What is an Asset?

Plus a new course from Napkin Math!

The fundamental bet of a new business is that a founder can use the capital from investors to purchase a variety of assets, combine those assets in a unique way, and then extract more value than those assets could produce on their own. 

Let’s say that I wanted to raise $350M for a crypto real estate company: I don’t really know how it will work, but I think stuff like ownership, community, and maybe even wave pools will be involved. Before any of that happens, I first need capital from investors. My investors hope that I will use this capital for building the business, but I may use it to fund my wife’s acting career. IDK. Regardless, the capital will be used to buy assets of some sort. 

If you were to ask the average startup founder what got them excited about their new venture, not a single one would say “responsible stewardship of assets.” It’s all about building products! Building teams! Very few people get into entrepreneurship (or really anything worthwhile) for the joy of carefully managed spreadsheets. 

However, the lack of interest in asset management never scales. The language of finance eventually comes for us all. Understanding how to communicate in assets allows technical leaders to relate with their leadership team; it means founders no longer glaze over when their accountant speaks; it means understanding investor’s incentives.

Knowing finance is power. 

Perhaps the most fundamental atomic unit of business is the asset. Understanding what an asset is, why it matters, and why investors paradoxically like asset-light businesses is what we’re discussing today. This is the way I wish I was taught finance.

What is An Asset and Why Do They Matter

Asset is the kind of concept where the outline is clear but the details are blurry. Meaning that if you say “asset” in a meeting, everyone will nod their head in vigorous agreement while simultaneously thinking of entirely different definitions. While it would be easier if we could all just agree on something, the only realistic way for a savvy builder to navigate this dilemma is to understand what asset means in context.

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