Business Spending in Silicon Valley
The stereotypes about Silicon Valley startup culture are true. Well, many of them. Though few companies begin with the plush offices, stocked refrigerators, or opulent company outings and parties, a lot of attention is paid to these rites of passage for tech companies that have reached a certain level of funding. Therein lies the problem. It isn’t so much that office perks that at first blush may seem over-the-top are necessarily a bad thing, in fact studies that link improved employee engagement with increased productivity suggest quite the contrary. The problem is in the type of irresponsible spending behavior that often follows an influx of outside investment.
Buying the Business
It’s a known fact that sometimes business comes at a higher cost than at others. Sales, discounts, promotions, and other traditionally margin-eating practices are often the focus of the term, “buying the sale.” There is a new variation of this tactic being practiced today by many young tech companies. Companies in their infancy that operate with revenue insufficient to offset expenses until they reach a certain capacity tend to look for outside investment to bridge the gap. This makes perfectly good sense for a variety of businesses. Some companies, however, use these bridges to buy more growth before their operating income can actually afford to pay for the business they currently run. It is at this point that things begin to get a bit messy.
A Good Bad Example
We’ve discussed in the past the glowing exception to the practice of many young startups to spend first and ask questions later, Slack, and how they are breaking the mold of the cash-crazy unicorn frat party. Where Slack is renowned in the burgeoning tech community for building, nay rocketing, their growth with the same financial prudence that you may expect from a bygone era or industry, there are similarly exemplary cases of the opposite behavior. As opposed to casting spotlights, and subsequently aspersions, on to the darkest recesses of mismanagement of young companies that still have a chance to right the ship, I’m going to poke some holes into Yahoo’s current state of affairs, instead.
Yahoo’s numerous layoffs, highly publicized executive turnover, and most recently its public courting of suitors to buy-off various parts of the internet company are not an exact corollary to the trials and tribulations of a 16-month-old startup. Imagine if you will, though, that if Yahoo was the embalmed lung of a smoker on display during health class and the tech startup was the teenager who smoked his first cigarette during lunch. The point is that even for the most fortunate companies, long-term operating failures can result in only poor outcomes, especially when the results include being a nasty floating lung or the Pets.com sock puppet. Not good options.
There is Hope
While reports of funding drying-up in Silicon Valley and volatile stock prices of recent tech IPO’s can collude to create a sense of fear, these market conditions won’t dictate the outcome of all companies. Particularly, companies that save on daily expenses are the ones that are positioning themselves to withstand more challenges beyond their control than others. Furthermore, by adopting a cost-saving hosted telephone system most companies will multiply the impact of their efforts. Hosted services save upwards of 60%-70% over an on-site PBX, but the added flexibility that comes from a mobile-ready phone system allows for even more savings. The Harvard Business Review noted how employers saved $1,900 per employee over a 9-month period simply by letting them work from home. What’s more, these same employees returned higher productivity, saw higher retention rates, and reported greater engagement than their in-office counterparts. Truly, the advantages of changing some utilities extend well beyond a monthly invoice.
Get Started Today
Switching to VoIP used to be a painful, protracted, and laborious process, but with the development of user-friendly platforms like Dash from VirtualPBX, it has never been easier. In five minutes, Dash users can be up and running with all of the communications powers of a multinational corporation but with the flexibility and speed of the cloud. Additionally, Dash users don’t need to be IT pros to get it to work. Entrepreneurs tend to be generalists and proficient in many different areas, but VirtualPBX believes that nobody needs to be an engineer to operate their business phone. Dash exemplifies that belief. Take a look at the features and benefits of a Dash plan or schedule your free demo of the entire suite of VirtualPBX VoIP products to learn more.