Editor’s note: This is a sponsored post by Tekes Tempo, where we interview their customers on practical information on running a startup.
Your startup’s cashflow is obviously crucial to keep your eye on so we spoke to Rami Korhonen, the CEO of PlayMySong, about how he optimizes their burn rate. For those of you who haven’t seen our past coverage of the Helsinki-based startup, PlayMySong allows anyone to create public jukebox out of a playlist on a computer and a mobile app. So if you’re throwing a party with your friends, everyone has a say in what song in your Spotify playlist should go next using their smartphone connected to PlayMySong’s Spotify app. Or for businesses like restaurants, bars, and gyms, PlayMySong offers a solution that updates the jukebox for the modern world.
“I’ve been working in startups since before they were called startups,” Korhonen says. “I guess they were called tech companies. But back then the plan was to get lots of funding, hire a lot of people, and then figure out what you’re doing. Now it’s pretty much the other way around.
“Obviously when you’re building something new to the world, and you need to build a loyal fan base, it makes sense to try to extend your runway as far as you possibly can. However at the same time you need to invest in key things, which for us is product development and building an international presence.”
Month to month their burn rate stays pretty consistent. “After we were able to get into the Tekes Young Innovative Companies that allowed us to decrease our burn rate a little bit to make the necessary adjustments to really start taking our product to the market in a bigger way.”
Playmysong has 3 full time guys in Finland, while Korhonen spends most of his time in San Francisco where he focuses on opening venues and promoting the service. PlayMySong has also been able to keep the burn rate down by selling their product through outside salespeople with a low monthly retainer, but a high commission. This helps them get motivated people on the streets of SF, NYC, and Helsinki to continue to expand their solution’s presence.
They’re currently doing a little bit of marketing through adwords and so on, but they’re holding of for really increasing their marketing push until their updated apps hit the market, where they want to make that bigger push. That’s going to increase their burn rate, but at the same time it’s tied to selling their product.
“If we get the metrics right, then it’s not necessarily just the burning, but also bringing revenue into the company.”
To actively keep an eye on their cashflow, they say they’re using Netvisor, which gives them visibility of all their incoming and outgoing money all the time.
But perhaps the most obvious, but biggest consideration is to only add members to the team if they absolutely cannot do something themselves, or when the “hours of the day are no longer enough anymore.”
“Until we hired our desiger six weeks ago I was doing a lot of fliers and brochures and all that sort of stuff, which really makes no sense. I did get high grades in Arts in high school, but I really have no experience with graphic design. It was an interesing time, and we got through it, but we’re in a much better state now with a true professional helping us out on that front.
As mentioned, PlayMySong has a new generation of their smartphone and Spotify apps coming out soon, so we’ll keep you posted when that will come out.
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This series of posts is sponsored by Tekes and produced in co-operation with ArcticStartup to share real-world tips from entrepreneurs.
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