A useful shortcut in build-stage companies is the project manager’s mantra: Good, Fast, Cheap – pick 2.
Here’s a real-life example from the world of fast-food burgers, which because of my Five Guys franchising experience, I know something about. People sometimes complain to me that Five Guys is expensive compared to other “similar” options. True. Good and fast, yes. We strive for 8 minute ticket times and perfectly cooked food. But it’s not cheap. In ’N Out, which I’m a huge fan of, is good and is cheap, and I’ve waited there for 20 minutes when it gets busy. Burger King is cheap and fast.
Part-time CFOs are similar. This is my business right now and I had to decide which 2 I would be. I picked good and fast. Some prospects don’t want this, and that’s OK. It means that I (and all of TechCXO, really) am not a good fit for them.
I think in what I do that this is the best way to provide a lot of value. If things get to a point where being cheap is more important, then I will bow out.
I’ll say that on average, it is simply not possible to be good, fast and cheap at the same time. It is also not optimal to be kind of good, kind of fast, and kind of cheap. It’s hard to get initial traction this way and even if you can, it eventually gets companies killed.
In the world of being a CFO, where this shows up in product companies is in the combination of pricing, margins and lead times. I have one client right now that is good and fast, but not cheap. High margins. I had one in the past that was good and cheap, but not fast. When they tried to be fast, they had to do it at low margin because they had staked out a position on being cheap. This had huge impact on how much cash they would need in the next 2 years, and therefore how much they had to raise, and therefore on how much dilution they had to take.
All things being equal, startups with big ambitions that don’t have access to limitless VC financing often optimize first around “good” as “fast and cheap” is otherwise limited to companies with either scale or very skinny cost structures. If you’re a startup going for fast and cheap, that’s great – then you need to limit your expenses anywhere you can. If you’re going for “good”, also great. Then the question is: do you want to be good and fast, or good and cheap. Either one works.
But all 3 together – that can’t last long.