Cash Flow Turnaround Journey

A story about how a startup transformed from burning $2.4M per month to becoming cash flow positive in 7 months by focusing on working capital management.

"We were burning a little over $2 million a month, and in July of '17 we burned $2.4 million. We asked ourselves how to stop the burn. There are typically 3 options: First was layoffs - I wasn't going to do that. I love my team, they're fundamental to everything we do. Second was slowing down acquisition spend - wasn't going to do that either because speed is our biggest leverage against larger competitors.

We discovered a third solution: fixing the working capital position of the business. We focused on improving our cash inflows and outflows through several strategies. We moved from selling primarily through app stores, where we paid 30% fees, to selling on web where we only paid 2.7%. We explored alternative pricing options, moving from $10 monthly subscriptions to offering a $100 annual plan paid upfront and $15 monthly plans.

We built out a robust engineering team dedicated to the web product, made web our primary focus for traffic, and transformed our website into a destination for great experiences and content. We conducted extensive AB testing and pricing iterations.

The result of all this work was remarkable - we went from burning $2.4 million in a single month to becoming cash flow positive just 7 months later. This gave us back control of our business and the product we wanted to build."