Businesses will spend money to make money

Dear new developer,

Businesses will spend money to make money (or save money, which is essentially the same thing). This is what they are doing when they are hiring you, when they buy that shiny new office building, when they spend money on computers and other tools to help you do your job, and even when they pay severance. While you may not be in the position to spend money yourself, understanding that businesses will do so can clarify your understanding of what you are working on.

Making money is not the only reason businesses spend money. Sometimes they spend just because the CEO or other leadership want to, or for image reasons, or because of inertia. But in the long run, spending money for other reasons is bad for business.

Spending money to make money is rarely a sure thing. If the return was certain, then other businesses would notice and step in and spend money down (this is assuming a relatively free market–regulations are a whole different ball of wax). So taking bets with money is a key part of running a business.

What does this mean to you, new developer?

When you evaluate a project, think about the economics of it. How is it going to make money? What assumptions are there? Don’t assume you know all the answers to these questions.

Asking the people behind the project why they think this project is going to make the company money will help you understand why the project exists (it’s no fun to work on a pointless project), help you improve the project (perhaps there is a more economical way to achieve the goal) and increase your value to the company (someone who can execute the details while understanding the big picture is more valuable than someone who can only do one of those).

Sincerely,

Dan

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