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What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. Danielle goes through some commentary from Bill Gurley, Fred Wilson and Marc Andreessen about burn rate and then goes on to discuss her own burn rate and others publicly weigh in.

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Startups: Avoid These Inner-Series Mistakes When Scaling Your Business

YoungUpstarts

For example, we worked with a company and observed that each release required eleven engineers. While additional personnel is crucial to scale the product, misaligned hires will increase burn rate without a concurrent jump in productivity and meaningful growth. The newly-promoted engineer often has no managerial experience.

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Are Business Plans Still Necessary?

Both Sides of the Table

and the subsequent acquisition sprees of companies like Google, Yahoo!, The COGS (costs of goods sold) tells me about how big your customer acquisition costs will be. Don’t know the running rate for engineers? I won’t need to hire many engineers or customer support staff. portfolios.

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Why More Funding Won’t Magically Fix Your Startup

Mucker Lab

These lost startups land higher valuations, have larger teams, outsource more product development and spend more money on customer acquisition than their peers. Until you have product-market fit, hire builders: engineers, designers, and growth and product people. More and more investors have begun to shun high burn rates.

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Strategy Roundtable For Entrepreneurs: Non-dilutive Financing Through Revenue Sharing

ReadWriteStart

Jeff also described a compelling in-game offer-based customer acquisition model that is proving quite effective for him. Jeff has managed to keep his burn rate very low thus far, and a slow and steady crafting of the business is working nicely. Brainscape. The answer to the question is neither. Note, I said, validated.

Dilution 114
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Dragons, Bootstrapping and Women in Tech

Up and Running

Nelson has some tips: Know your burn rate. She notes that if you’re considering acquisition as an exit strategy, creating and maintaining relationships is going to be key. When you’re starting a business to build your own luck, you don’t often have a lot of start up capital. How do you balance it all?

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Lean Startups aren't Cheap Startups

Steve Blank

The key contributors to an out-of-control burn rate is 1) hiring a sales force too early, 2) turning on the demand creation activities too early, 3) developing something other than the minimum feature set for first customer ship. What’s the customer acquisition cost? Who influences a sale? Who recommends a sale?

Lean 244