When a company burns cash it helps all the recipients of that cash, but what happens when the cash runs out? From Wolf Richter at wolfstreet.com:
How cash-burn machines power the real economy, and what happens to the economy when investors refuse to have more of their cash burned.
This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
I’m not going to call it “tech,” because most of the startups in that so-called tech space aren’t tech companies. They’re companies in mundane businesses. And many of these companies aren’t startups anymore but mature companies that have been in business for over a decade and now have tens of thousands of employees. And then there is the entire shale-oil and gas space that has turned the US into the largest oil and gas producer in the world.
They all share two things in common:
- One, they’re fabulously efficient, finely tuned, and endlessly perfected cash-burn machines.
- And two, investors in these companies count on new cash from new investors to bail out and remunerate the existing investors.