
How do tech companies spend 100's of millions? - Apane
I just read about instacart raising $400 million, I&#x27;ve read that AirBNB has raised over $1B, I&#x27;m curious as to how these companies spend that much money.<p>From my understanding, these companies have identified sales tactics that work, and marketing tactics that work, so I&#x27;d imagine some of the money would go towards supercharging their sales team&#x27;s and marketing teams etc... but still, 400 million? Why so much? How do they spend it?
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WalterSear
Much of customer service and sales can't be scaled via technology,
particularly in the B2smallB markets (ie - AirBnb), where there is a
requirement for business level support.

I've seen huge 'boiler room' setups at companies of this nature, with rows
upon rows of support representatives in one big room.

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miguelrochefort
> Much of customer service and sales can't be scaled via technology

I don't see why not. This looks like an important business opportunity.

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idoh
On a more serious note, once a company has developed a business model where
the cost of acquiring users is less than the lifetime value of those users,
then it can make sense to pour in massive amounts of money into getting those
users. So I'd venture to say that those companies are in such a position and
are scaling UA with the hope to recoup the $$ down the road.

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malux85
Starting out early in the startup journey it is likely that money is more
scarce than time. So you develop a strategy to optimize the scarce resource -
frugality, resourcefulness, creativity

After a company gets a large amount of funding, suddenly time is more scarce
than money.

You need project X to succeed in the next month, and that might mean putting 2
to 3 vendors on the problem and picking the best result. Yes this is more
expensive, but we're now optimising for time

Another strategy is acquisition of technology and talent, if you have 400
million in funding, then it makes sense economically to purchase a
infrastructure team of tech company at 10 million, when you know it's going to
generate 100M in value for you.

The best companies are ones where strategy is fluid and willing to adopt to
the reality of dynamic resource scarcity.

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akulbe
Labor. The most expensive part of any business is still the labor.

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CyberFonic
The top executives are buying luxury cars, yachts, homes. Paying for
"entertainment", etc. Not to mention their advisors, etc. Have you looked at
what the bankers take from a successful IPO? It would make your eyes water.

When companies raise a pile of money, they hire a bunch of managers,
consultants, etc. Then they need executive offices, expense accounts, etc.

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integral_indigo
This isn't helpful.

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miguelrochefort
These companies are managed by people who lack focus and a sense of frugality.

\- The kind of people that expand their product line instead of focusing of
the 20% that generates 80% of profits

\- The kind of people that would buy Starbucks daily even if they lived
paycheck to paycheck.

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pinewurst
Massive infrastructure expenditures (prepaid cloud or custom datacenter
construction), high salaries, paying Beyonce to perform at company parties,
deciding to invest in robot cars, drones and space travel, etc. The usual...

