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Ask HN: What's your burn rate? What do you do to reduce it?

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Re: Ask HN: What's your burn rate? What do you do to reduce it?

#11

Post by blackswan »

tyrelb wrote: post #7
blackswan wrote: post #3

I think this is something that is highly variable - based on personal requirements, cost of living in your country and your acceptable minimum standards of comfort. I think techniques to minimise burn would be more interesting than actual rates. One tip from my startup: I think a lot of people think getting employees and office space should happen at around the same time. I don't think office space is worth the premi…

Agree with office idea! Don't sign any long-term leases (over 6 months), and keep it month-to-month. If you start to take off, your damn lease will come back to haunt you... this is a burnt-out economy - grind those leasing agents down, get them to throw in free furniture, free rent, renovations, etc. with the promise that you'll expand out in a couple months with a larger space in the same building. When you get off…

I agree with what you write re: bargaining with the leasing agent - a couple of my friends have got really good deals recently by simply saying "I'll take it now if you include 3 parking bays and give us a shorter-term lease" or equivalent. Now is actually a really good time to lease space if you are certain that it's the right thing cash flow wise.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#12

Post by MicahWedemeyer »

wfjackson3 wrote: post #2

bootstrapped business, basics already up, full product is prelaunch, maintaining other full-time employment, about $45 a month.

You can eat and live on $45 a month?

I see that you're still maintaining other full-time employment (which is a good idea, IMO), but let's be serious. True burn rate is more than just hosting costs.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#13

Post by jasonkester »

blackswan wrote: post #3

I think this is something that is highly variable - based on personal requirements, cost of living in your country and your acceptable minimum standards of comfort. I think techniques to minimise burn would be more interesting than actual rates. One tip from my startup: I think a lot of people think getting employees and office space should happen at around the same time. I don't think office space is worth the premi…

Here's my take on the whole office expense thing:

http://www.expatsoftware.com/articles/2006/12/chamonix-branc...

If you're going to spend money on a building with room for developers and a fast internet connection, there are much cheaper places to find that building than an office park in the suburbs.

Kalymnos, for instance, has apartments you can rent for $20/day in the off season, which is why you'll find me there this fall.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#14

Post by wfjackson3 »

MicahWedemeyer wrote: post #12
wfjackson3 wrote: post #2

bootstrapped business, basics already up, full product is prelaunch, maintaining other full-time employment, about $45 a month.

You can eat and live on $45 a month? I see that you're still maintaining other full-time employment (which is a good idea, IMO), but let's be serious. True burn rate is more than just hosting costs.

I see burn rate as the expenses of the company, not of the person. Right now I don't need the company to pay me for living expenses because I still have other employment.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#15

Post by c1sc0 »

jasonkester wrote: post #8

Business stuff: ~$500/month Life stuff: ~$1500/month I had that down to ~$1000 total when I was living on the beach in Thailand and hadn't yet built anything big enough to require a fast machine at a collocation facility.

I like that distinction between business stuff and life stuff. Burn rate is also valid from a personal finance point of view.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#16

Post by tyrelb »

ant5 wrote: post #9
tyrelb wrote: post #4

$25k per month for outsourced development team (10+ experienced people, Canada/US based), three full-time employees (Canada), office space, phones, and at a pre-launch stage.

Holy crap. Pre-launch, so no revenue stream? $25k across 13+ people, plus office space? If you split the 25k evenly, that would be $1.9k each, or a yearly salary of roughly $23k. What kind of developers are you able to hire for that paltry sum? In SF -- We spend $30k/month on salary/benefits/taxes for 4 people (not including rent and other expenses), and even then we're paying below market rate. Our other expenses, i…

Members of the development team come "on and off" during the process. We kept IA in-house to ensure specs and continuity - we aren't locked into any vendor / supplier should we want to switch and bring all development in-house.

Office space is $1,700 - this is up in Vancouver, BC. Again, a bombed-out economy lends itself to finding deals.

I cannot go into the level of developers, but I can say some are presenters at tech conferences, attend the tech conferences, and have built startups before. Again, we manage costs by bringing on people at the right time, for the right amount of time.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#17

Post by c1sc0 »

wfjackson3 wrote: post #14
MicahWedemeyer wrote: post #12

Earlier quoted context omitted.

You can eat and live on $45 a month? I see that you're still maintaining other full-time employment (which is a good idea, IMO), but let's be serious. True burn rate is more than just hosting costs.

I see burn rate as the expenses of the company, not of the person. Right now I don't need the company to pay me for living expenses because I still have other employment.

That's why I think it's interesting to make this distinction when reporting burn rate.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#19

Post by fezzl »

Currently, while we are doing Beta, less than $100 per month per person for food and other miscellaneous expenses. We have no rent, since we're college dorm resident assistants with free stay. Internet, electricity, etc. are free too.

It's hard (and unnecessary) to reduce our burn rate any further because that would be cutting into bone.

Re: Ask HN: What's your burn rate? What do you do to reduce it?

#20

Post by joshkaufman »

I work from home, and rent/food/utilities/internet in northern Colorado is about $2,000 a month. Aside from rent, the internet is my biggest expense: I live in the mountains, so I pay ~$450/mo for a T1 - cable/DSL is not available, and satellite sucks. I could live in town and pay less, but my rent would go up, and I'd rather live in the mountains.

As for business expenses, I average ~$1,000 in recurring charges per month, which pays for servers, payment processing, web app subscriptions, and international calls. I usually spend another thousand a month on books, courses, and other continuing education, since that's my market.

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