Steve Blank

FEBRUARY 11, 2010

CEO – “Well, we’ve missed our sales numbers for the last six months.” What does this have to do with missing your sales plan? CEO – “Well our VP of Sales isn’t making the sales plan and he says it’s a marketing problem, and he’s a really senior guy.”. The CEO asks the VP of Sales to join us in the conference room.

Burn Rate 248

Burn Rate Silicon Valley Marketing Boston 248

Steve Blank

MARCH 17, 2020

The questions every startup or small business CEO needs to ask now are: What’s my Burn Rate and Runway? Burn Rate and Runway. To answer the first question, take stock of your current gross burn rate i.e. how much cash are you spending each month. What does your new business model look like? How do you know?

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

Mucker Lab

MAY 28, 2020

Before you indulge in marketing, sales and blinged-out offices, find product-market fit. Test your sales and marketing a few feet from the ground, first – not from an airplane. Hire the wrong people. Bad hiring decisions are often a symptom of premature scaling. Why hire a sales team when you have nothing to sell yet?

Startup 78

Startup Cofounder Burn Rate Technical Review 78

YoungUpstarts

MAY 19, 2016

Use burn rate as an example. If you don’t understand how much money your company is burning through each month, how can you expect to intelligently talk about your fiscal health? To become part of the surviving half, use these methods to ensure your startup’s structure stands strong. Read your books from cover to cover.

Technical Review 124

Technical Review Burn Rate IP Intellectual Property 124

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. We hired everyone according to our plan. This can’t be happening to me. Stage 2: Deny any of it was your fault.

Redemption 330

Redemption Cofounder Silicon Valley Burn Rate 330

Startup Professionals Musings

JUNE 27, 2022

Too often they are also hesitant, inexperienced, and fearful of hiring people or finding a mentor to be the partner they need. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

Burn Rate 329

Burn Rate Differentiation Salary Entrepreneur 329

Steve Blank

FEBRUARY 26, 2013

90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. We hired everyone according to our plan. This can’t be happening to me. Stage 2: Deny any of it was your fault.

Redemption 222

Redemption Cofounder Silicon Valley Burn Rate 222

Up and Running

JULY 27, 2020

Cash doesn’t always show up in your bank account the moment you make a sale and, for most businesses, you need to spend money on your product or preparing your services before you actually make that sale. These are the financial facts of your business, based on your actual sales, expenses, loans, purchases, etc.

Forecast 83

Forecast Management Cash Position Software Review 83

Feld Thoughts

NOVEMBER 18, 2013

They close on the $750k, hire a buddy or two, buy some Macs, and get to work. Things start to get a little fuzzy in terms of priorities, but not to fret, the new office is coming along really well with all of the hiring! At month six, one of the early hires leaves, a developer who turns out wasn’t a good fit.

Burn Rate 152

Burn Rate Equity Software Review Early Stage 152

Both Sides of the Table

NOVEMBER 3, 2009

Let’s start with how much value you think you’ll create for your customer if they use your product in terms of hours saved, costs avoided, extra sales, better conversion rates or whatever. How many people will you hire in the first 24 months and in which sequence. Don’t know the running rate for engineers?

Business Plan 334

Business Plan AJAX Venture Capital Technical Review 334

Both Sides of the Table

MAY 2, 2015

For a well-funded seed company I have controversially recommended hiring a great office manager that doubles as an administrative assistant. It freed up Ophir to grow out our sales organization, to work more closely with agencies, to innovate on product and to raise capital. They can show the projections on what this does to burn rate.

Operations 150

Operations Metrics Early Stage Non-Compete 150

Startup Professionals Musings

SEPTEMBER 21, 2019

Too often they are also hesitant, inexperienced, and fearful of hiring people or finding a mentor to be the partner they need. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

Burn Rate 249

Burn Rate Entrepreneur Differentiation Salary 249

Both Sides of the Table

DECEMBER 16, 2009

They had wasted a lot of money because they had raised a lot of money and therefore hired a large staff. He asked each sales / biz dev person to call customers and tell them they had to change their contracts. I just knew that our sales sucked wind and we were burning through tons of cash. We were SMOKING cash.

Entrepreneur 306

Entrepreneur Burn Rate Cofounder Sales 306

Steve Blank

SEPTEMBER 7, 2009

This post describes how following the traditional product development can lead to a “startup death spiral.&# In the next posts that follow, I’ll describe how this model’s failures led to the Customer Development Model – offering a new way to approach startup sales and marketing activities. No one wants to sit next to the VP of Sales.

Customer Development 224

Customer Development Developer Customer Silicon Valley 224

Up and Running

SEPTEMBER 9, 2020

This means that your cash spending is less than the amount of cash you received from your customers, new loans or investment in your business, or sales of assets that you owned. When you have negative cash flow, you should also keep track of your burn rate and runway. The key to successful cash flow management.

Burn Rate 83

Burn Rate Forecast Cash Position Employee 83

Steve Blank

NOVEMBER 18, 2010

You can almost set your watch to six months or so after first customer ship, when Sales starts missing its “numbers,” the board gets concerned and Marketing tries to “make up a better story.” The web site and/or product presentation slides start changing and Marketing and Sales try different customers, different channels, new pricing, etc.

Burn Rate 247

Burn Rate Management Business Model Customer Development 247

Startup Professionals Musings

JULY 4, 2021

For market changing products, build first a minimally viable product (MVP), and never build products for sale until you have real orders in hand. Hire real help and learn to delegate. Inventory and features added too soon. Inventory is money sitting idly by, adding no value. Bottlenecks to team productivity. Lack of communication.

Startup 404

Startup Lean Metrics Matching 404

Startup Professionals Musings

DECEMBER 31, 2013

Too often they are also hesitant, inexperienced, and fearful of hiring people or a mentor to be the partner they need. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

Burn Rate 275

Burn Rate Entrepreneur Differentiation Salary 275

Both Sides of the Table

JUNE 17, 2017

The most obvious way to explain this is with sales people. If you hire 6 senior sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business 6 months. They don’t want high burn rates but they will never fund slow growth.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Hunter Walker

FEBRUARY 20, 2022

Maybe you’ve spoken with the previous companies customers or investors or employees and learned from that — maybe you’re even now taking their customers, hiring their best team members, whatever. Just a weird sales saying I recall someone telling me years ago. Stop Pitching FOMO Investors, They Won’t Convert. Just Survive.

Marketing 119

Marketing Burn Rate Angel Investor Early Stage 119

Startup Professionals Musings

OCTOBER 4, 2017

Too often they are also hesitant, inexperienced, and fearful of hiring people or finding a mentor to be the partner they need. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

Burn Rate 139

Burn Rate Differentiation Salary Entrepreneur 139

Steve Blank

FEBRUARY 16, 2010

In my last post I described what happened when a company prematurely scales sales and marketing before adequately testing its hypotheses in Customer Discovery. The VC’s were very concerned that the revenue the financial plan called for wasn’t being delivered by the sales team. They don’t. All this takes time.” What went wrong?

Revenue 230

Revenue Balance Sheet Hockey Stick Burn Rate 230

Up and Running

SEPTEMBER 17, 2014

Keeping track of gross margin assures you know the value of each additional sale. This impacts every decision related to your business, from hiring more staff to expanding product offerings to investing in marketing. – Ben Rubenstein , Yodle. . – Mitch Gordon , Go Overseas. Gross Margin. No Specific Metric.

Metrics 146

Metrics Burn Rate Entrepreneur Forecast 146

BeyondVC

JULY 6, 2006

A clear kiss of death that I have seen more often than not is hiring a VP of Sales too early. On top of that, you figure that you want to hire the senior guy first so he can bring in his own troops. Hiring a VP of Sales too early can cost you dearly. Hiring a VP of Sales too early can cost you dearly.

Hiring 79

Hiring Sales Burn Rate Vertical 79

Up and Running

MARCH 26, 2020

Acknowledging a continued decline in sales and the need to lower expenses is obvious. Sales dropped suddenly. If you already have a budget and a forecast for your business that helps you predict your cash flow, now is the time to dig in and create different scenarios to help you understand how changes in sales will impact your cash.

Management 152

Management Forecast SBA Burn Rate 152

YoungUpstarts

MAY 20, 2015

Once you have these 3 validations, with a few sales, or commitments, then the scaling is on!” Burn rate: Seeing company grow fast is both exciting and overwhelming experience. Hire Talent. “I would say that hiring talent is were the story begins. Hire Proactively. Maintain Culture.

Colombia 100

Colombia Burn Rate Startup Agile 100

Startup Professionals Musings

MARCH 15, 2015

Too often they are also hesitant, inexperienced, and fearful of hiring people or a mentor to be the partner they need. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

Burn Rate 120

Burn Rate Startup Differentiation Salary 120

Transformify

AUGUST 27, 2017

All of the above is true, but it is also true that many startups have failed because they hired too early, too fast, or fired too late. Many of the points below can be found among the best hiring practices for startups and there is nothing wrong with them in general. Then the hiring begins. Hire full-time employees.

Hiring 64

Hiring Software Review Burn Rate Startup 64

ithacaVC

MAY 20, 2014

Ask: why is your burn rate so high and is it sustainable? Did you hire too quickly? Ask: how does the buying coop work and how will it impact your sales cycle. Now, with the benefit of hindsight, this only makes me ask more questions. Ask: are your customers satisfied and are some available to speak with me?

Burn Rate 80

Burn Rate Sales Cycle Portfolio Hiring 80

Up and Running

DECEMBER 11, 2013

Investors like valuation to relate to actual business numbers, such as sales, gross margin (price less direct costs), and burn rate or fixed costs. I can take the money you want, hire some people, and become your competitor.” It’s simple math. . Defensibility. That’s about defensibility. A product business is scalable.

Valuation 136

Valuation Oregon Burn Rate Angel Groups 136

Mucker Lab

MARCH 8, 2016

How can we tell founders to stay lean, keep focused on their customers, and keep burn rates low if we cannot walk the talk and eat our own dog food? The ones who would rather hire a sales guy than spend money on flavored morning lattes. We are consumed with generating great returns for our limited partners. The underdogs.

Burn Rate 60

Burn Rate Limited Partner Bootstrapping Portfolio 60

K9 Ventures

MAY 28, 2015

And in order to do that they need to either raise capital to be able to hire a team by paying them real dollars or recruit co-founders who are willing to share the journey based on the equity stake and bootstrap the company. But they may not have figured out the sales model just yet. DP: Edward Colman, Mary Poppins. 100K/month.

Revenue 48

Revenue Startup Burn Rate Cofounder 48

Steve Blank

NOVEMBER 2, 2009

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. These are great, but they are not repeatable by a sales organization. Something else?

Lean 244

Lean Silicon Valley Startup RSS 244

VC Adventure

APRIL 2, 2015

A company gets some early data on sales performance and either completely misinterprets it or believes that early sales scales linearly (or even worse, on a log basis). Not recognizing that your sales problem is actually a product problem. Reading it here in black and white this is something I’d never do.

Dilution 54

Dilution Burn Rate Sales Portfolio 54

Feld Thoughts

FEBRUARY 9, 2016

” Many companies have hired ahead of their growth rate because they had the cash to do so. In our portfolio, we generally don’t have this problem because we aren’t big fans of either (a) overfunding companies or (b) escalating burn rates based on headcount.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Up and Running

OCTOBER 1, 2014

Nelson has some tips: Know your burn rate. Nelson suggests creating a projected sales forecast and planning how you’ll achieve it, realizing of course that you’ll make adjustments to these numbers as you grow. Yesware is a sales and tracking gmail extension. How do you balance it all? Be hyper-focused.

Bootstrapping 107

Bootstrapping Cofounder Portland Burn Rate 107

YoungUpstarts

AUGUST 19, 2016

Then come the marketing, sales, and accounting considerations. While you absolutely need to keep an eye on earnings and burn rate, human capital is ultimately the fuel that makes the machine run. Depending on your startup’s needs, it can be a toss-up on whether to hire for attitude or skill.

Startup 100

Startup Burn Rate Cofounder Salary 100