Learn Rate vs. Burn Rate

Go from scattered tactics to compounding breakthroughs with this one metric

“We’re burning cash and learning nothing.”

I looked up from my notes. This was no ordinary customer interview.

His words crystallised something I’d heard from so many founders.

Some teams are mired in debate, others execute like crazy, but only on small things. Nothing moves the needle.

Lots of activity, minimal impact.

“We don’t have unlimited runway,” he continued. “Is there a way out of this cycle?”

At that exact moment, I realised there is.

“I don’t know the right tactic for your company,” I started. “But I do know one thing.”

You. Get. What. You. Measure.

Successful teams track many KPIs.

Struggling teams should start with one:

Learn Rate / Burn Rate – Coined by the brilliant Sara Gordon.

“Burn rate” is pretty straightforward, but how do you measure “learn rate?”

Measuring Your Learn Rate:

Every Friday, ask your team one question: "What did we learn this week?"

Not what did we do. What did we learn.

Go around the room (or Slack thread). Sales rejections, marketing experiments, user feedback - what worked, what didn’t, and why?

“Why” separates useful learning from noise. “CPAs are too high” or “Message variant A works best,” doesn’t tell us much. Why did this happen? What new questions does it raise? What should we try next?

After everyone shares their learning, do the math: Was that learning worth your weekly burn?

Say you spent $20,000 this week. Did you learn $20,000 worth of insights about your customers, your product, your market?

If not, you're burning cash without building knowledge.

Most startups think they're learning when they're just confirming what they want to believe. Real learning will surprise you.

Optimising Your Burn Rate:

Look at your biggest expenses. Ask one question: "Is this making us smarter or just busier?"

That marketing campaign that's "sort of working"? Cut it. That product feature you're building to test an assumption? Stop. Run an experiment instead.

Every dollar should either generate revenue or generate learning. If it's doing neither, it's waste.

This includes people. Until you know what works, hire playbook writers, not playbook executors.

Doing the Math

Err on the side of frugality – Assume this will take a long time, and preserve every hour of runway you can.

If your current approach isn’t working, it isn’t magically going to start.

Every mistake needs to make you smarter.

How can we do this faster?

There is a process to maximise the pace and quality of learning. I didn’t invent it, but I explain it in my book Growth Levers and How to Find Them.

If this resonates with you, and you’d like help implementing this, we’ve managed to compress years of “learning it the hard way” into a ten-week sprint, guided by me and my team of experts, in our Growth Program.

We have a few slots left in our summer cohort, which starts June 30th.

If you have a live product with some happy customers, book a 15-minute call with my co-founder to see if you’re a good fit.

The faster you learn, the sooner you earn.