Starting a Company Outside Silicon Valley Just Saved Me $1.1M

The cost of residential rent and a gallon of milk are indirect inputs to startup costs at best, while things like the cost of coworking desks and entry level engineers are a far better proxy. I looked through the early-stage cost models from RJMetrics, Stitch, and Crossbeam to pull together a rough breakdown of how expenses were allocated among different cost categories in the early stages of growth. By far the largest expense at the early stages, engineering headcount is disproportionately high as the product is being developed and a company iterates to product-market fit. We also lumped general and administrative expenses into this bucket as sales salaries were a more fair proxy for general salary ratios for non-engineering roles. 15% – Cost of Goods Sold (COGS) and Other Expenses (software licenses, etc.)

Some things just don’t change with geography.

Source: blog.getcrossbeam.com