Yo! I need cash too!

Ethics are a funny thing, especially in a startup. Its not unusual for a founder to take money out during a round of funding. The basic theory is that they have been paying themselves almost nothing to get the company going and have been putting their hearts and souls into it, company first themselves second. They get funding for the company, they get some cash in their pockets. Not a big problem.

So lets say hypothetically that you get a round of funding. You take out a nice phat pile of cash. Who knows what you spend it on, but that tan sure suits you and that's one sweet ride you have now.

Then lets say 6 month later you have to let a whole bunch of people go because you have over extended yourself. Not a problem, these things happen right. Economic meltdown-blah-blah-blah.

Then lest say your cash position gets tight again, its only been 9 months but you spent too much. So you get another round of funding. During that negotiation you manage to take some more money out again. Its just over a year since you last took money out, but you have such an elegant and extravagant lifestyle that you really need that sort of cash. Oh, you have to cut staff in this round as well. No problem.

You run the numbers just before you fire your CFO and then find that there is not enough headroom for you to take more cash out. So what do you do? Give up on your cash? No, what you do is give your managers a cash figure that they need to cut in addition, covering the cash you want to take out. How do they do that? Well cut the thing that eats the cash... staff.

The moral dilemma. You have to raise funding twice in 18 months. You have two rounds of rifts. You cut extra deep on the second. You take cash out twice.

Is that great leadership? Probably not. Can you claim the morale high ground? Probably not. Have you been managing your cash position well? Probably not. Do you put your staff first? Probably not.

Henry would never do that sort of thing, if he did there would be a riot and everybody would start leaving. His new Aston Martin is rather nice though, kind of a baby blue.

This weeks food and drink
Beer : 0 (no more official drinking!)
Shots : 9 (We just drink at our desk now, who cares, we still don't even have a VP)
Dinner : 0 nights (no more dinners!)
Weight : 193 lbs