Understand Finance

Knowledge Sharing:
1.  The accounting books of a company start with a chart of accounts. There are two kinds of accounts; income/expense accounts and asset/liability accounts.
2.  Advertising revenue that you receive from Google Adsense would be an income account. The salary expense of a developer you hire would be an expense account. Your cash in your bank account would be an asset account. The money you owe on your company credit card would be called "accounts payable" and would be a liability.
3.  The concept of double entry accounting is important to understand. Each financial transaction has two sides to it and you need both of them to record the transaction. Let's go back to that Adsense revenue example. You receive a check in the mail from Google. You deposit the check at the bank. The accounting double entry is you record an increase in the cash asset account on the balance sheet and a corresponding equal increase in the advertising revenue account. When you pay the credit card bill, you would record a decrease in the cash asset account on the balance sheet and a decrease in the "accounts payable" account on the balance sheet.
4.  These accounting entries can get very complicated with many accounts involved in a single recorded transaction, but no matter how complicated the entries get the two sides of the financial transaction always have to add up to the same amount. The entry must balance out. That is the science of accounting
5.  the profit and loss statement which is a report of the changes in the income and expense accounts over a certain period of time (month and year being the most common)
    •    the balance sheet which is a report of the balances all all asset and liability accounts at a certain point in time
    •    the cash flow statement which is report of the changes in all of the accounts (income/expense and asset/liability) in order to determine how much cash the business is producing or consuming over a certain period of time (month and year being the most common)
6.  If you have a company, you must have financial records for it. And they must be accurate and up to date. I do not recommend doing this yourself. I recommend hiring a part-time bookkeeper to maintain your financial records at the start. A good one will save you all sorts of headaches. As your company grows, eventually you will need a full time accounting person, then several, and at some point your finance organization could be quite large.
7.  There is always a temptation to skimp on this part of the business. It's not a core part of most startup businesses and is often not valued by tech entrepreneurs. But please don't skimp on this. Do it right and well. And hire good people to do the accounting work for your company. It will pay huge dividends in the long run.
8.  In the early days the CEO is the jack-of-all-trades, doer-of-all, famously the “chief janitor” or coffee maker. But if you level up, raise capital and grow customers, revenue and staff – life changes. Eventually you need a VP of Product to handle your product roadmap, a CTO for engineering leadership and VPs of sales, marketing & biz dev. Most companies that are scaling have CFOs, heads of HR or talent. The “span of control” for a growing tech startup is probably 6-9 people. The “doers” in your organization.
9.  This is when your job function truly starts to match the definition of “leader” because that’s exactly what your role is. You set direction. You hire great people. You help them prioritize their objectives and review the results. You course correct. You motivate, cajole, reassign tasks, hire, fire and push the organization forward. CEOs who try to do everything themselves rather than lead are usually pretty ineffective – they can’t scale.
10.  Leadership is actually quite difficult. You have this tension between on the one side being a micro-manager (by which great people won’t want to work with you) or being hands off (and having quality lapses or team alignment issues). Neither end of the spectrum is particularly effective. The best leaders are great at hiring in large part because they are inspirational.
11.  If you hire truly talented people you end up definitionally with a lot of competitive peers who will inevitably jockey for resources and control. Extremely talented people are ultra competitive.
12.  I’ve come up with a set of rules that describe our reactions to technologies:
1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
2. Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
3. Anything invented after you’re thirty-five is against the natural order of things.
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References:
http://avc.com/2012/08/mba-mondays-accounting-from-the-archives/
http://www.bothsidesofthetable.com/
http://cdixon.org/