Victus Spiritus


Data-Driven Startups by David Cancel

13 Nov 2010

The breadcrumb trail to a slide deck
Lost in the haze between 3-4am this morning I read Maximizing Iterations a post by Michael Montano, co-founder of BackType. I was guided there via Nathan Marz's tweet stream. There's a growing trend among entrepreneurs to acknowledge the uncertainty of untested business models. In short, there is no business model until you actually build it. Each iteration is another chance to test a model.

The challenge is to maximize the number of iterations of your business, a practice evangelized by Eric Ries.

The number of iterations (N) is unit less. Runway and iteration time share the unit of time (T=days) and if the former isn't bigger than the latter you're done. Cash is your favorite currency($), and burn rate is currency/unit time ($/T). This no nonsense formula is a focusing element for optimization effort, lest we get lost in the process and lose sight of the problem we're struggling to solve.

# iterations = cash/(burn rate * iteration time)
N = $/( ($/T) * T) yeah units

That's it. You can increase cash, or decrease the product of burn rate and iteration time. Make note that burn rate and iteration time are related entities. Four coordinated and talented hackers out iterate you working solo, but they cost more. If your startup survives long enough to zero in on a model, you'll want to raise the burn rate to leave competition in the dust, completely overhauling your company focus from search to execution.

Without further introduction, here's David Cancel's slide deck that put's the startup process in perspective: