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Eric Siu explains systems thinking through a water bottle analogy: stocks, inflows, and outflows. He applies the concept to venture-backed companies that spend faster than they earn, showing how they can run out of cash and go bankrupt.
Eric Siu explains systems thinking through a water bottle analogy: stocks, inflows, and outflows. He applies the concept to venture-backed companies that spend faster than they earn, showing how they can run out of cash and go bankrupt.
The book's called Thinking in Systems. Have you heard of it? Uh-uh. Here's a little lesson for everyone here. I got a water bottle I'm holding up over here. Blue Yeti, guys. Great water bottle. So the way it works is this is a stock. What you have in a system is you have inflows and you have outflows. So when I drink it, I take out of the stock, right? So the problem is when a company raises too much money, their stock is filled with so much cash, you actually don't have many inflows at all, to your point. So what happens with a lot of these venture-backed companies? They end up overspending and then they think, oh, they have inflows coming in. They actually don't. They end up becoming really bloated and they end up focusing on the wrong things. And what ends up happening is, oh, guess what? The stock is all gone, company has to go bankrupt.
