Understanding business and investment
The goal is to take capital and labor and convert them to productive output. That's where profit comes from.
Paying people more for their labor than what you earn by selling their product is not business, whether what these people do is punching strategic holes, writing elaborate code, or pumping out semi-literate articles.
Web-based operations that expect to derive their revenue from advertisement are not different -- they are spending money for contents which they hope will attract readers which they hope will attract advertisers; they pay "content producers" to recruit "visitors" or "impressions", the products they are trying to sell; they could waste money in other ways, e.g. pay spammers, or buy advertisement space for their own pages elsewhere in desperate attempts to prolong a pyramid scheme. The method of spending more than earning does not matter, as long as the inescapable fact of a negative financial outcome stares at you month after month.
Putting capital to work in machines or departments that you close down after a few months, without anything left to leverage or re-invest, is malinvestment. Your "business" will be around at most until you've exhausted your sources of capital.
If you understand this, you will be able to make sensible, strategic business decisions. Otherwise, well, you'll make one ridiculous decision after the other, wasting money, wasting time, wasting labor, wasting ideas, even wasting waste.
As Joel Spolsky aptly described: Imagine that the goal of your software company is not to solve some specific problem, but to be able to convert money to code through programmers.
All the above requires are the ability to think in principles, to distinguish between production and consumption, to perform basic accounting computations, to understand and manage risk, and to make decisions based on rational considerations.
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