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This article by Danielle Morrill, CEO of Mattermark, is "A self-examination guide for Seed and Series A startups" that goes deep into what "burn" means and how to be intellectually honest with yourself (and investors/stakeholders) about your real, current burn. This also spurred other founders and startup execs to weigh in with their (self-disclosed/calculated/guessed) burn rates. Those startups include:
  • Mattermark
  • Dunwello
  • Buffer
  • Eligible
  • Happy Inspector
  • Blended Labs
  • Sourceeasy
  • AdEspresso
Good stuff for sure..
  • SE

    Sean Ellis

    almost 5 years ago #

    This is a great post by Danielle Morrill. The whole discussion about burn rates is a really interesting one with lots of tie ins to growth hacking.

    Personally I don't think it's necessary to have a high burn rate to build a successful company. While you are seeking product market fit, you should keep your costs relatively low. When you start to scale, you should do so in a way that your sales and expenses scale in tandem. I've been a part of growing a company that is worth over a billion dollars today, and we were cash flow positive the entire time we scaled the business.

    At Qualaroo/GrowthHackers, we've been cashflow positive and when we've had burn, it's generally well below $100K per month. I often speak to founders of successful companies who are surprised that I'm so focused on keeping our burn rate down, but I'm pretty obsessed with controlling our own destiny. I'm still haunted by my first startup experience where I had to layoff 40 people in a single day to get control of our costs. We ultimately sold that business for a couple hundred million dollars, but I hope to never have to lay off good people again.

    The goal is not just self determination. To me the goal is to stay in the game long enough to build something truly world changing. A high burn rate can really risk your ability to do that.

    • SH

      Skyler Hair

      almost 5 years ago #

      Thanks for that comment Sean. Good to hear it from someone who's been there and done that. I sometimes wonder if I'm being naive for believing in doing business this way.

    • AC

      Adam Ceresko

      almost 5 years ago #

      Amen @sean well said.

    • JS

      Jimi Smoot

      almost 5 years ago #

      I'm reminded of a saying my dad always told me "just because you have money doesn't mean you need to spend it"

      I think a lot of people have a tendency to burn cash when they have it because the assumption is that there will always be more. This is a fallacy.

      What I learned while bootstrapping and exiting my first business is that cash as ammo and a startup is a journey into enemy territory. I only take shots that I think I can hit and I am always in conservation mode because I don't know when I will get more.

  • AR

    Adam Rabb

    almost 5 years ago #

    Great article. I'm sharing it with a few people. Startup burn rates are natural, but I like to bootstrap it.

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