| I've think there are a couple of hidden factors which help explain the correlation between frugality and startup success - economic intuition, and the sense of entitlement. Many startup founders don't have good economic intuition, and this expresses itself both in a lack of frugality, and an inability to come up with a realistic business model. In other words, similar skills and experience are needed to answer both these questions: 1. How long do we need our investment money to last, and what is the best way of spending it over that time? 2. What kind of products will people will pay for, and how much will they be willing to pay? So you'll often see a startup which is spending money unnecessarily, and also finding it impossible to bring enough in. On the second point, some startup founders have a sense of 'entitlement'. By this I mean a belief that the world owes them a good life without them having to earn it. Perhaps this is because investment is too easy to come by in the current environment. Instead of feeling a heavy sense of responsibility and guardianship over their investors' money, and focusing on providing a return, these founders think they've been given a free ticket to go pursue their dreams. This will express itself both in a lack of frugality regarding money, and also an unwillingness to put in the long hours necessary to make their startup succeed. |