The mysterious "receipting team" is not in the main office, and has no phone number or even names listed, emails are never directly replied to, instead site contacts will call to relay questions/answers from them, ref# come from an automated do-not-reply email. They will quite often be "backlogged" and fail to send a ref# before the the end of the month, and suddenly will be cleared up on the 1st of the month.

We've had jobs that finished in the first week of a month, been ignored for 25 days, received a ref# with an apology for the delay on the 1st of the following month, get paid 45 days end of that month. So up to 100 days from completing work to getting paid. All our accounts are POS, 7 days EOM, or 30 days EOM, and must be paid on time or we lose supply. So to do a job with $100k of materials and wages for them, we have to have $100k spare cash for up to 60-100 days

It's not a cashflow problem, they're sitting on reserves and we're a blip on their radar, less than 1/10th of a percent of their outgoings

So we quote them outrageously high, and they never blink. I've told them some jobs would be up to 50% less if they paid quicker, and they've outright said they'd rather hold the cash and pay more. For a sense of scale we've invoiced them about $500k a year for the last few years, they've told me to clear out a couple weeks for two jobs that are nearly that much each, in February and April this year. I can't figure out who's getting the bad deal, them or me, I keep assuming they must have some massive upside I'm not seeing ¯\_(ツ)_/¯

In other words, you have a business of a certain size with a certain set of constraints and goals. For most small businesses the constraint is not enough money, and the goal is to make more money.

Naturally you see your client as a "big version of your business" and therefore you think they are optimizing to the same goals as you. When interacting with corporates this is a really common mistake.

What's really happening is that to them they have all the cash in the world. The difference between 30k and 150k is nothing. Literally nothing.

However they likely have incomings and outgoings totally hundreds of millions, if not billions, each month. When you move that much money some jobs are likely to be _really_ big, and doing it right the first time I'd important.

So they have a buying, and paying, process. That process is optimised for say 50M and up. But the process applied to all purchasing, they want 1 process, not 3 or 5 or 10.

Your tiny rounding error if a job is therefore irrelevant. Money is not the limit. They want to use their process. Andif you are happy to wait 100 days, then they are happy to spend more.

Would you rather spend 30c now, with a bunch of hassle, or $1.50 in 3 months time with zero hassle. Since $1.50 is nothing, you're happy to pay more for no hassles.

Neither of you are getting a bad deal, and yes they are getting upside you can't see. You are playing to one set of rules, bug they have a very different rule book.

> You're both getting what you want, but you are different businesses, so you are optimizing for different things. [...]

> The difference between 30k and 150k is nothing. Literally nothing. [...]

> Would you rather spend 30c now, with a bunch of hassle, or $1.50 in 3 months time with zero hassle.

Anyone who struggles to understand why corporations do what they do should internalize this thought process. It explains a lot.

Each body in the machine needs a reporting structure, training, tooling, a career path, and be plugged into other structures that have visibility to and alignment with, senior management. So it's about trying to maximize the size of your company while keeping the complexity manageable. In a big organization, management is struggling for simplicity and visibility, and one technique is standardization of processes and alignment on goals and processes so that you have more than just a big bureaucracy doing thousands of inscrutable things, but you have a bureaucracy that management can understand, measure, and steer as best they can. This is the biggest challenge.

So they tend not to do things like hire one off people to do random things at odds with what everyone else is doing.

That means you do not chase every possible thing which appears to have some upside but adds complexity. Because following the latter approach is the administrative equivalent of "yes, we are an autobody shop, but people often come here hungry, so let's also sell them some pancakes" -- a decade of these type of decisions and you have a huge unmanageable mess.

Clay Shirky once wrote a piece in which ATT reached out to him for a business discussion about getting into web hosting, and when he told them how little he paid for web hosting, they were absolutely stumped at how anyone could provide reliable webhosting for a profit, and Shirky replied that his webhosting just wasn't very reliable. He tells them there is no staging environment provided, no failure, no offsite backup, no redundant power -- how sometimes he'd just take the main site offline when he wanted to update, and other times it would go down when there was too much traffic. The ATT folks just stared at him in disbelief. And Shirky knew that they weren't going to get into the web hosting business because a company can't both be good at doing one thing and the opposite of that thing at the same time. A company that has reliability in its corporate DNA isn't going to "hire a few guys" to create a cheap, yet unreliable offering - even if it means they are leaving money on the table.

1) They aren’t as fiscally sound as you think.

2) They’ve sub optimized and someone is looking very good for stretching payment terms at the expense of the rest of the company. Once they do this it can be hard to walk back as someone centrally has to justify more working capital.

Option 2 seems plausible, a couple years ago they had a bit of internal politics that we were caught in the middle of, the end result was changing the engineering requirements going forward over purely cosmetic issues, doubling the price of materials. One particular job we did in 2019 for $30k, was $150k in 2022, for the same exact end result for the workers, at the same site, right next to the previous one. The site manager complained, and I said if he got it in writing that they wanted to use the old engineering and disregard the cosmetics, it'd be $30k and take 2 days less, and he said they needed it done ASAP, it'd be faster to convince capex to pay the $150k than it would be to start another round of discussions on the engineering.

They can try to spin it as a free loan from you or the ROI gain of running a leaning team, but they're paying 400% more (150k v. 30k) in a current reporting period.

Nothing clever.

You're also sticking around and not getting burned out of repeat business. I like increasing prices to compensate and being upfront.

ouch. This kind of situation could benefit from a cost savings program at that company.

The problem is empowerment to question the officer who signed the deal and has the vendor relationship.

Fair point, but that's for a different discussion.

The question was how to "root" it out, not business priorities.

If you're unable to flag and audit an easily identifiable 400% cost increase year over year and +$100k in savings, then let's be honest about the value creation of your AP/Procurement teams.

For instance, the contracting officer may have to fill out one form for a $500,000 project that they can approve, but approving any kind of different payment terms requires more levels of approval. Sure, it doesn't make sense in this instance, but maybe the rule makes a lot of sense with a far bigger contractor. As the OP said, they are a blip. Making rules that work well for 95% of the time and end up doubling the cost of the 5% is rational.

More options:

3) There are tax advantages to higher costs of services and lower costs of debt servicing that make it advantageous to pay more for a good with better terms.

4) It's literally not worth the time to optimize. They planned for this cost and it's a blip so who cares if it's double the cost. I mean, someone should care, but who actually gets the benefit. Think about it like not cancelling a subscription or not renegotiating every time a contract is up in personal life.

My default assumption would not be that there's an upside in this for them, but that they're a disfunctional organization. The people procuring your services and authorizing the expense are not in contact with or unable to influence the people planning and authorizing the payment. They might not even share a superior all the way up to the board, with the procurement people reporting to the COO and the payment people to the CFO. If it's easier to spend the company's money than to save it, people will spend it. Corporate seldom rewards saving money anyway.

I had a manager who could buy just about anything he wanted with no checks as to why he needed this stuff or where it went. The only control was the time period between delivery and payment.

There is a massive upside for the person you're talking to in accounts payable.

By making the whole tender process ridiculous, they get to hold onto their bullshit job.

I've found similar things when dealing with corporates. They'll never try to negotiate the price down, but they'll be damned if they don't get to rack up their Amex points. :)

The golden rule I keep in mind is that you're never speaking to a company - instead, you're dealing with a human.

>> Economists such as Lord Adair Turner, the former chair of the British Financial Services Authority, have argued that innovation in the financial industry is often a form of rent-seeking.[24][25]

source: https://en.wikipedia.org/wiki/Rent-seeking

Do they not teach this stuff in an undergraduate business classes any more? "Float" was BIZ101 and in BIZ102 you learn how to read financial statements...

The "genius restaurateur" in the article rediscovered the art of not paying your bills with a credit card, i.e., the "debt trap".

It's similar to a payday loan, except for businesses. Maybe that's why the bad rep comes from. Of course with my personal experience the interest rate is nowhere as high.

Don’t put it on the invoice of payment is close to on time, and waive the first late payment (if the other payments are close to on time). When waiving it, put the late payment fee in the invoice and and another line item waiving it. In whatever communication channel you send the invoice, note that they had a late payment, and that since it’s the first time you’ve waived it.

Why would you give someone a 50% discount for faster payment? Is your cost of capital so high?

Maybe I can pay you advance (with the 50% discount) and then, 100 days later, collect 100% from the customer?

When I started raising prices, taking a medium/large sized job from them was an huge risk. If I hadn't started hiking the prices when I did, We probably would have folded later that year when we did a much larger job for them, if I hadn't been stockpiling the extra cash from their smaller jobs.

It was an enormous existential risk early on when I had less capital to play with, now in a weird way I can look at it how you say: The company is loaning itself 50% to make 100% later.

That said, fair's fair so I'd still honor the offer if they asked: I don't/can't quote other clients that much, so if they wanted to pay on reasonable terms I would charge them reasonable prices.

The only thing that stood out was that the argument the author set out to dispel had a much simpler flaw. In the original argument, point number 3 (having less skin in the game leads to bad decisions) is the weakest one.

That statement isn’t really a first principles fact, but at best a hypothesis. IMO, not even a good one. For all we know, having less extreme exposure may lead to better decisions, as the founder may be open to more calculated risks. And even IF true that statement doesn’t address the tradeoffs: maybe bad decisions are outweighed by the ability to outrun the competitors due to influx of extra cash.

While there is certainly some correlation in such arguments, the bar for proving causation needs to be much higher than a pithy statement.

All that being said, I really enjoyed the rest of the argument.

The argument boils down to "here is a bad thing about raising capital, here is a good thing about not raising capital, therefore not raising capital is better".

But there are other pros and cons that this argument is ignoring, so it is not logically correct.

I also think the version in the article is an unfair representation of the original blog post (https://ensorial.com/2020/dont-raise-money/), which explicitly says

> I’m not suggesting that there are never reasons to take outside investment. Obviously there are. But, we should recognise that doing so comes with significant trade-offs and difficulties that mean it shouldn’t necessarily be the default.

(I see that @ilyt already posted this exact quote.)

>> Raising capital to do a startup reduces skin in the game (you’re spending other people’s money, after all).

The more likely correct take is as follows. Note that I am changing just one word.

The right version:

>> Raising capital to do a startup INCREASES skin in the game (you’re spending other people’s money, after all).

The naïve take seems to place no value on reputation (ability to get more financing in the future).

If you're satisfying, a single logical argument for a decision is enough. If you're answering the question of "How to add 10M of new revenue to this business?" there are many valid answers and you just want to test a few and land on one that's well supported by an argument. Then go execute that and do it all over again later.

If you're maximizing though it's much trickier. If you're answering the question of "What's the ideal way to raise capital for this business?" a single logical argument is not enough because you often misrepresent the search space and end up doing very precise optimization of a tiny subset of options for example.

A good option is to turn optimization problems into satisfying problems by specifying them more. "How can I raise capital at cost below X, amount above Y, in under Z months?" gives you most of the value of the optimization problem. It doesn't give you a general insight but it may even give you more value than that by forcing you to define your constraints properly. It's common to find that once you try to fill in X/Y/Z to even start working on hypothesis you find out not everyone has the same view. Having that discussion is often more valuable than any fancy generic optimization you could do to the problem.

When my natural inclination is to optimize, and the smart decision is to satisfy, having it as explicit words will help me make a decision faster.

Nassim Nicholas Taleb, a grumpy guy who nonetheless makes some good points sometimes, said debt was a way to "fragilize". Like Just-In-Time manufacturing, it can make sense up to a point, but is often taken way further, to the point of being a bet that nothing in your environment will change.

The original argument could be very easily argued - you just might not have enough money to get your foot in target market in the first place and not every business can be stared by single person and some savings anymore.

I don't see why author of article didn't just do that instead of pages of arrogant faffing because he got offended he couldn't invent a counter-argument to a (not only one, just one) way to make sensible business that many people succeeded just fine utilizing

The original argument was just that it shouldn’t be the default position.

It's as if author just doesn't have any sensible reasoning for his gut feeling that "startups should raise money by default" then is annoyed that he can't produce anything sensible on the topic but someone else can produce reasonable argumentation for opposite, then started giving up random examples of how not-startups companies use cash flow, and nothing there was really related to original topic on how to start and grow your startup.

And all of the examples fit nicely into hard to get/expensive to get markets that need a bunch of money upfront

> I’m not suggesting that there are never reasons to take outside investment. Obviously there are. But, we should recognise that doing so comes with significant trade-offs and difficulties that mean it shouldn’t necessarily be the default.

that the original article suggested.

Good description. If you have a point to make, make it!

Once you have less skin in the game, it is easier to make bad decisions

Doesn't quantify how much it's easier, and nothing follows from this. It may be ok that some startups (maybe even 99%) fail because not having skin in the game is not right for them. This may filter out, globally, bad startups.

But let's allow the argument to be true and that the rest follows. Still it's all conditional to a specific startup making those mistakes, being easier to make doesn't mean they are made consistently.

Ye. It is quite ofent I am winning, get nervous, and lose. When playing competitions.

Less skin in the game makes you cooler.

The other interesting example of cash flow games is Warren Buffet's focus on insurance. He really likes picking up people's premium payments and collecting interest on them until the claims hit. My limited understanding is that Buffet looks for those situations specifically.

The way he sees it, the float is an interest free loan that you never have to pay back, as long as your incoming premiums each year are roughly equivalent to your outgoing claims each year. His strategy is to use this interest free loan to generate as high a return as possible, which he can then cream off the top for shareholders.

Maybe for the thing insured, but dependencies can cause ripple effect costs which can be very high, so both sides can have positive EV when considering the whole (not just the insurance). I think you are assuming all transactions are zero-sum? Not something I know much about, so quite probably I just misunderstand your comment.

I don’t see how it follows. People may make worse “penny-wise pound-foolish” decisions when it is their own money. Using done by hand SEO instead of ads to save money for example and it taking longer to get customers, as a made up example.

The devil’s in the details.

That argument has as a premise that taking on investment increases risk. For the most part that’s simply not true, having more money in hand reduces risk for a business.

Also means (generally) finding someone to invest, which (generally) means getting your head around your business what you do, what you are going to do next, and what you are going to do with the money, a plan one might say. This plan is then considered by the investing party and if it is total nonsense, no investment.

As an owner you still want money to spend. How do you get that if not from the profits?

It's a riskier model for non-cash flow based businesses though, in my opinion. If you don't have a stable source of cash flow from something like a subscription model it's harder to count on revenue being consistent (unless you're dominating a particular market).

Also can be risky if you only have one or a few clients providing the cash flow. If they pull out or go belly up, your business can be decimated with whatever overhead you added to provide for them.

In the cable company example, from taxes (not paid) and accelerated depreciation (a big part of the taxes not paid). Money is fungible and cash is the ultimately fungible form of money. Tax money (not paid) is better than money taken as taxed profits.

By running the business at a loss (from a profit/loss point of view), the cable company paid little or no taxes. You can take $100 in profit and pay $30 in taxes (net $70 in your pocket), or you can show $0 profit and roll that $130 into your business expecting $130 + growth in the future. Note that, with the cable company example, the cable company "was unprofitable" every year yet paid a compound return of 30% to its shareholders.

Or you sell some shares, or borrow against your equity. Perhaps you can roll it forward indefinitely and you're in a jurisdiction where your heirs get favorable tax treatment by inheriting the business.

The whole setup probably requires operating at a much larger scale than that of a sole trader or small family business.

I guess this why EBITDA is important: if you have positive EBITDA and stop growing the business, you can pay off your loans, finish depreciating your existing equipment, and with I=D=0 you have real profits.

I understand the rationale behind cash flow management, but I've always been a bit annoyed at the games around payment terms. It just feels like a chain of all companies lagging payment to suppliers while expecting (or hoping) for prompt payment from their customers. I'm curious what the world would look like if everyone was expected/required to pay within 2 weeks of services rendered?

You might have payment terms agreed upon, but a megacorp has no issue delaying payment an extra 60 days and will cut a check for the original amount without agreed upon late fees included. Then a smaller company is left trying to manage the relationship after their margins are arbitrarily slashed.

For me as an engineering manager at the “big customer” it was a constant embarrassment. We worked with small scrappy vendors who I was on a first-name basis with. Megacorp would just never cut the checks. They would negotiate super aggressive terms to start with and then still intentionally not meet the agreed terms. I had close collaborators telling me they really needed the $$ to meet their own bills and all I could say was “I’ll send another email to purchasing and hope for the best!” Hated that so much.

As the scrappy vendor, landing those big accounts is so important that you will take the risk even if it kills your business :(

Generally large customers do actually have the cash, and simply have no incentive to pay on time, so why bother?

Meanwhile, their internal deadlines are very strong incentives, and can get managers in serious trouble if repeatedly missed, especially by a year or more.

You’d need to generate credit through the financial system versus trade at some nodes.

Consider a diner. It orders ingredients. Adds value to them. Serves and collects payment. Let’s enforce instantaneous payment on this system. Now the diner has to borrow to buy ingredients. Or maybe it pre-sells “tickets.” The way some high-end restaurants do. Now the customer is financing them. If they don’t have credit, maybe this encourages their employee to pay them earlier. Et cetera.

So... its pretty clear that time is poorly understood in the axioms presented, and the author comes to that conclusion at the halfway mark. And frankly so is risk. But nobody--myself included-- wants to read an accurate axiomatic representation of probability distributions and discount rates.

But in so doing I expect that the bit about "skin in the game" would be hard to ground. The argument is that if you have 100 percent of your wealth tied up in one enterprise you are going to be very careful. Very risk averse. But what is the optimal level of risk taking? Zero? It's not a hypothetical. Especially in tech startups, projects can have wide error bars on completion time. Short runways mean you can really only pick from among the shortest options in the solution space, and longer implementation plans are discounted.

Maybe thats good. But it seems like a huge shortcut to say "the shortest path is optimal."

At the scale of a one or two person show the up front costs for building and selling your software are pretty reasonable. This setup rearranges how much cash you need up front to 1. be competitive and 2. win over new business. True this has a cap on it of say... ~1-2M ARR but that's a very reasonable game for a lot of smart people to be playing. I didn't read the original article he's arguing against, but if that's the style business they are discussing then the "don't raise" argument holds up. Frankly given the original article's conclusion of "don't raise money" I suspect they weren't focusing a post-IPO cable business...

So in that way at least the original article does have a point, in a better world startups most likely shouldn't take as much funding as they do, but in the current world, the correct answer for any particular startup will always be to do exactly that.

This articles wastes too much time on its appeal to personal incredulity when the answers are so obvious.

Net effect: their net worth showed accumulated fiscal year-end bank balances of twice the "not insignificant amount of funds" (according to cash methods of GAAP).

They went on to hint at the fact there are 24 time zones on this planet (more actually). I asked about the legality of such antics. They said they were not sure other than any obvious fraud on using such financial statements for any fraudulent financial benefit. They explained how the daily batch processing of bank transactions hurt customers real time cash flow, and felt it was one way to rectify things to the customer advantage.

Hmmmm

Some ideas really benefit from investment before a product is marketable (i.e. for research, production). Kickstarter etc. provide a great tool to generate that for consumer oriented products before the product is launched. There are many markets where this is not so simple or not possible.

ohhhhh!!!! Tell me that's not the reason there are so many sub-contractors around.

That seems a complex ut doable tax code fix

There is no real tax shielding coming from depreciation. If you just invest to replace existing depreciated asset, you just reach a steady state where you indefinetly write off real loss of value in infrastructure and pay taxes on real income which is things working as they should.

The real tax shielding actually comes from debts and means you can finance your investment in new infrastructure advantageously by using the tax write off. The interplay of debts and depreciation is not involved: that would remain true without any depreciation.

Anyway, the point of Malone through EBIDTA wasn't about cash flows anyway. It was to show that if you ignored how new investments were financed, the company was actually earning money and was profitable and these profits would materialise as soon as the company would stop expending which is indeed exactly what Amazon did again years later.

To get back to the article, I don't really understand what follows the part about Malone. If the point was that raising money through debts would be preferable to raising through capital, I would obviously have agreed but that's kind of obvious and startups wouldn't use VC money if they had access to debt anyway. Instead, he is somewhat talking about WCR without mentioning WCR which is weird before coming back to his initial argument about VC without having really at any point discussed the subject. What a mess.

So, the new operator gets to start depreciating from their basis (which is fair and right), but the old operator has a gain to have taxed (or delayed by a 1031 exchange). It’s a cash flow difference in taxes as well (making it fair to include in the article), but not a permanent avoidance of taxation.

There is a tax concept using "leased employees" where you pre-pay for a vendor to work on-site, and it counts as an asset on the balance sheet. I don't think that applies to independent contractors.

Sub-contractors are popular because

1. They don't count in key performance metrics like revenues/employee or liabilities (paid vacation)

2. Their costs are buried further down the income statement and appear as non-recurring/variable.

3. They can ramp up/down with less approvals.

Megacorp can get a loan for significantly more favorable terms so the cost of financing is much lower on their end. As such it would be slightly advantageous for them to pay quickly and ask for a discount. Unfortunately the net benefit is small for mega corp and they usually can’t capture the savings

Any specific insights you can share?

Compared to just getting books from libgen?

[1] https://ensorial.com/2020/dont-raise-money/

https://www.youtube.com/watch?v=vbkg1WXf594

At least it's not Holly Jolly Christmas.

Rehashing the example from the article: Why do restaurants pay Net-120? Suppose Restaurant R is buying 30-day dry-aged steak from Supplier S. R needs to buy the steak days in advance of cooking it to serve customer C. R receives money for the steak only after this point, and now R can pay back S.

Why is pre-payment better? S can now be more efficient about the number of cows they have to slaughter. If R pays by Net-120, S ends up with a lot of waste due to unsold dry-aged steak, because S cannot anticipate the true demand but must be prepared to capture it to earn money.

Analysis: In effect, S and R are pushing C to plan better. If C can just confirm that they want dry-aged steak ahead of time, which involves significant preparation, the entire supply chain can be more efficient. Sometimes, planning ahead is a benefit for C, as landing reservations at top restaurants can be difficult. Other times, C does want the ability to make last-minute decisions on where to go for food.

Meanwhile, S can do something better than slaughter the cows that would have gone to waste. In essence, S has more freedom because S has more cash flow. So does more cash flow == more freedom?

Cash is the most liquid asset. Supposedly, it represents the value that you can transfer immediately. I can have all the cash in the world, but if I am bound to pay a ton of debt with that cash, do I really have the ability to use the cash for something I value? That's why cash flow is a separate, and more useful, concept.

One argument against "cash flow == freedom" is that cash flow can be a function of effort. If I spend all of my waking hours working, I will generate cash flow, but I won't get to enjoy anything. What about landlords who don't have to do much to earn cash? Well, cash flow in strict $ terms doesn't capture everything. Businesses don't have this problem because they can simply capture the effort for producing cash flow in terms of wages. A simple trick is to pin a cash value for the amount of time I spend.

Cash flow represents freedom because cash flow = value in - value out at a given point of time. You don't even need to use USD for the "cash" part of cash flow, if that's not what you value. Then, to increase cash flow, you can 1) strictly increase "value in" (e.g. work more), 2) strictly decrease "value out" (e.g. delegate a task to free up your time), or 3) increase "value in" more than "value out" for a single transaction (e.g. take out a loan). Increasing cash flow doesn't need to be immediate: you can work on an asset and incur negative cash flow initially to establish better long-term cash flow. Worse "value in - value out" now for a better "value in - value out" in the future.

It's neat to see how to apply accounting principles to optimize my day-to-day.

1. the other guy made some argument

2. but he was just too ignorant to understand why his argument was wrong

3. I am smart and I do SENSEMAKING

4. therefore other guy's argument is wrong

As far as I can tell, the actual first argument is something along the lines of

1. many founders raise capital and waste it because it's not "their money" so they part ways with it more easily

2. this leads to failed businesses

3. therefore founders should not raise money

and the counter argument is

1. some businesses need upfront capital and the returns only come later

2. some founders can raise capital and use it effectively, instead of wasting it, even though it isn't "their money"

3. therefore founders should raise money

which are both good arguments and in no way contradict each other. I have seen founders do both, and it's true that some money is raised when it was not needed, and some money is raised and then squandered, and some money is raised and used effectively to generate massive returns. That's why it's called "venture" capital.

I feel that the anecdotes about cash flow are somewhat interesting, but the whole 'proving an argument' narrative is unsubstantiable fluff.

The cash flow strategies are things which can be leveraged in specific situations, but are generally not global truths that most early stage startups can action on.

Rhetoric is the classical art of persuasion. Were you trying to say "empty rhetoric" or to describe the argument as being poor? Describing a poor argument as "rhetoric" is like calling an old unreliable car "engineered".

Logos is part of rhetoric, not aside it.

https://pressbooks.ulib.csuohio.edu/csu-fyw-rhetoric/chapter...

Typically when I hear the word rhetoric used in the way you're defending, as a pejorative autoantonym, it's by political talking-heads trying to dismiss an argument of an opponent.

His financial advice is "don't think about the amount or the debt, but think about the cash flow analysis."

He goes on to state that many new companies won't need to go into debt to be successful along the terms the founds define them.

You are presenting a straw-man argument. He even says, it isn't that the argument is wrong, but that there are better (more complete) frames to examine this problem. Your point (4) is literally false.

If such a decision on 1k took a week in a real startup which blocked a whole team at 10k/head… then there wouldn’t be much startup in the future.

Founders waste money because they need to move fast. Sometimes the need for speed also means that they do seemingly foolish things, you can be right or fast - sometimes being slow is wrong.

But I guess it is hard to sound smart this way :)

By definition, one no longer fully owns a company when exchanging ownership for liquid capital (often at ridiculously discounted value), or lose future well-being through debt-financing issues/predatory-scams. Note, the often negligible incremental cost of scaling tech companies often offsets the expected value in investment risk. Every fist-year student learns Bayesian statistics, but Vegas was built on those who still can't assess risk.

In general, a small service site like Craigslist operates just fine with minimal overhead, and has remained functional much longer than most startups.

It was really sad seeing what Silicon Valley Bank did to startup culture, and naive investors that get FOMO.

Happy 2023 =)