🧠 What your burn rate isn’t telling you
A 12-month runway sounds great — until you realize you’ve been burning to prove nothing.
Hey friends 👋
You’ve got $300K in the bank and a burn rate of $50K/month.
That’s 6 months of runway. Not too shabby.
You sleep a little easier. You tell your spouse it’s fine. You tell yourself there’s time.
Except…
Runway doesn’t get you customers.
Runway doesn’t get you funded.
Runway doesn’t create results.
It just buys you time to maybe do those things — unless you’re too caught up burning cash so you can feel like a bigshot.
But founders love to treat their burn rate like a countdown clock.
The problem? Time isn’t your real constraint. Evidence is.
This week, I’m breaking down the dangerous illusion of burn rate — and showing you how to fundraise for traction, not just survival.
It’s a quick one today. Let’s dive deep 👇
Let’s start with this little-discussed truth:
Runway isn’t as safe as you think it is.
It’s easy to see why founders cling to it:
Runway is simple. It’s comforting.
Runway is a number you can control — especially when everything else feels like chaos.
“We’re burning $50K a month, so we’ve got six months left.”
It’s clean. It’s linear. It fits nicely into a slide deck.
It’s not hard to grok.
Honestly, it even sounds strategic — like you’ve got your financial house in order.
But here’s what that number doesn’t tell you:
What’s changing month over month?
What bets are you validating before the money runs out?
What evidence are you collecting that the business is working?
Because a six-month runway isn’t the score.
It’s the game clock.
And if you don’t know what points you’re scoring in that time, you’re drifting toward a loss.
Because it’s not about how much time you have left.
It’s what you do with it.
Here’s what burn rate doesn’t measure
Burn rate tells you how long the lights stay on. It doesn’t say what gets built while they are.
It doesn’t measure:
What you’re learning
What you’re validating
Whether your startup is more credible today than yesterday
You can burn $50K a month and feel busy. You can ship features, run ads, post LinkedIn thought-leadership content.
But it’s got big toddler play kitchen energy — there’s a lot of activity happening, and they sure are busy, but nothing ever comes out of the oven.
And that’s the missing piece: burn rate doesn’t measure progress.
If you want to actually get somewhere, you need a different model.
You need a traction model.
If your burn rate tells you how long you can stay in the game, your traction model tells you how you plan to win it.
A traction model doesn’t start with time.
It starts with a milestone:
What’s the signal that says, “This is working”?
What do you need to prove in order to level up your business?
What new evidence will unlock your next round, your next hire, or your next channel?
That’s your milestone. Everything else is operations.
Inexperienced founders ask, “how long can we survive?”
But wise founders ask, “what’s the smallest amount of money we need to confidently prove the next thing?”
And that’s how they fundraise:
Not for months of runway. But for a clear, credible proof point.
And it translates right to your pitch deck:
The worst “ask” slides ask for want $X for Z months.
The best ones ask for $X to hit Y milestone in Z months.
Because nobody funds you to stay alive.
They fund you to advance.
So what exactly is a “traction model”?
A traction model is simple. It’s three parts:
A clear milestone — the point you’re trying to reach that will meaningfully level up the company, such as raising a round, unlocking a new market, or proving product-market fit.
Decision points along the way — checkpoints where you pause to assess: are we on the right track? What needs to change? These keep you focused and honest.
A process for validating progress — fast, cheap experiments that test assumptions and generate evidence. Not guesses. Not vibes. Data.
Together, these three pieces form the structure — and process — that separates actual progress from busywork.
You’re not just wandering toward some vague goal like “growth.” You’ve got a destination, a map, and a way to know if you’re still heading in the right direction.
I wrote a whole article on these “3 pillars” last month.
If you build out a traction model, your burn rate has context.
Now you can ask: what are we actually getting for the money we’re burning?
In other words:
Don’t measure the burn rate. Measure the traction rate.
Burn rate tells you how fast you’re spending money, but traction rate tells you what you’re getting for it — and how fast you’re getting it.
It’s the difference between:
Spending $100K and learning something game-changing
Spending $500K and having nothing but a prettier slide deck
Traction rate is your progress-per-dollar.
It’s your learning velocity — how you turn cash into conviction.
You don’t just need a lower burn rate. You need a higher return on every dollar you burn.
Because runway doesn’t get you funded. Traction does.
If you’re only tracking burn, you’re only managing your timeline.
Start tracking traction — and make the next six months count on the scoreboard, not just the clock.
Want help building and executing that traction model?
Join the Lab and let’s build it together
See you next week,
—jdm
PS: If you found this post valuable, please take a moment to share it with a friend. It really helps me out.
So great JDM! Thanks