One Month’s Expenses at a Startup

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Don’t tell me what you value, show me your budget, and I’ll tell you what you value.

 Joe Biden

When Everpix shut down and open-sourced their financials, one of the most fascinating and hotly debated points was the company’s expenses.

I thought that adding another data point to the conversation could be interesting to fellow startup folks. Here’s one month of expenses here at iDoneThis, for July 2014. What you see below is taken straight from our bank statement.

People

Payroll $19,610.45
Payroll Taxes $5,025.65
Blue Shield $2,093.00
Paychex Fees $122.36
Total $26,851.46

Paying people is by far our biggest expense. This is how much it costs to support our small company of 4 people. This month our people costs only accounted for 58% of our startup expenses, but it regularly accounts for closer to 85%.

We have health, vision, and dental for everyone on the team. We’ve already seen how investing in the health and well-being of the team has paid off.  Earlier, we didn’t have dental and one of our employees had a dental emergency. The company chipped in to cover the cost of the procedure, which cost over $1,000. Afterwards, we got dental and vision for everyone, and it gives peace of mind and protection against another similar incident happening. Ultimately, on a team comprised of people all over 30+ in age, this is a must-have.

(Note that we pay dental and vision annually, so it’s not in any of the amounts above.)

SaaS

Heroku $1,387.00
MailChimp $652.50
SendGrid $589.27
Intercom $248.00
Baremetrics $79.00
Baremetrics $79.00
iDoneThis $51.00
Customer.io $50.00
Litmus $49.00
HelpScout $45.00
Embedly $44.02
Buffer $40.00
Dyn $30.00
iDoneThis $30.00
WP Engine $29.00
Embedly $28.00
Wistia $25.00
GitHub $25.00
GetSentry $24.00
Wufoo $14.95
Buffer $10.00
Total $3,529.74

And we not only use our own product, we pay for it too, so that we are literally our own customers.

We’re big believers in the power of SaaS. Defaulting to using SaaS over building things in-house means that we can focus on what we do that’s valuable.  For example, last month, we ripped out our homemade drip email system and replaced it with Customer.io. This frees us from the trouble of maintaining our homebrew when bugs pop up and it goes down. Plus, Customer.io is building features and improvements to drip emails that we’d never have time to do.

To us, paying for SaaS is like a better version of hiring someone to do the job.

Office

Office Rent $10,599.71
Furniture – Chairs, lamps, couch $2,500.00
Amazon Marketplace – Aeron Chair $899.00
Amazon Marketplace – Aeron Chair $899.00
Amazon Marketplace – standing desk $300.48
Amazon Marketplace – Dell Monitor $198.00
Amazon – office chair $170.25
Amazon – speakerphone $95.80
Total $15,662.24

The amount spent on the office this month was anomalous but I thought that it might be interesting, so I left it in.

We moved into our first office this month.  (It’s at 47 Great Jones near Bowery if you’re in NYC — come by!)  To negotiate away the good-guy guarantee, we offered to pay 3 months’ rent up front in addition to 1 month’s security deposit. Ongoing, our rent is $2,625 per month.

Considering how much time we spend at our desks, we did think it was worthwhile to invest in ergonomics. We initially bought a bunch of furniture off of Amazon, but we came across a Craigslist listing for a startup that was downsizing. We bought 9 Aeron chairs, 3 lamps, a couch, a filing cabinet, and a plant from them for $2,500 and returned the 3 chairs we purchased from Amazon.

Moving into an office is expensive!

Miscellaneous

Twitter Ads $222.20
Job Board Listing $200.00
DANNYVANKOOTEN.COM $59.00
Odesk $11.11
Odesk $10.00
Jonathan Quach $2.72
Total $505.03

Here’s where we have some experiments.

We’ve only played around with paid acquisition — it’s something we’ll likely dedicate more time to later on. We tried finding writing freelancers on oDesk, but none of them produced high enough quality writing. We put a job board listing on WeWorkRemotely.com, and we got some fantastic candidates from them.

Total – $46,548.47

This is our highest month ever for expenditures because of the office move-in. We’re not bootstrapped, but we operate close to profitability, so we try to keep expenses down and only spend money on things that are truly important.

  • Shruti

    Hey Walter – I found two SaaS items that you can cut down cost on:

    1. MailChimp – you might want to try out Sendy + SES – same functionality and substantial savings
    2. Buffer – you might want to try out SocialPilot.co – save up to 90% of your costs

    Worth giving a look.

    • Walter Chen

      I’ll check them out, thanks!

  • http://oraleye.com Mark Moore

    Hi Walter,

    Thanks for sharing this, it’s very helpful to ‘benchmark’ against similar sized teams and data in this area is very limited. I was also interested to see you’re very real dental needs- hopefully over time we’ll be able to reduce those for companies like yours. I’m looking forward to following your progress!

    Mark
    http://www.oraleye.com

  • http://twitter.com/#!/annelibby Anne Libby

    Aeron chairs!

    After the dot-com meltdown, a friend who’s not in finance/tech (she’s a social scientist) asked me where all of the venture capital had gone. I told her, salaries for people like me.

    And Aeron chairs, that had gone on to second lives elsewhere.

  • Chris N

    Hi Walter – it looks like you guys use at least 17 different SaaS accounts to get what you need done. How do you guys manage all these services?

  • https://cagrisarigoz.com/ Cagri Sarigoz

    Wow, you’re shockingly transparent with your finances! That’s the spirit.

  • Kaegan Donnelly

    Great post, Walter! We’re thinking of doing a similar blog posts one of these days at Baremetrics–thanks for the inspiration. =)

  • http://www.schluesseldienstvergleich.eu MarcoDi

    Very interesting, thanks for the open words.Good luck!!

  • ElieJulz

    Timely writing , I loved the points – Does anyone know if my company could possibly get access to a fillable IRS 1040 – Schedule E version to fill out ?