Bankrupt by MayMichael Haase18. November 2016
”I have something else to say”, my throat dried. I sighed deeply, ”I looked at the numbers this weekend, and at our current burn-rate we run out of money by May”. My co-founder, Ida Marie, froze. Our plan was always to secure our first external funding in April, but this was calling it way too close. I continuted, ”so, I propose to slash your salary for the next 8 months, so we can survive until August”.
In my former workplaces, Novozymes and McKinsey, it was unheard of to be 8 months from bankruptcy. But in an early-stage start-up this is not unique. Most start-ups try to drive as far as possible on their own money to ’dress up the bride’ and get a high valuation before inviting the first external investor to enter. It is like a ’financial game of chicken’, where it is all about jumping out of the car JUST in-time!
Why is it necessary? Because start-ups as a broad asset class are really shitty investments: Only 1 out of 15 start-ups succeed. So, any start-up needs to do a lot of work to differentiate itself. Only exceptionally good teams, good ideas, and lucky timings can beat the odds.
So, knowing the odds why do we start a company? We are cocky enough to believe we can make it. Importantly, we are driven by something much stronger than money. Building something out of nothing is a thrilling experience, and we believe that our product will actually make a better world.
This blog will be Plant Jammer’s ”Startup Newsletter”. You will hear about our idea, our ideals, our product, our failures, and our success. It is a story of two crazy people: Michael, who said goodbye to a secure linear climb up the corporate ladder, armed with a steaming hot CV from McKinsey, Merrill Lynch, and Novozymes. And my Co-founder, Ida Marie, who chose to make her very first full-time job a start-up, rather than first building a CV she can fall back on. Follow us and find out if the blog ends with a bankruptcy in May, or if it becomes an incredible adventure that never ends
”OK”, Ida Marie said a week later. ”I have some savings I can carve into, and I will go without salary as long as we agree to build some transparency. Let’s have a monthly meeting where we clearly define burn-rate, expected lifetime, and key milestones, including external funding. Let’s agree to not get surprised like that again”.
It seems we’ll be able to make it at past May… Yay – never miss a chance to celebrate!!!