[JumpCrisscross]

> what exactly is the mechanism that makes overfunding lead to a company's failure

It covers up problems until it's too late. Remember Color, the social network that spent like $500,000 on domain names [1]? Now imagine those kinds of decisions being made by every C-level executive. That's Jawbone.

Production issues, market-fit issues, et cetera could all be dismissed by management to shareholders and management to themselves on account of the massive, unaccountable cash pile. "Overfunding" means investors shifted too much control to management too early. (By contrast, well-funded teams know they will have to periodically check in with investors for future funding rounds. That motivates explicable behaviour.)

[1] https://techcrunch.com/2011/03/24/color-com-was-acquired-for...