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Cash means controlling your own destiny.

This is as important in your personal finances as it is in business. With enough cash, you can decide for yourself what you want to do and when you want to do it.

I call it buying my time, but in reality, you are buying your freedom to choose. For both people and businesses, it is about getting to the point where your income, assets, and liabilities are in line such that you have a safe surplus.

If you look at the most successful companies or people, they tend to have a significant reserve and that allows them to make choices. Without that reserve, many choices go away. With no reserve, choice almost entirely disappears.

If your goal is freedom, you need to buy that freedom.




I'm surprised this post received relatively few votes and discussion vs. the value I see in its message. Anecdotally, in addition to hiring and keeping top people this is the only other thing I've been able to identify that successful founders whom I know, do very well.

This has been my focus for the last two years, both personally and in business. It's paying dividends in both.

This, among others, gives me the impression that among VCs A16Z is the Founder's VC. The drive for profits and ruling by the numbers (favoured by accountants and investors) seems to be tempered by a very real grip and understanding of the reality a founder and their team faces.

You must have the ability to make decisions; cash is king.


"If your goal is freedom, you need to buy that freedom." nailed it!

I couldn't agree more with you. The timing couldn't be better because I just finished a spreadsheet for a new family budget. Once I got past the scary big numbers, I realised that in a couple years we could be completely debt free. The next thing that crossed my mind was what we could then be able to do: save, travel more, be more selective in jobs, etc. When you have cash, you have freedom.


The problem with that approach is that for most people their lifestyle is adjusted upwards as they get closer to being debt free or having some money. In the end this is a discipline problem, if you commit to some budget now and stick to the plan for the next couple of years you'll be fine, beware of the temptation to change your lifestyle when you reach your goal because it will put you back where you started pretty quickly.


While I agree with this statement in general, it is a bit of a tautology - do cash reserves come from success, or cause it?

I agree that cash reserves help, but I think it's hard to ascertain how big a driver of success it is, given that it is also the result of success.


The "trick" is to get generating as soon as possible. Even moderate revenue matters - not only because moderate expenses have to be paid, but because "generating revenue" as a mindset needs to be cultivated and honed. It's an ethic that few have truly mastered, and one that truly defines an entrepreneur. Generate revenue as a habit.

Yes, there's a balance to be had between doing things that generate revenue now and doing things that matter in the longer run ... but guess what ... that is exactly the nature of every business out there. From the biggest multinationals to the smallest corner shop - they're all balancing between generating shorter term revenues with longer term growth.

If you are spending time only doing long run ("strategic") stuff, you are not a business. The funny thing is, the opposite is not true: i.e. if you're only generating revenue but have little to show for long term direction.


Oh yes. We do live in slavery. Money is the only key to our chains.


is money the key, or is money the chain that binds us? The only good that comes out of this is that you get to decide which of these worldviews you want to live in, then make the best of it.


Both. This is not some metaphysical bullshit:

- If you have more money (wealth, the key), you are freer, because you don't have to earn a wage for longer (with enough money, you are retired and don't ever have to earn a wage again.)

- If you have lower costs (lifestyle, the chains), you are freer, because any wage you earn can be lower, and you have more spare money to put towards your wealth.

You don't need to chose between being a wage-slave or a hippy. Investing a good fraction (say 10-80%) of your income is something most middle-class westerners can afford, attacks both ends of the problem, and leads reliably to freedom.


> Investing a good fraction (say 10-80%) of your income is something most middle-class westerners can afford

What in the world? Investing 80% of your income will leave you substantially in arrears with the IRS.


After-tax income then. Or you move to Singapore.




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