4 ms·

This is utterly batshit. $10k+ per head as your burn rate???!? We're a 30 person org. We burn about £80k a month - $125k. Our revenues are well in excess of th

This is utterly batshit. $10k+ per head as your burn rate???!? We're a 30 person org. We burn about £80k a month - $125k. Our revenues are well in excess of that. That includes rent, salaries, and all other expenses. Then again, I guess when you're playing with your own cash, which started as nothing because you bootstrapped, you look at things differently, and don't put "35 foosball tables, offices in manhattan and the valley, and a corporate getaway to the Maldives" at the top of your "essentials" list. I see more and more of what I call "startup dickwaving", whereby people compare metrics on a fairly meaningless basis and act as members of a cute little club of oh aren't we all so special, rather than, y'know, BUSINESS, happening.

jurassic 12y ago
$125k/month works out to $50k/yr/person. In case anybody else was wondering.
- adwf 12y ago
  Means around £30k per employee which is reasonable for UK junior-ish dev straight out of university, but low if they're based in London (I dunno).
  - danieltillett 12y ago
    £30k per employee for all expenses is very low even for the UK.
    - jotm 12y ago
      Welcome to the real world. Most small software businesses who offer some small service (say, an ERP software package no one has ever heard of + support) to a small number of companies hire the cheapest devs they can find.
      - danieltillett 12y ago
        I am in the real world :) 30k per employee with all the on-costs is very low. I suspect that a number of these employees are part time or remote workers in low cost countries.
        madaxe_again 12y ago
        Nope. All full time, on site. A good working environment counts for one hell of a lot, and the cost of living here is low.
        deleted 12y ago
        [deleted]
  - madaxe_again 12y ago
    We're not in London, and we pay more than that. We keep costs down by dint of the fact that our costs are, in descending order: - People - Hardware - Offices We even manage to have fun, too. I just can't wrap my head around where this "other" expense that folks are supposed to have goes. Sure, you can throw more fuel on and grow faster, maybe, but to burn for the sake of burning, because you have to hit a number... I just do not understand. Bullshit metrics destroy so much. You just have to look at where the NHS has ended up, to understand how this rot pervades (GPs must see N patients per day. Surgeons must "solve" N cases per month. Death rates must be below X.).
    - dmor 12y ago
      I think people are just confused by your use of the word "burn". What is your fully loaded average cost per employee (total spend divided by headcount of 30 people)?
      - madaxe_again 12y ago
        About £2.8k - £3.2k/month - it has admittedly increased over the last six months, as we've had a few expensive hires, and have taken on more space in preparation for more growth. As per elsewhere, we admittedly have abnormally low rent costs, and virtually no other costs outside of rent, people, power, and hardware.
        dmor 12y ago
        So £84k - £96k total spent per month right (assuming the 30 person team you said before) BEFORE you subtract revenue?
        peterjancelis 12y ago
        Yes that is what he is been saying.
    - lmm 12y ago
      Your numbers must be off - 80k/month for 30 people means paying <32k; that's an average and assuming hardware and offices are both zero. Good devs cost more than that in Cambridge (and at least twice that in London), and elsewhere you'd struggle to find them at all. Are you relying on hiring fresh grads or something?
arethuza 12y ago
"Our revenues are well in excess of that." Doesn't burn rate cash flow indicate negative cash flow - so if your revenues are much higher that what you are spending then you don't really have a burn rate in the normal sense as you are cash flow positive?
- danieltillett 12y ago
  The op did say burn not burn rate. I think quite a few of the disagreements here are the result of us not being clear about what we mean by different terms. Burn rate is negative cash flow so cash income - cash expenses.
  - arethuza 12y ago
    "We burn about £80k a month" I think most people hearing that would interpret it as "burn rate" rather than cash expenses.
    - danieltillett 12y ago
      I agree. This is why I said the problem is we need to be more precise in the terms we use.
- madaxe_again 12y ago
  Sure - was using burn rate in terms of "we burn this much cash a month" - but we also have income, which is greater than our expenses.
  - muyuu 12y ago
    Sweet, that means you are already bootstrapped and you don't need to raise capital. This post is about startups that need capital.
    - ncallaway 12y ago
      Why would the expenses per employee for a bootstrapped company be different than the expenses per employee at a startup?
fmavituna 12y ago
£30K a year, tax etc. on top of it. Do you do tech business or something else? Office costs, extra overhead, insurance etc. It's really hard to run a company that cheap. This is not about "offices in manhattan". Even one office in the UK around a decent place for 30 people will be quite expensive to run. I'm just curious, is this is tech company, how many of those people are developers / designers (high skill required tech workers)? How is it really possibly to run a company that cheap in the UK? I would love to hear the things that you do for lowering the costs.
- madaxe_again 12y ago
  Tech. 22 technical. 8 management. Wouldn't be hanging out here if I made coat-hangers for a living. :) We accrued cash and bought a commercial lease with a decade to run from a bankrupt company - prime real estate in the centre of a creative city. Before here, we based ourselves out of a squat, and after we left agreed a retroactive amount of rates to pay the council to turn a blind eye to our having been there. It really pays to shirk estate agents and to instead do "huh, that building is suddenly empty - let's call the owner". Insurance is also surprisingly cheap, so long as you indemnify yourself against consequential loss, which in our business is a must. "Extra overhead" runs to not much - maybe a few £k a month. Oh, and this isn't included in my figure, but is something EVERYBODY WHO RUNS A TECH BUSINESS IN THE UK SHOULD BE AWARE OF - R&D Tax Credits! HMRC cut us a cheque every April. I'd actually rather we spend a bit more and perhaps become unprofitable for a while, as I want to invest in growth more heavily, but my partner, the loveable tightwad that he is, needs deep justification for every penny spent. And that's the crux of it. Go into business with the tightest person you know, and spend forever fighting about it, and end up with pretty optimal budgetary decisions, as everything has to be thought/fought about.
  - Keats 12y ago
    Do you have an example of a project where you got R&D Tax Credits?
    - twic 12y ago
      My previous employer would claim credits on all development of new products. Not maintenance of existing products, not operations costs, and not features that a customer had asked for specifically. But over half of our technical staff were building new apps to expand our reach into new markets, and the management put all of that in for credits. They'd also claim on new features added to existing apps. There was an annual exercise where a couple of poor managers dumped the whole year's stories from the project management tool and classified them all as creditable or not. Not a lot of fun, but the CFO was always happy with the results!
deleted 12y ago
[deleted]

jurassic 12y ago

$125k/month works out to $50k/yr/person. In case anybody else was wondering.

adwf 12y ago
Means around £30k per employee which is reasonable for UK junior-ish dev straight out of university, but low if they're based in London (I dunno).
- danieltillett 12y ago
  £30k per employee for all expenses is very low even for the UK.
  - jotm 12y ago
    Welcome to the real world. Most small software businesses who offer some small service (say, an ERP software package no one has ever heard of + support) to a small number of companies hire the cheapest devs they can find.
    - danieltillett 12y ago
      I am in the real world :) 30k per employee with all the on-costs is very low. I suspect that a number of these employees are part time or remote workers in low cost countries.
      - madaxe_again 12y ago
        Nope. All full time, on site. A good working environment counts for one hell of a lot, and the cost of living here is low.
      - deleted 12y ago
        [deleted]
- madaxe_again 12y ago
  We're not in London, and we pay more than that. We keep costs down by dint of the fact that our costs are, in descending order: - People - Hardware - Offices We even manage to have fun, too. I just can't wrap my head around where this "other" expense that folks are supposed to have goes. Sure, you can throw more fuel on and grow faster, maybe, but to burn for the sake of burning, because you have to hit a number... I just do not understand. Bullshit metrics destroy so much. You just have to look at where the NHS has ended up, to understand how this rot pervades (GPs must see N patients per day. Surgeons must "solve" N cases per month. Death rates must be below X.).
  - dmor 12y ago
    I think people are just confused by your use of the word "burn". What is your fully loaded average cost per employee (total spend divided by headcount of 30 people)?
    - madaxe_again 12y ago
      About £2.8k - £3.2k/month - it has admittedly increased over the last six months, as we've had a few expensive hires, and have taken on more space in preparation for more growth. As per elsewhere, we admittedly have abnormally low rent costs, and virtually no other costs outside of rent, people, power, and hardware.
      - dmor 12y ago
        So £84k - £96k total spent per month right (assuming the 30 person team you said before) BEFORE you subtract revenue?
        peterjancelis 12y ago
        Yes that is what he is been saying.
  - lmm 12y ago
    Your numbers must be off - 80k/month for 30 people means paying <32k; that's an average and assuming hardware and offices are both zero. Good devs cost more than that in Cambridge (and at least twice that in London), and elsewhere you'd struggle to find them at all. Are you relying on hiring fresh grads or something?

arethuza 12y ago

"Our revenues are well in excess of that." Doesn't burn rate cash flow indicate negative cash flow - so if your revenues are much higher that what you are spending then you don't really have a burn rate in the normal sense as you are cash flow positive?

danieltillett 12y ago
The op did say burn not burn rate. I think quite a few of the disagreements here are the result of us not being clear about what we mean by different terms. Burn rate is negative cash flow so cash income - cash expenses.
- arethuza 12y ago
  "We burn about £80k a month" I think most people hearing that would interpret it as "burn rate" rather than cash expenses.
  - danieltillett 12y ago
    I agree. This is why I said the problem is we need to be more precise in the terms we use.
madaxe_again 12y ago
Sure - was using burn rate in terms of "we burn this much cash a month" - but we also have income, which is greater than our expenses.
- muyuu 12y ago
  Sweet, that means you are already bootstrapped and you don't need to raise capital. This post is about startups that need capital.
  - ncallaway 12y ago
    Why would the expenses per employee for a bootstrapped company be different than the expenses per employee at a startup?

fmavituna 12y ago

£30K a year, tax etc. on top of it. Do you do tech business or something else? Office costs, extra overhead, insurance etc. It's really hard to run a company that cheap. This is not about "offices in manhattan". Even one office in the UK around a decent place for 30 people will be quite expensive to run. I'm just curious, is this is tech company, how many of those people are developers / designers (high skill required tech workers)? How is it really possibly to run a company that cheap in the UK? I would love to hear the things that you do for lowering the costs.

madaxe_again 12y ago
Tech. 22 technical. 8 management. Wouldn't be hanging out here if I made coat-hangers for a living. :) We accrued cash and bought a commercial lease with a decade to run from a bankrupt company - prime real estate in the centre of a creative city. Before here, we based ourselves out of a squat, and after we left agreed a retroactive amount of rates to pay the council to turn a blind eye to our having been there. It really pays to shirk estate agents and to instead do "huh, that building is suddenly empty - let's call the owner". Insurance is also surprisingly cheap, so long as you indemnify yourself against consequential loss, which in our business is a must. "Extra overhead" runs to not much - maybe a few £k a month. Oh, and this isn't included in my figure, but is something EVERYBODY WHO RUNS A TECH BUSINESS IN THE UK SHOULD BE AWARE OF - R&D Tax Credits! HMRC cut us a cheque every April. I'd actually rather we spend a bit more and perhaps become unprofitable for a while, as I want to invest in growth more heavily, but my partner, the loveable tightwad that he is, needs deep justification for every penny spent. And that's the crux of it. Go into business with the tightest person you know, and spend forever fighting about it, and end up with pretty optimal budgetary decisions, as everything has to be thought/fought about.
- Keats 12y ago
  Do you have an example of a project where you got R&D Tax Credits?
  - twic 12y ago
    My previous employer would claim credits on all development of new products. Not maintenance of existing products, not operations costs, and not features that a customer had asked for specifically. But over half of our technical staff were building new apps to expand our reach into new markets, and the management put all of that in for credits. They'd also claim on new features added to existing apps. There was an annual exercise where a couple of poor managers dumped the whole year's stories from the project management tool and classified them all as creditable or not. Not a lot of fun, but the CFO was always happy with the results!

deleted 12y ago

[deleted]