Gym thoughts from under the bench press.
Today we’re ripping 12-8-8-6-4, starting at 225 lbs and finishing at 295. Each set paired with 15 pull-ups.
Apparently, between sets, I’m getting annoyed about capital allocation.
Sometimes I see Series A and Series B companies making expensive hires, spending millions on marketing, and promoting a product that makes me wonder whether anyone involved has actually tried using it.
Then come the announcements about “millions in sales” and all these impressive “partnerships.”
My question: how much of that revenue comes from customers who independently decided this was the best use of their money?
If your investors introduce you to their portfolio companies, great. Connections are part of business. I use mine too.
But if those companies are buying primarily because of who’s on the cap table, how much does that revenue actually tell us about demand?
Would they renew if the investor connection disappeared tomorrow?
That’s the part I keep coming back to.
At what point does the financial engineering stop long enough for the business to prove it works? And does that happen before or after the original investors get their exit?
I have similar questions watching the valuations and IPO discussions around OpenAI and Anthropic. I use these tools. I see the value. I still want to understand how the economics eventually justify the price.
A useful product can still be an overpriced investment.
I’m not calling the next dot-com crash from underneath a barbell. But I do wonder how often “this time is different” means we’ve found another way to postpone the same questions.
Who needs this? Will they keep paying for it? Can the company make money delivering it?
Building TCE has made me appreciate how much you learn when a customer can simply take their money somewhere else. You have to earn the next project.
Capital should flow toward its most productive use. Seeing access to the right circle treated as proof of a great business is disheartening.
I know that’s part of how the game gets played.
Doesn’t mean I have to like it.
Anyway. Next set.