Fri, Jul 04, 2014
Peter Thiel once said: “Money is either an important thing or it is everything.”
We’ve talked about the importance of cash-flow before. The value of your company is the sum of its (discounted) future cash-flow. Simple as that.
With this in mind it is glaringly obvious that you have to focus on generating (future) cash-flow. All those fun Silicon Valley businesses which don’t have a business model and no way to get to one? You better pray for some idiot to come along and buy your company.
Personally I wouldn’t start a business where I don’t see a path to generating cash-flow. This doesn’t mean you have to generate cash-flow from day one — but you want to have a clear path to it. Also don’t make the mistake and believe you necessarily need to generate profits from day one — it’s perfectly fine to reinvest your cash-flow (and then some) into your business if you’re in growth-mode. But there needs to be a path to cash-flow.
No cash-flow — no business.