We're in a Culture of Burning CASH!

We started our SaaS near the beginning of a tech-craze in 2008-09, where a lot of big companies and apps were popping up that were starting to kill it. These companies included Airbnb, Tumblr, Spotify and Groupon, to name a few. During these years, I noticed a peculiar trend that was happening. There were several companies who weren’t focusing on making money and being profitable. Instead, their focus was on pitching to investors and securing that seed or venture round. At that time, it was almost as if the only way to validate your business was to get funding. Securing investor funds was considered a huge win in the tech world, and young entrepreneurs were seeing that as a road to riches. Instead of focusing on matters such as profit margins, keeping costs low, and being cash flow positive, many of these companies were focused on metrics such as runways and burn rates. These companies were so fixated on spending as much money to grow their businesses and trying to secure that next round of funding, where they had no time to work on being a sustainable and profitable business. (BTW- in no way am I putting all funded companies in the same bucket. There are certainly ways to burn cash wisely and still maintain good units of economics in the long-term. Rather, I’m referring to the companies who’ve seeked funding for the wrong reasons). The only problem with that strategy, is if you’re unable to secure that next round and funds run dry, your business is dead. I’ve personally seen a few of these type of companies die in front of my eyes because investor funds ran out. These companies were building a culture around hiring, marketing spend and hyper-growth, where they couldn’t pivot enough and adjust themselves to focus on sustainability when they ran out of cash. Call me old school, but I prefer making money and building a sustainable business. In seven years of operating my business, I have not once looked at my runway or burn rates, because I never had to. Since day one, our focus was on profitability and creating a business with longevity. I couldn’t be more proud at the fact our entire business was built on revenue financing, and without a single penny taken from outside sources. I currently see this culture of burning cash slowly starting to fade. There are more and more companies who are bootstrapping their way to success. Companies such as Basecamp, CB Insights, Baremetrics and ConvertKit, are helping pave the way by making their bootstrapped success stories open and transparent. This openness is helping the SaaS ecosystem for the better, and encouraging young entrepreneurs to do it on their own. Cash is great – let’s hope this culture of burning it fades. Music by sifer2424