Fred Wilson: Cash Is Only King If You Use It

It sounds like what Fred is saying is suspiciously close to the maxim "You have a spend money to make money", which is often quoted by people as they spend money on useless things that will in no way help them make money.

As a real estate investor, I can tell you that cash is kingliest when it's sitting in your bank account. It makes expansion much easier, because people are most willing to loan money to people who don't need it. I kind of expect it's the same in the startup world...if you're sitting on a large pile of cash with a low burn rate and high profitability, you can probably raise cash a lot easier than a startup that's down to their last nickel with a huge burn rate and no profitability in sight, yes?

What I found interesting is Tom's argument buried in the bottom of his post:

"Something you may have to spend cash on is making sure your product or service and the pitch for it are relevant to your prospects and customers in these tough times. Obviously, people are looking more for an opportunity to save than to spend. Can you help them do that?"

In my consulting experience in the corporate sector, it seems to me that while executives are interested in hypothetical savings, they are simply less interested in investing in products or services altogether. I'd be interested in how others target client's general risk-aversion mentality in bad economic times with something other than a good argument?

Link to the post he refers to: http://blog.tomevslin.com/2008/10/when-your-compa.html