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2296 : STEP FOUR – PLANNING FOR IMPLEMENTATION

‘expensive solutions are often signs of
mediocrity’

focus resources where they matter The frugality of Amazon.com
offers a stark contrast to the apparently more indulgent strategy of
Boo.com, which was intended by its founders to be technically
awesome and ultra hip in all its operations in order to appeal to the
affluent young.

Amazon.com concentrated all available funds on development of its
website and business model and allowed little or nothing for the
niceties of office life, such as desks. It tended to be the Amazon.com
staff themselves who made the desks from doors. Jeff Bezos tells the
self-deprecating story of how he almost blew the appointment of a
senior financial director whom he had been trying to recruit for months
by ringing him to check how high the ‘desk’ should be made.172

In contrast, the founders of Boo.com were highly image-conscious,
regarding themselves as the vanguard of the second-generation internet
entrepreneurs. They invested heavily in luxurious offices in major cities
such as London, New York, Stockholm, Paris, Amsterdam and Munich.
They were reported to have spent $250,000 on flat-screen monitors for
the staff. When added to the investment in purchasing and integrating
‘best-of-breed’ electronic transaction software, the infrastructure costs
significantly outweighed sales revenue, burning cash in early 2000 at a
rate of over $1 million per week.

five golden rules It is worth bearing in mind the five golden rules for
asset parsimony attributed to Ian MacMillan, director of Wharton’s
Snider Entrepreneurial Center:173

G Do not buy new what you can buy second-hand
G Do not buy second-hand what you can rent
G Do not rent what you can borrow
G Do not borrow what can be begged
G Do not beg what can be salvaged.

generate early cash-flow Lack of funds will also force you to
concentrate on bringing sales revenue as early as possible into the
business. Gary Mueller, for example, introduced an up-front monthly