Decide-Today Runway Math
Cost cuts only buy runway if you make them now; every month you wait permanently destroys optionality
- Difficulty
- Moderate
- Time to result
- ~days to results
- Steps
- 4
- Confidence
- 95%
Levine's core insight about crisis decisions is that the value of a burn cut decays with time — the runway a cut can generate is maximized on day one and shrinks every month you delay. Because a startup only dies by running out of money, the decision to cut must be made today, not when the wall is closer, since waiting doesn't just delay the fix, it makes the target mathematically unreachable.
Origin
Uri Levine's crisis-management framework; illustrated with worked burn-rate math from his book and advisory work.
Core principles
- 01The only way a startup dies is running out of money
- 02The longer you wait, the more options you lose — the only moment you can fully choose is today
- 03A cut applied later covers fewer months, so a runway target reachable today becomes impossible later
- 04Deciding to hold course is legitimate — but it must be an explicit, communicated decision, not drift
How to run it
- 1
Compute current runway and the burn cut needed
Take cash in bank divided by net burn to get months of runway, and calculate the percentage cut required to reach your target runway. Example: $2.5M in bank, $200k net burn = ~12 months; if you lose half of revenue you may drop to 6.
- 2
Model the cost of waiting
A 50% cut made today can double 6 months of runway to 12. The same cut made 3 months later leaves 3 months burned at the old rate plus 6 at the new rate — only 9 months total. A 12-month target you don't act on today is unreachable.
Pro tip State it as a rule: 'If you decided today that you need 12 months, and you don't act today, you will never have 12 months.'
Watch out Every month of delay is options permanently removed, not merely postponed.
- 3
Make the decision now and commit with conviction
Choose your path — cut burn, hold course, raise — today, right now, and commit fully. A half-hearted decision the team can sense will not be followed.
Pro tip Making decisions with conviction is the second-most-important CEO behavior after never giving up; without conviction the team won't follow.
- 4
Communicate the decision to the whole team
In a crisis everyone already knows there is a crisis. Inaction or silence reads as a sinking ship and your top performers leave. Announce the chosen course even if the course is 'full steam ahead until we hit the wall'.
Watch out If you do nothing visible, the highest-performing people — the ones you most need — will be the first to leave.
In the wild
A company with $5M annual revenue ($400k/month), $200k net burn, and $2.5M in the bank has ~12 months. Lose half the revenue and, with the same reserves, runway collapses to 6 months. Cutting expenses to match the new revenue on day one restores a full 12 months.
→ Acting on day one preserves the choice; delaying three months caps the achievable runway at nine and forecloses the 12-month option entirely.
Common mistakes
Deferring the cut to 'deal with it in five months'
Staying the course to postpone pain means the eventual cut covers far fewer months; the runway you could have bought is gone forever.
Cutting the coffee instead of the payroll
70–75% of a startup's budget is people; perks are nickels and dimes. Cutting perks doesn't move the number and it signals leadership that can't make hard decisions, driving people out anyway.
Is it for you?
Best for
Founders facing a revenue or funding shortfall who must decide whether and how hard to cut burn to extend runway
Not ideal for
Well-capitalized companies with years of runway where the time-decay pressure doesn't yet bite
From the transcript
“The only ability to choose is today.”
“If you decided today that you need 12 months, and you don't act today, you will never have 12 months.”
“the more the longer that you wait you actually lose options”
“if you look at the startup and you look at the budget, 70% of the budget is people”
“The second one, by the way, is making decisions with conviction”
From the episode
A founder’s guide to crisis management
Uri Levine (Waze co-founder, serial entrepreneur)