Why Cash Flow is Destiny and Amazon's Secret Leadership Principle Which Can Help You Control It...

When I left my first high-paying job at Trilogy, for the adventures of Startup-land, my manager bid me with the golden words from the Geeta:

You are what your deepest desire is. As is your desire, so is your intention. As is your intention, so is your will. As is your will, so is your deed. As is your deed, so is your destiny.

No truer words have ever been spoken.

But he also said something else: Save for a rainy day. Always.

I quickly forgot that part.

And very soon I went bankrupt. And then again. And then once more.

I learned it was possible for your bank balance to be a negative number. I maxed out every credit card I had, and no one would give me more. It was terrible.

But not having food on the table wasn't the hard part. The harder part was to sabotage strategy for short-term tactical. It destroyed all my plans - which was everything I had.

Cash is king, you would have heard it before. But Cash Flow is destiny when you're a founder. It must be maintained at all costs - I learned it the hard way. Cash Flow allows your plans to exist which gives them a fighting chance to succeed. It is air for strategy. Without it, everything collapses.

But what's the best way to maintain it? The answer is the secret Amazon leadership principle.

You would have heard about the 14 Amazon leadership principles. You're better off forgetting them. No one knows what to do with them - not even people at Amazon.

But there is a secret Amazon leadership principle - that isn't widely talked about.

It is about creating Mechanisms. If you intend to do something long term, the best way to do it is to create a Mechanism.

Mechanism creates a habit. Habits compound. Compounding bends the world we inhabit.

If you want to improve a business metric, you don't need to do a lot of work. Just set up a Mechanism to focus on it. Maybe a recurring meeting every week to track it. That's pretty much it.

As long as you show up to the meeting, the metric will improve over time. You will absolutely need to do the work. But for now, setting up the Mechanism is all you need to do. But more importantly, without a Mechanism to back, it might just be wishful thinking.

Coming back to Cash Flow. I have a simple Mechanism to track it.

Every month end I fill up a spreadsheet. It has all expenses and earnings. I track a singular metric - Time to Bankruptcy. How much time do I have given the current expenses and ZERO future earnings that I will go bankrupt. This number should always be more than 10 years. If it goes lesser, then I risk the wrong side of Cash Flow. And plans will have to be put to rest.

But with this Mechanism in place, I don't think about Cash Flow for the rest of the month. I am free to plan bigger, knowing it will all be taken care by month end.

If you're a founder, be on the right side of Cash Flow. And set up a simple mechanism to enforce it. Everything else can come later.