggling with employees over purchases they need to do their job. That's moronic. I once had to spend several days navigating the expense maze at a company to buy a $35 book. It must have cost the company hundreds if not thousands of dollars in lost attention and motivation. That's not cost control, that's cost myopia.
It does mean going through every large line item with regularity and asking yourself "is this really worth it?". It's so easy to let costs slip, and suddenly you're looking at a disturbingly large monthly nut, thinking what the hell? This counts triple if you're a startup, not yet firmly settled in profitability.
At 37signals, we celebrate cutting costs on everything but people and their wellbeing. Don't spend money on vendors that you could spend on employees. Vote with your dollars for a lean ship that can sail for as long as it pleases. Control thy costs, matey!