Pilots and Planes
If you’ve ever flown commercial you know the drill. Seat-back; upright. Tray-table; locked. Seatbelt; fastened. And my personal favorite to blatantly bypass, electronics; airplane mode. These instructions are provided by the Flight Crew because they are mandated by law, and because what’s about to happen is mission critical to reaching your final destination, and not in the religious sense. As you settle in to your seat, begin your psychoanalysis of the person(s) sitting next to you (that extra “s’ implies you find yourself in the dreaded middle seat, in which case, god bless), and start to form pre-conceived notions about their entire life story, the Pilot will come on the ol PA (Passenger Address system1) for one final announcement; “Flight Crew please be seated and ready for takeoff.”
Runway
Planes achieve flight by accelerating at high speeds in a straight line until the airflow that is cresting over (and under) their angled wings, is so strong and creates such force, that the plane and everyone in it, goes airborne. That straight line is a precisely paved and painted strip of asphalt. This single strip that’ll you’ll find yourself barreling down, as your life, and those of the strangers beside you, is left to the hands of the Pilot you heard only moments ago, is called the runway.
The Wright Brothers, pioneers of flight itself, did not have the luxury of modern day airports with their myriad of runways. Grainy videos of their initial test flights shows them running, on foot, as fast as they possibly could, off a steep enough hill with the hope that the wind would do the rest. It’s laughable to think that because of this, their sheer will and determination over 100 years ago, we’re now able to go from one country to another while binging a single sleep inducing Netflix series.
In business, or in my case with Rate Game, the term runway is used metaphorically. In the same way that a physical runway is finite and will reach an end, so too is the fate of a business that does not have the means to make money. With this terrifying knowledge at hand, and the costs to build my little wooden plane (as I simultaneously sprint towards my launch point Fred Flinstone style) starting to mount, I thought it prudent of me to calculate my runway.
Rate Game’s Runway
In my last post I put out a disclaimer that needs repeating; numbers and me don’t really vibe. So I decided to make my first hire. That’s right, I brought on a CFO full time. His name is ChatGPT and so far he’s worth every penny. For his first day on the job I gave him one task: calculate my runway. Here’s what he had to say:
From the office of the CFO, Dated: 2.15.2024
Let's first look at the one-time expenses already incurred.
One-Time Expenses Already Incurred:
Initial MVP Workshop Design: $1,500
MVP Build and Launch: $8,500
API Vendor for Sports Game Info: $5,000
Domain Management on GoDaddy: $199
Delaware State LLC Filing Fee: $160
Website Design and Launch: $850
Total One-Time Expenses: $16,209
Let's now look at the current cash reserves on hand when accounting for the one-time expenses.
Cash Reserves: $32,000 - $16,209 = $15,791
Now let’s determine the planned monthly expenses starting from March and assume they remain unchanged.
Total Monthly Expenses from March 1st, 2024:
Current Monthly Expenses: $94.15
Planned Increases (App Hosting + Advertising): $2,100
Total Monthly Expenses: $2,194.15
Forecasting the Runway:
With the updated cash reserves, let's calculate the financial runway.
After including the additional expense for website design and launch, the updated financial forecast shows that Rate Game has a runway of approximately 7.2 months starting from March 1st, 2024, assuming no additional revenue and constant spending as planned.
Summary:
The additional one-time expense slightly reduced the financial runway from about 7.5 months to approximately 7.2 months.
It's crucial to continue monitoring expenses closely and adjust strategies as necessary to ensure the longevity and success of the app.
Exploring additional funding or revenue streams could provide a buffer and extend the financial runway beyond the current forecast.
Ready for Takeoff
Not bad for his first assignment! Might even give him the night off for this fine piece of financial forecasting. No in all seriousness, it seems I have just enough jet fuel to give this puppy a go. I’m happy I did this. I’m even more pleased with the fact that it’s out in the open for all to see. My runway is just that, my own. I will only have myself to answer to when making decisions on which lever to pull, and when, as I prepare for my first flight.
My flight path is unknowable and there’s no air traffic controllers out there guiding me to touchdown. But that’s ok. I’ll worry about that in the coming weeks. For now, I’ll stay focused, and imagine a future in the open skies.
Until tomorrow!
http://hibdz.skydiving.co.uk/757/767_tech/communications/pa.htm#:~:text=The%20Passenger%20Address%20(PA)%20system,on%20an%20Audio%20Control%20panel.