A short business-advice monologue arguing founders should monitor 'distributable cash' monthly and ensure their businesses generate cash available for stakeholder distributions. The speaker warns against continually reinvesting all profits with the promise of a future exit, advocating a balance between reinvestment and returning excess profits.
This is one of the metrics that I look at every single month. How much distributable cash have we produced at this company in this month? I look at it because it's the ultimate sign of a healthy business. If a business, every single month, doesn't have any money available for distributions, if everything's going right back into the business, then I got to ask, why are we doing this thing now? There's obviously going to be times when you're going to double down. You're going to want to say, no, no, for right now, we're going to be doubling down on growth. But if that's the only thing that you ever do, if the money never comes out, then I submit to you're not running a fully efficient and effective business. Because the goal of every business is to distribute excess profits to the stakeholders. Do not believe the hype that your job as an entrepreneur is to freaking starve to death. Invest everything back in the business, because maybe one day at the end, if you sell, there's going to be a giant pot of gold waiting at the end of the rainbow. You can have both.
