Wise Startup Blog

After reading the Calacanis post, I thought it would be interesting to share Grooveshark’s tips for saving money on the cheap… (I hope our investors enjoy this)

1. Not really so much as a way to save money, but it’s a good way to set up a culture: Make everyone accountable for everyone else. At Grooveshark, we all feel the pain when we have a big outlay of money. I swear we have a team of part-time accountants (do we really need an EVDO card? yes. do we really need iMacs for our whole dev team? probably not). It’s refreshing that everyone is so conscious about spending money, it really allows us to make smart decisions about money and make sure we’re spending money in the right places.

2. Allow people to work from home, adjust their schedules. By giving our team control of their schedules, they feel empowered, and this allows them to make the best decision for the company.

3. Encourage peer pressure: the biggest motivator at our office is looking across the room at somebody else and seeing them working hard. I’m constantly trying to “beat” anyone else in the office for putting in the most hours. Constantly trying to overwork each other can be fun and really encourages our startup culture.

4. 0% interest credit cards. When we purchase something, it’s always on a credit card, and at that, it’s always on a low interest card. This allows us to have more freedom in using our capital and allows us to push payments back when we are strapped for cash, and at the very least allows us 30 days to pay for purchases on a regular basis.

5. Shop at Sam’s Club, call up your local bottling distributor, and beg and plead for free goods. We buy in bulk on the food we buy, the drinks, and we’re constantly trying to negotiate a lifetime of free energy drinks from vendors.

6. Pay employees in stock as opposed to cash. At the early stages of our development, we didn’t have much cash, so we paid people in equity. As we’re getting more capital, the equity and our company is becoming more valuable so we’re resorting to cash outlays as opposed to equity as we’re moving on. However, being able to provide equity upfront was paramount in our ability to develop our product

7. Locate your company in the cheapest location you find. We’re in a college town, and you really can’t get much cheaper than that. With the majority of our employees being in college or now dropouts, it’s not hard to get people to sustain themselves on ramen and granola bars. As we’re growing, however, people’s palettes are starting to change so we’re going to be looking for new ways to eat on the cheap, while giving it more of a healthy twist.

8. Stock up on plenty of caffeine. Whether it be in the form of coffee, energy drinks, mountain dew — whatever it is, it helps people stay alert and working all through the night. I’m personally an advocate for no-name energy drinks at $1 each, but apparently our team is a bit picky and likes $2.50 Red Bulls.

9. Allow your employees to live in company housing. 6 of us live in our old office. Instead of leaving the office vacant, we decided to move into the office to save ourselves from losing money. This is two-fold, as it allows us to save the space in the event we need to expand and also allows us to live for dirt cheap, thus saving money on salaries.

10. Have tons of parties. We’re constantly celebrating our achievements at Grooveshark. Now the tip is, do it on the cheap. As I said, we’re in a college town, so the Natty Light is constantly flowing. Also, pizza is a great celebration food — no need to get expensive catering when everyone is just as happy with some premium pizza (we love Satchel’s).

Anyone have some other cost savings tips they care to share?