Thread by @QuinnyPig

Tonight I want to rant a bit about money.

For those who've never run a company, it turns out they run on giant burning piles of money. It's way more expensive to run a small business than I'd have believed before I did it.

You find yourself context-switching between personal money and company money frequently. "$80 for a hamburger? (Are you out of your goddamned mind?! | I'm going to need a receipt.)"

Every job I've ever had was super focused on controlling cost. The SaaS products I used. The conferences I attended. The travel / meals allowance.

I thought I understood it. It turns out I don't get it at all.

I was looking over the travel expenses that @mike_julian and I incurred last year.

The Duckbill Group's travel policy is "you fly business class, you stay in nice places, you eat how you'd like."

We took a lot of clients out for nice meals, too. Sales is an art!

I flew 140K miles, @mike_julian flew 60K.

The total for the two of us across all of that, with the above travel policy, was $60K for 2019.

Think about that for a minute.

If we had forced coach only, demanded receipts / enforced per diem, and stayed in crappy hotels out by the airport, we could have held that to $45K or so.

$15K is, in the context of a business, a relative joke.

Why on earth do companies try to squeeze their employees on these piddly expenses? "Crappy travel policy" for someone who spends a lot of time on the road is "time to find a new job" justification.

Another example: I went nuts when I started this company in decorating my home office. I spared no expense.

It cost way under the $5K I was planning for.

So uh... why did I put up with crappy chairs / desks / monitors in open plan offices for so many years?

I swear, you can't go back again.

I suspect that companies get this wrong a lot.

If you're a low margin business where a 7% cost difference per employee makes or breaks you? Okay, I guess. It's just unpleasant.

But you lose a lot of morale chasing stuff like that down--and it's the wrong answer.

If @mike_julian drops $15K on a dinner, I will have some pointed questions for him. The answers will determine the outcome, but one outcome that's not on the table is "we now have a meal policy."

In other words, "get rid of the person who made you think you needed a policy."

One flight to Atlanta was $400 to upgrade on the way out, which was great.

The return flight's upgrade was $4400. I flew coach because I have to live with myself.

The longer I do this the less likely I am to ever be employable again. It turns out that most companies don't accept "because I said so" as a justification, and that's increasingly becoming a hard bar for me.

If you don't trust my judgement we've got way bigger problems.

"Well that works well for you as a 10 person company, but it doesn't scale."

I dunno. I've never run a company at large scale.

But my travel policy looks a lot like Netflix's.

Show me your budget, and I'll show you your priorities.

Most companies deem travel and meals as unimportant, and it shows in how they manage costs.

The problem is, for the folks setting those polices who themselves don't travel much? It's a different world.

Somehow the responses to this have turned into a bunch of bikeshedding about travel policies. It was one example.

Let's pick another. For our ten person company, we spend about $30K a year right now in SaaS costs. That isn't a typo.

G-Suite, Tableau, Slack, Zoom, Asana, a pile of others.

The same principle applies: it's highly visible, but small in comparison to our major costs. So why spend huge time hunting people down? "REMOVE THAT MULTI-CHANNEL GUEST IN SLACK!" is a terrible use of time.

If you add together last year's travel for the whole company, and our annual SaaS spend, it's less than payroll.

For July.

Our number two expense? Contractors.

You think that @jeffbarr birthday video (see pinned tweet) made itself? There are other, less ridiculous examples.

For SaaS companies, their number 1 expense is generally payroll, number two is AWS (or equivalent provider). Three is office rent in many cases. There are exceptions.

So when I talk to folks about what I think COVID19 is going to do to companies' cloud spend, the answer is "well first, let's wait until the layoff dust settles and they've cancelled their office leases."

They'll get to the cloud bills sooner or later, but big numbers first.

This is why financial planning and analysis is so important. Your finance team cares WAY less about why the AWS bill is 20% higher this month than they do about whether this is an abberation or the new normal. They're trying to do 18-36 month projections on a variable cost.

Company money is a weird thing, and even with full access to the budget it takes some serious getting used to.

"That's a lot of money sitting in the business checking account" gives way to "okay, that affords us one of three possible opportunities to pursue."

I will say I've got limited patience for the "well, it doesn't work this way when you're a public company" takes.

Okay? I have no idea what it takes to strike that Faustian bargain. It was never in my game plan. Maybe this whole model falls to custard. So what?

I'm not suggesting that every company throw their policies out in favor of my approach; I'm sure they've set things as they are for good reasons.

They just didn't appeal to me, so I struck out to do something different.

It's a strange world--and it's only getting stranger.