Know your runway

Dear new developer,

When you are considering a career move, whether to a startup, a sabbatical or further schooling (basically any time when your income will exceed your expenses) it pays to calculate your runway. There are various kinds of runway (social, emotional, financial) but the easiest one to calculate is financial. You do this by tracking your monthly net outflow (expenses minus any income) and knowing your savings. Dividing the savings by the outflow gives you the months of runway you have. At the end of your runway you will have no money, which makes living hard. That is something you want to avoid.

How can you avoid the “I have no money” outcome? First, calculate your runway regularly. Once a month is optimal. Second, be aware how long it would take to get a new job (this will probably be an estimate, but ask folks with similar experience who have found jobs how long it took them). Third, before you start, decide on a number of months of runway that will cause you to start seeking other sources of income. Fourth, get a job before you need to.

If you look like you are going to run out of money before you are done with whatever you are trying to do, then you have some hard choices. You can quit or pause your task, increase your income (drive for Lyft, etc), decrease your expenses (move to a cheaper home, etc). Decreasing expenses is the option you typically have the most control over, but it can be unpleasant. It’s the course I recommend, however, because it typically is the least distracting (though if you are cutting expenses to the point that you are hungry all the time, then that may not be the case).

The reason to get a job before you need to is that desperation makes interviews tougher (more pressure). Even if you find a job and get the offer, you will accept a job that isn’t the best fit just to bring in some income. If benefits aren’t important, you may want to consider contracting as a stopgap to allow a more relaxed interview process while stopping the bleeding.

Whew. Sounds stressful. Why would you ever put yourself in situation where you needed to think about runway?

Pulling from savings and not maximizing your current income is a form of investment. When I joined a startup as a co-founder I leveled up my skills around devops, customer empathy, community building, and product management. When I took a sabbatical I learned how much I truly loved building software (I remember reading an article about RDF in an internet cafe in another country).

It can absolutely make sense to invest savings and time into something that will drawdown your savings rather than increase it. Just keep in mind how long you can invest so you aren’t unpleasantly surprised.

Sincerely,

Dan

PS This post was inspired by a comment from a Meetup participant, but all thoughts and mistakes are mine.