Your Burn Rate, Full Google Drive, and Danger Zone Crypto

How Much Cash You Need Stashed If a Emergency Happens...

We're covering how to save money on digital storage, understanding what your startup's burn rate really means, some of the hardest working real estate agents, and much more.

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Stock Market Update

Market Performance: May 12, 2024.

US stocks closed mixed Monday while a meme stock rally was reignited following a string of recent market gains. Investors largely stuck to wait-and-see mode, with attention to an upcoming inflation report seen as a potential starting gun for interest rate cuts. The S&P 500 (^GSPC) closed just below the flatline, while the tech-heavy Nasdaq Composite (^IXIC) moved up about 0.2%.

The Dow Jones Industrial Average (^DJI) snapped its eight-day winning streak, closing down 0.2%. The markets were dominated by a meme rally Monday.

GameStop (GME) shares jumped 74%, adding to a recent run-up for the video game retailer as meme stocks grab headlines again. The gains came as the social media star credited with kick-starting the 2021 meme stock frenzy, "Roaring Kitty," returned from a three-year break. AMC (AMC) shares also gained nearly 80%.

Financial Maverick Insights

Google Drive Full? Here's How to Save Money on Digital Storage

Google Drive, Google's cloud storage service, has over 2 billion active monthly users, according to Google partner Patronum. If you're one of those people, you might know you're account only gets 15GB of free space. That storage can fill up fast, and when it does, you'll see a message asking you to upgrade to a Google One plan, but you don't have to buy digital storage.

We'll walk you through both processes if you have access only to a mobile device.

Delete large files first

If you want to keep the majority of your items in Google Drive and Gmail, you can free up space by sorting each service by file size and deleting only one or two large files instead of a few dozen smaller items. Deleting one or two videos that take up multiple megabytes of space is easier than sorting through hundreds of old documents of similar file size to decide which can be deleted.

Empty your Gmail spam folder

It's easy to forget about emptying your spam folder, and it can take up unnecessary data in your Gmail account. Emptying your spam folder -- and your social or promotions folders -- is another way to make space.

Clean up your Google Photos

Google also includes Google Photos in the 15GB of free storage it gives its users. Photos and videos can take up more space than text-based files, especially higher-quality ones, so it's a good idea to go through and delete old photos and videos to make room. There's no option to arrange your photos and videos from largest to smallest like in Google Drive and Gmail, so you'll have to go through and delete items manually. You can check how much space a file is taking up by selecting it and clicking the "i" for information from the top menu.

When all else fails, download your files to your desktop

If your storage is still almost full and you can't part with any more items from your Google Drive, Gmail or Google Photos, you can download your items and store them directly on your computer.

Understanding What Your Startup's Burn Rate Really Means

“Managing burn is what it’s all about,” says Larry Augustin, who has been a founder, a CEO and a board member of many startups since the mid-1990s. “People get into trouble because they plan for what they’ll do with the next funding round rather than plan based on the funding they already have. That next funding round may not happen. Managing burn rate is a way to give yourself options.”

But burn rate—technically, the negative cash flow of companies that have greater expenses than revenue—is not necessarily a measure of danger. It is also the lifeblood of successful startups. Companies with great growth opportunities rarely capitalize on them unless they’re willing to burn through a lot of cash along the way.

The goal, then, is figuring out the right balance between sufficient and excessive burn rate. But how?

Understanding burn rate - the basics

If you are targeting a massive consumer market and won’t be happy with anything other than an IPO, for example, you’ll need to make hefty investments to attract top talent from other successful companies and establish a widely recognized brand. If you are building a gaming app or a cloud service for a niche business market and hope to get acquired within a few years, your need for capital will be lower. Obviously, the more you need to spend, the higher your burn rate will be. And the more money you’ll need to raise.

The two burn rate metrics that matter: unit economics and cost of growth 

Frugality alone won’t be enough as your business gains traction and you look to raise money from professional investors. At this stage, you need to get serious about the two main variables that will determine your burn rate: unit economics and the cost of growth, says Kasznik. Unit economics is the amount your company earns on every item your company sells, whether it’s a hardware product, an app or a cloud service. You calculate it by subtracting the cost to acquire each new customer from the lifetime value of that customer.

Burn rate can rise, but should never fall

Many founders are tempted to increase their burn rate as sales increase, and this is justified if the company is beating its financial goals. “If every $1 of investment is generating $3 in profits, you’re obligated to pour on more jet fuel” and spend more to capture market share, says Lipton. While increasing the burn rate will delay profitability, it’s usually worth it.

Fast-growing companies can end up with a stronger market position that could lead to higher profits from far more customers than would have been possible with a lower burn rate.

The big takeaway

While managing your burn rate is important, it shouldn’t become a time sink. Look at the financial statements once a month, get a sense of how much runway you have left, and—unless the company is approaching bankruptcy and every penny counts—only spend more time if a key line item is out of the norm. “If you’ve got 12 months of runway, whether someone spent $5,000 more or less on travel isn’t that important,” says Lipton. “Don’t be cavalier, but if there’s no smoke, there’s definitely no fire.”

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