What do startups spend their money on?

What I meant to ask is, what do they HONESTLY spend their money on?

Majority of it is salaries. This is especially true if you have a tech heavy product. But I'm sure there is a lot of wasteful spending in many companies, like this one http://techcrunch.com/2013/12/30/motionloft-jon-mills/.

There is a lot of money spent on "culture", which another term for adult playground. I get why it's done, just seems frivolous to me.

We spent almost $90,000 in legal expenses over the course of one year. Knowing what I know now, we would have only spent a third of that. It got so bad that I was almost afraid to answer the phone for fear the it was our attorney and I'd be charged for answering it.

Lesson here — Find an attorney that has experience in startups and can tell you how much you'll be charged up front, period.

i've been bootstrapping my company for about 10 months now. we are building a wearable device in the pet market. this means that we have not only to create an amazing app experience, with all the subtlety and nuance of the most sophisticated apps out there, but to also design, develop and deliver and beautiful piece of hardware that connects consistently and easily to said software.

i've built the entire foundation of the business, developed two working prototypes, a working app, website, business plans, early legal stuff, etc... all for around $30k.

most money was spent on the team we contracted for the app dev and the money i was paying the hardware dev before convincing him to work for just equity. other than that was the raw materials for the prototypes, shipping (pain in the ass), some design work, some light travel expenses and the little monthly subscriptions that are needed to run a website, etc...

short story - its typically mostly for hardware or software development (paying either internal employees or a contracted firm) hope that helps.