Funded or not, ambitious or not, I just don’t see the sense of startups having fancy offices. In the old days, as a consultant to startups and investors both, I hated walking into an interview with a startup when it was a nice office, beautiful windows, carpets, and lots of space. In the middle days, building my own company, I didn’t want to be spending on appearances when there was never enough for product development and marketing for growth. And nowadays, as an angel investor, I don’t want a company that has nice offices.
There are exceptions: some kinds of businesses need fancy offices as part of their strategy; accountant, lawyers, and some high-end consultants. Those are rare special cases. I was a successful and expensive consultant for years, out on my own, without a fancy office. I never met a client who wouldn’t work with me because my office space wasn’t nice enough. I did have at least one who selected me because (among other factors, obviously) he didn’t want to pay high-end-consulting overhead.
Another exception I always make is powerful tools. As consultant, entrepreneur, or investor, I don’t respect a company that has people working on slow computers, outdated software, or slow network bandwidth. That’s a dumb way to save money.
I just read 7 Frugal Startup Tips from Millionaire Entrepreneurs on Entrepreneur.com. It includes some great tips, like avoiding expensive office furniture, reusing supplies, being careful about space, and so forth. That reminded me.
A bootstrapped company doesn’t overspend because it can’t. By definition. It doesn’t have other people’s money. But a funded startup should spent the money on the product and the marketing. Not the offices.
I don’t respect obvious overspending. It doesn’t mean smart founders or smart investors. The best example are those absurdly expensive SuperBowl ads in 1999 and 2000. But a fancy office is right up there.
(image: bigstockphoto.com)
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Tim,
I wholeheartedly agree with you that a start-up’s #1 priority should be the inner workings of their company and not the outer trappings. That said, your offices generally do reflect back on your company whether fairly or not. It would be like someone going to a client meeting with ratty hair and dirty ripped clothes. They may be number one in your field but most people are going to make judgements based on what they see. But that doesn’t mean you have to dump a lot of money into your space. There are a lot of ways to get a nice space without spending a lot of money if you know what you’re doing. In addition, if you have employees your space can have a direct impact on their productivity. So maybe don’t spend a lot – just spend wisely.
Hi Tim,
this is a great article.
I strongly agree with with you.
Here is a brief story about what happened when i planned to start a business (social enterprise) without an office..
I met couple of investors at a meeting in my local chamber of commerce and industry. I presented a detailed portfolio of my services , from how i developed it to how it will contribute to economic and social prosperity. While the person next to me, presented everything on how she managed to find a building, furniture, office rooms etc.. but when she was questioned about how she is going to develop the content of her service , she replied after a long pause- ” i guess i will ask people from London to do it for me”
In the end, there is a huge applause for her while everyone in the room criticized me, particularly the women said i have no confidence in me, pointed out that I should stop or, take more time to plan, and made me feel ashamed of my nationality and literally made fun of my business plan because i did not include cost of office, furniture , office electricity etc.. When their fun making of me was over, I told them ” somebody has already permitted to let me use their office premises, and have started supporting my projects”
However, later i did not take that offer to use someone else’s premises.
fast forward, one year after, the people in that room who had furnished luxury offices did not even enter the market with their product/service! let alone fail or struggle to survive.
I am a living example that the notion of having office premises as you start a business is misleading. I operate from my home. As a small business entrepreneur, honestly I don’t need my staff to work 8hrs 5days a week. And most importantly have them confined in ‘work-space’ when they can work from the comfort of their homes using internet, mobile phone, telephone, and have the freedom of being away from a stressful ‘office’ environment.
Some of the people so far, who worked with me , don’t know that i don’t have an office. Because in my country people will laugh their heads off if you have a business but don’t have an office! they will kick you out of the meeting by shaming you with words. When they ask me where my office is, i have to reply ” on such and such road” just for the sake of getting my work done.
You have written a brilliant piece! Thank you!
Good post and agree 100% – It’s like the conversation going around about ” What should a Founder ( Rockstar) get paid”
Whatever happened to good old common sense?