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Well if you are a startup that makes profit or has a long runway that is well managed, it doesn't matter what anybody else thinks about you. In boom times it c

by birken 11y ago

Well if you are a startup that makes profit or has a long runway that is well managed, it doesn't matter what anybody else thinks about you. In boom times it can be a challenge to control burn for even well-run companies because the markets for things like employees or office space become distorted due to high demand. In bust times these expenses naturally go down, which helps well-run companies.

lbotos 11y ago
What is a "long runway" for a startup? We are super transparent at my current startup and have what I'd say is "solid" runway but I'd love some perspective.
- potatolicious 11y ago
  That's relative, but in the context of this conversation it probably means "runway longer than the miserable fundraising market is expected to last". So, longer than 1-2 years, which seems disturbingly typical for a lot of startups I've talked to. In contrast I once interviewed at a startup that had a net burn rate low enough to keep running for 7-8 years without needing additional funding, even assuming no revenue growth. Presumably they'd be in a better position to weather a tech downturn (though one has to be careful about what a downturn would also do to said revenue - companies building products and services for other tech companies are especially susceptible).
- code4tee 11y ago
  Long enough to fund all costs and necessary growth activities until either: A) The business generates enough profit to be self-sustaining, or B) The business is bought and thus this is all someone else's problem now C) The business manages to convenience investors that all it needs to get A or B is throwing more money into the pot to keep things going a bit longer When the market tightens A is king and B/C become a lot harder hence why everyone stops caring about 'soft' metrics like fluff and user growth and starts caring a lot more about hard facts... like is this great idea actually making any money!
- birken 11y ago
  A long runway would be long enough to meet a huge milestone with your current funding. Given a standard milestone (reaching profitability, reach profitability in some markets, user growth to XYZ threshold), 1.5 years is probably solid and 2.5-3 years is "long". Practically speaking, there is little difference between 3 years and 10 years of runway, because a company that stagnates for 3 years is likely to lose key employees and momentum whether or not there is money left in the bank. The goal of a startup isn't necessarily to survive at all costs, it is to make sure to survive long enough to see if the concept works. That is where there is no exact answer, because it depends. If you are a startup where increasing revenue isn't on the near-term road map, you might want to be more conservative because you will eventually be depending on investors in the future. If you are a startup with really strong unit economics and a path to profitability, you can be more aggressive because in the worst case scenario you can probably reach profitability via the backdoor (layoffs, cutting expenses, etc).

by birken 11y ago

lbotos 11y ago

What is a "long runway" for a startup? We are super transparent at my current startup and have what I'd say is "solid" runway but I'd love some perspective.

potatolicious 11y ago
That's relative, but in the context of this conversation it probably means "runway longer than the miserable fundraising market is expected to last". So, longer than 1-2 years, which seems disturbingly typical for a lot of startups I've talked to. In contrast I once interviewed at a startup that had a net burn rate low enough to keep running for 7-8 years without needing additional funding, even assuming no revenue growth. Presumably they'd be in a better position to weather a tech downturn (though one has to be careful about what a downturn would also do to said revenue - companies building products and services for other tech companies are especially susceptible).
code4tee 11y ago
Long enough to fund all costs and necessary growth activities until either: A) The business generates enough profit to be self-sustaining, or B) The business is bought and thus this is all someone else's problem now C) The business manages to convenience investors that all it needs to get A or B is throwing more money into the pot to keep things going a bit longer When the market tightens A is king and B/C become a lot harder hence why everyone stops caring about 'soft' metrics like fluff and user growth and starts caring a lot more about hard facts... like is this great idea actually making any money!
birken 11y ago
A long runway would be long enough to meet a huge milestone with your current funding. Given a standard milestone (reaching profitability, reach profitability in some markets, user growth to XYZ threshold), 1.5 years is probably solid and 2.5-3 years is "long". Practically speaking, there is little difference between 3 years and 10 years of runway, because a company that stagnates for 3 years is likely to lose key employees and momentum whether or not there is money left in the bank. The goal of a startup isn't necessarily to survive at all costs, it is to make sure to survive long enough to see if the concept works. That is where there is no exact answer, because it depends. If you are a startup where increasing revenue isn't on the near-term road map, you might want to be more conservative because you will eventually be depending on investors in the future. If you are a startup with really strong unit economics and a path to profitability, you can be more aggressive because in the worst case scenario you can probably reach profitability via the backdoor (layoffs, cutting expenses, etc).