Tailscale has raised $160M

Yes; you will burn through all the capital you raise in ~18 months. It is _extremely_ difficult to efficiently allocate large raises (100M+) in 18 months. In fact, I’m developing a pet thesis that no single human or business can efficiently allocate more than $100M. This would imply that any time a single raise is more than 100M, the investors always would have had a better return by splitting it into chunks of 100M or less. It’s not a _good_ thesis yet, just one I’m performing thought experiments with

Why would you not just have the same amount of income, but spend less money?

Some business can certainly allocate more than $100M, but I could see that thesis for VC-backed tech-style product companies.

A few examples come to mind immediately: trading firms/hedge funds often have more capacity than that in their existing strategies; hardware businesses can have substantial up-front costs; companies with high COGS might need that much to just scale at the rate they're already moving, since each unit locks up a bunch of capital until it's sold.

The benefit for VC of lending you more than you need is (a) getting the owners hooked on spending money, then (b) taking control.

You can’t be serious. Lots of businesses easily have that much just in cost of goods or marketing spend. $100M is not such a crazy amount especially considering the cost of hiring technical people.

Also note that the benchmark of “efficiency” should be a function of growth, not some absolute standard.

Now I'm waiting for all AI billboards in San Francisco to be replaced with Tailscale ads

I think we are saying slightly different things. COGS are composed of many smaller capital allocations. According to this untested, pet thesis, putting on a report that $250M was spent on capex is just fine; but if you go to a single vendor and sign a $250M contract, you have wasted money by not being more careful about how that capital is allocated. $100M is _a lot_ of capital, and I think it’s easy to lose sight of how much stuff you can do with that much money when applied to industries that don’t pay tech salaries for speculative growth. As examples: how many pounds of food could you grow for 100M? How many doctors could we train for 100M?

I think the thesis is thought provoking. Not sure yet if it’s worth anything, but it also doesn’t preclude businesses from having massive cashflow.

Maybe 200 doctors at prevailing medical school rates? That’s not an obscene amount.

I mean, it is obvious that you cannot sustain efficiency as you scale (Amdahl's law) but (1) $100M is not that crazy to be able to keep track of in your head, even for a single individual (I can imagine a successful real estate developer with a handful of ongoing projects and various other personal investments), and (2) in a high growth situation, it makes financial sense to sacrifice some economic gain for scale. In your original example, sure an investor would be better off, if they could actually find 10 good investments with zero cost, to spread their money, but very likely they'd be better off taking the big one and spend their energy raising more money.