Beware of Ballers on a Budget

We re-post content about as often as a celestial object flies between the Earth and the Moon. However, sometimes, we just gotta’ share.

As many of you know, I’m an avid reader, and my RSS feed is constantly full of juicy nuggets of advice. It was during NADA 2013 that I read this post by Mark Suster of Both Sides of the Table, and it generated an extreme moment of clarity (something akin to the end of the Matrix). You can form your own opinion about what Mark says. It hit me like an asteroid.

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The other day I was at a Mercedes dealership. Unfortunately my wife was hit head on in December by a woman who lost control of her car. It was time to get a new car and my wife’s requirements were:

The safest thing on the road
As many air bags as possible

I researched the pricing of the car at TrueCar – not because we’re an investor – but because it gives you complete price transparency over what other people in your area paid for a car. It surprises me that anybody would buy a car without this data because as most people know MSRP on cars is mostly an irrelevant data point used for marketing purposes. “Invoice price” is an equally meaningless marketing tool.

But I digress.

I was sitting with the financing guy who was trying to upsell me everything from pre-paying service to prepaying dent repair coverage, etc. My partner Steven Dietz is an expert on cars (and auto startups having funded DealerTrack, TrueCar, Digital Airstrike, Uparts and others) and I called him and he said, “Decline everything. That’s where the dealer makes all their margin – upselling you at close.”

Anyway.

I was chatting with the finance guy and he was cycling through all the things he wanted to bait-and-switch me to and he asked if I wanted a lease in stead of a purchase. I told him I didn’t because we planned to keep the car for more than 3 years so it was more advantageous to buy. I still drive the same car I bought for cash in 2005.

I asked him what percentage of cars on his lot were done as leases. He told me that more than 50% of the cars that moved off his lot were leases.

Whoa. Why so many on leases?

“This is LA. Many people who buy here can’t afford the cars they want but with a lease they can have a nicer car. They want to be ballers. But they’re ballers on a budget.”

We laughed.

Ballers on a budget!

It got me thinking about the tech industry. I think the last few years have produced a few too many with “ballers on a budget” and I think some “aspiring ballers” draw the wrong conclusion.

I have written about this before in my post on Conference Hos. These are people at every conference. Always on stage. Back stage. At the parties. Instagramming their pictures from London. Dublin. Korea. Mexico. Panels. Talking about changing the world. But they haven’t actually done it.

The problem I have always had with this is that it is very ego centric. It’s taking company resources – usually funded by angels or VCs – for personal gain. While back at the office the other 98% of the staff actually have to build stuff. Sell stuff. Work on budgets, submit RFPs, answer customers support calls, work the bug-tracking software, and trying to meet the next sprint release schedule.

The feeling it engenders back at the office can be corrosive. Because often these Conference Hos bring back their latest idea from the hot tub cocktail session with their favorite tech superstar. And the stay-at-home staff is left trying to implement the idea while the CEO is off at the next big conference.

But they haven’t made it yet. Their businesses may be bleeding cash. Struggling to be relevant. They’re not ballers. They are posers. Pretending they have had a big breakthrough but their actions and statements belie the truth.

Not ballers. Ballers on a budget. The ones who lease expensive cars to look like they have made it while they rack up credit card bills.

I never lived beyond my means and it’s always a warning sign for me when evaluating companies and entrepreneurs. I like more understated types. Who are out to prove things rather than be showy.

And beneath it all I worry more about the perception that ballers on a budget set for others. The people who really are working hard at their startups with no money to pay real salaries and sharing a cramped office. And as they look at their Twitter or Instagram feed imagining that they should have “made it” like the people they see popping champagne at the parties.

Note to said entrepreneurs – you’re not missing anything. Your 8-year-old Toyota is just fine. Your 2am coding session is more important than their 2am cocktails on the redeye back from Japan where they have no customers.

In LA we have a culture where people drive fancy cars but live in small apartments and where credit card balances are larger than bank balances. That makes no sense. In the tech world we are breeding a bit of a culture where we have entrepreneurs who are “conference famous” but have small revenues and red ink.

And neither of these cultures is a good thing.

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Back story on photo. A few years ago I headed out to China for a few weeks on a tech tour. I timed it to be there with my pals Dave McClure and Christine Lu. I came across this kick-starter page from baller-in-training Trevor Owens. It really made me laugh and I loved his hustle.

For me this is the antithesis of baller on a budget. He was being open and saying, “I really want to go on this trip but due to my age and lack of resources I could use some help. I don’t want to run up a big credit card bill I can’t afford.”

Trevor made it on the trip as you can see from this KickStarter page where he raised his money.

We spent a lot of time together on the trip. In conferences, in bars, at late-night food, touring the sites in China. We had lots of debates about the tech world and about career development. Trevor for those who know his is an intense and focused dude. And he has an edge. And I like it.

I’ll bet that Trevor is on the right track in life. No glam. Hard work. Cost focused. Kind of like Dave McClure.

Ballers. Both.

p.s. next time you see Dave McClure make sure to ask him about his male foot massage in China. I can’t remember laughing that hard in a long, long time. Thanks, Mike Su, for reminding me!

About the Author:

Mark Suster is a 2x entrepreneur who has gone to the Dark Side of VC. He joined GRP Partners in 2007 as a General Partner after selling his company to Salesforce.com. He focuses on early-stage technology companies. Read more about Mark.