I have a past associate boasting 40k ARR at his startup with expenses well over 240k a year. There’s no way this is normal in the tech startup world is it?

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You are always going to have to spend some money before generating meaningful revenue, so running a significantly negative cash flow is pretty common at early stages. He’ll either need to grow out of that hole quickly or raise funding to fund more sustained losses

No doubt. From the outside looking in, I feel like they could be a lot more lean.

Seems somewhat normal. I'm not sure when it comes to ARR vs expenses but just look at how common it is for these huge tech companies to sell at absurd PE ratios.

True, but it seems extremely unsustainable with only angel funding. That’s maybe a year until they run out. Idk

That sounds like a huge red flag, and the end of the runway is going to be coming up pretty quickly. The idea of blitzscaling, spending big to grow fast, can only work in very limited circumstances. It's possible your former associate is suffering from founder's delusion and he's somehow rationalizing all this in his mind.

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