Managing Burn Rate: How to Not Die
Burn Rate is the amount of cash you lose per month. Runway is Cash / Burn. If Runway < 6 months, you are in the "Red Zone." Panic gracefully.
What is Default Alive vs. Default Dead?
Default Alive vs. Default Dead is Paul Graham concept. If you keep growing at current rate and spending at current rate, do you reach profitability before $0? If yes, Alive. If no, Dead.
The 3 Core Benefits
Peace of Mind
Knowing you have 18 months of runway lets you sleep at night. Ignorance of finances creates background anxiety.
Leverage
If you are desperate for money, VCs smell it and give you bad terms. If you have infinite runway (Profitable), VCs beg you to take their money.
Discipline
Constraint breeds creativity. Having a low budget forces you to find clever marketing hacks (like Mesh) instead of buying expensive ads.
Calculating and Cutting
The "Fixed" Costs
Servers, SaaS subscriptions, Rent. Audit this monthly. Cancel unused tools. Switch to annual plans for discounts.
The "Variable" Costs
Ads, Contractors. These are the easiest to cut. If ads aren't profitable (LTV < CAC), pause them.
Salaries
The biggest expense. Hiring is a one-way door. Be extremely careful. Fire fast if a hire isn't working out. It saves the company.
Monitor "Gross Burn"
Total cash out. Also monitor "Net Burn" (Cash out - Revenue in). Increasing Revenue is the best way to lower Net Burn.
Mesh Credits Strategy
Use Mesh credits to pay for user acquisition instead of cash. Every user from Mesh extends your cash runway.
Ignorance vs. Awareness
| Feature | Ignorance | Awareness |
|---|---|---|
| Strategy | Hope | Math |
| Decisions | Reactive | Proactive |
| Survival | Luck | Plan |
Frequently Asked Questions
What is a good runway?
18-24 months after a fundraise. < 6 months is "Emergency Mode." < 3 months is "Sale/shutdown Mode."
Should I cut salary or people?
Hard choice. Cutting people (Layoffs) is usually better than cutting everyone's salary (Demoralizing). Cut deep once, not shallow twice.
How much should founders pay themselves?
Ramen profitability first. Then market rate later. Don't starve, but don't live lavishly on investor money.
What makes a launch channel high intent?
High-intent channels have users actively searching for solutions, not just browsing a feed.
How many channels should I launch on?
Start with 3-5 strong channels, measure conversions, then expand to 10-12 over time.
How do I avoid launch fatigue?
Stagger your launches and reuse assets so each channel gets a focused push.
What should I measure after launch?
Track qualified signups, backlinks, and demo requests, not just raw traffic.
How does Mesh of Growth fit with other platforms?
Use Mesh for compounding reviews and backlinks while other platforms provide short-term spikes.
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