When I started Findory, I was extremely sensitive to burn, probably too sensitive.
Maybe having witnessed all the dot com flameouts caused me to be overly cautious, but I wanted to be very careful about money flowing out the door. Many companies do fail early simply by running out of cash. I thought the best way to avoid this was to be careful about spending money.
Findory was built on the cheap. It is self-funded. There is no office space; the company is virtual. There is almost no marketing or advertising.
There are no salaries or benefits at Findory. For most tech startups, salaries dominate the burn rate. Even at 1/3 salary, each additional employee is about $4-6k/month (fully loaded, includes benefits, expenses, office space, etc.) At full salary, it is about $10-15k/month. Salary and benefits would have burnt through initial funding in less than a year.
By the way, it is worth noting that not drawing a salary is roughly equivalent to taking a salary but investing an equivalent amount immediately back in the startup. The latter is a lot more complicated, but both serve to fund the company using the money normally paid in salaries and benefits.
Findory uses free open source software (Apache, MySql, Linux, Perl, Berkeley DB). This allows the company to keep its costs low in its infancy. A quick note here, using Fedora Linux was a mistake. As it turns out, the upgrade path to get patches on major releases (e.g. Core 3 -> Core 4) is quite painful.
Findory uses cheap, leased, commodity servers. Findory currently runs on six servers. The cost per server is under $100/month. They are simple, low end, AMD boxes with a reasonable amount of memory and a cheap IDE disk.
Rather than pay for a news feed, Findory runs its own crawl. That allows us to customize the crawl to our needs and quickly launch new products (e.g. video, podcasts), but does take a fair amount of time to maintain and extend.
In retrospect, I think I have been too cheap. The tradeoff here is between death by burn versus death by resource starvation. While Findory has lived a long time with very low burn, it has been starved of resources, slowing growth and making it difficult to pursue many paths for expanding the products.
Update: By the way, I always welcome comments, but I especially would love to hear feedback in this particular series. Think I should have done something differently? Please comment and let me know. Think I have analyzed the issues incorrectly? Chime in and tell me about it. I would enjoy hearing what you think.
Update: There are some good discussions going on in the comments to this post.