I've seen a couple of comments where expensive office space or other somewhat optional expenses are cited as reasons for going bust.
I'm curious, as I have no experience in this area, if that's really likely.
As an outsider, it feels like salaries would be the overwhelmingly largest monthly expenditure for most tech startups. Such that things like office space, even a lavish choice, wouldn't really be relevant.
If you were to break it down by "cost per employee" is there really a case where office space, perks, etc, really becomes the driver for failure? Where it is statistically meaningful versus the base salary cost?
If you're in SF paying market rate, with say a dozen employees, presumably your expenses BEFORE office space are in the range of 200K/mo+.
Unless they're gold plated, your "lavish" offices would represent <~10% of expenses.
Space and perks itself doesn't drive failure I don't think, but they can point to aspects that do.
There are plenty of disciplined companies that appear to be "lavish" with space and perks. There are plenty of highly profitable tech startups that really scrimp on space and perks. It's tough to generalize.
I think this depends on the size of the startup. If you've only got ~10 employees, decent office space, furtniture, catering, etc. in SF or SV could be a meaningful fraction of your overall expenditure. The more employees you have, though, the smaller that fraction is likely to be. Even so, I think you're right - downgrading your office space would get you maybe a couple months of extra runway, vs. reducing salaries or staff, which would get you a lot more.
I'm curious, as I have no experience in this area, if that's really likely.
As an outsider, it feels like salaries would be the overwhelmingly largest monthly expenditure for most tech startups. Such that things like office space, even a lavish choice, wouldn't really be relevant.
If you were to break it down by "cost per employee" is there really a case where office space, perks, etc, really becomes the driver for failure? Where it is statistically meaningful versus the base salary cost?