Edited excerpt from Five things I will do different for my next startup by Jeff Haynie:
Burn less. This is directly related to “monetize earlier” and “scale slower”. The faster you monetize and the slower you scale, the chances are you’re going to burn less.
Burn less is about optionality. And the one thing you want as a founder of a startup are options. You’re going to die much much faster because you ran out of options. Options are really what it’s all about. Options give you a chance to control your own destiny. When the times get tough, if you have options, you can use them. Without optionality, you’re screwed.
Burn is more or less an indicator of your optionality. If you burn less and have more runway, you have options (or at least you can create options with enough time). If you burn more, you reduce your options while reducing how long you can exercise them. And this is one of those things that it’s very easy to convince yourself otherwise. Spending money is fun!
Trust me, your board and investors will likely not agree with you. When you are nervous and want to go slower, they won’t always agree and will push you. Not everyone, but most. And it will always be much more fun to burn faster, not gonna lie. Burning less takes a tremendous amount of self-discipline and organizational priority and restraint.
When things are looking up and to the right, everyone around you, including your investors, will be saying “go go go”. But if you slip up, they won’t be there to admit that they themselves pushed you in that direction.
Remember, you can always increase spending — that’s very easy. Reducing spending is very, very hard and takes so much longer than you realize.
(1) I’m blessed to have wonderful VCs on the Seeking Alpha board. Nick Pianim of DAG Ventures, who is thoughtful, modest and insightful, would say exactly this: One of the key factors in startup success is time. So give yourself time.
(2) Cf. Reach versus monetization and Get to profitability — here’s how.