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Value of Time

July 18, 2012 — Leave a comment

Jack Groetzinger, the founder of SeatGeek wrote an article today that puts a unique spin on the cost-cutting focus of many startups.  Many founders focused on running a lean startup are focused on minimizing what they view as excess expenditures and, as a result, effectively value their time at $0 / per hour.

For example, if it takes me an hour to get somewhere by bus for $5 and 30 minutes to get somewhere by train for $10, I only save $5 in that half hour by choosing the bus.  If my time is worth more than $10 / hour to me (which it is), I maximize my value to my startup by taking the train.

However, it is tough to put a dollar amount on intangibles associated with this decision.  For instance, I may choose the bus if the bus better exposes me to other entrepreneurs  traveling from Palo Alto to San Francisco that might help my business.

A smart entrepreneur will estimate what their time is worth and the non-dollar impact of their choices and make decisions that maximize their value.

Jack’s full article can be found here.