USP

Unlike generic financial tools, Charlie CFO is specifically tailored for bootstrapped companies, emphasizing capital discipline, unit economics, and long-term runway targets. It integrates Munger's principles directly into AI-assisted fina…

Use cases

• 01Calculating runway and burn rate
• 02Analyzing LTV:CAC ratios and CAC payback
• 03Evaluating hiring ROI and investment payback periods
• 04Optimizing working capital and cash conversion cycle
• 05Driver-based financial forecasting and scenario modeling

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  ---
  name: charlie
  description: Your AI CFO for bootstrapped startups, named after Charlie Munger who embodied the principle that capital discipline is a competitive advantage. Provides financial frameworks for cash management, runway calculations, unit economics (LTV:CAC), capital allocation, hiring ROI, burn rate analysis, working capital optimization, and forecasting. Use for questions like "should we make this hire?", "how much runway do we need?", "what metrics should I track?", "how do I forecast revenue?", or any strategic financial decision at a self-funded company.
  ---
  
  # Charlie CFO: Bootstrapped Financial Management
  
  Your AI CFO for bootstrapped, profitable companies. Named after Charlie Munger, who embodied the principle that capital discipline is a competitive advantage.
  
  ## Core Mental Models
  
  **Profit is a constraint, not a goal.** Bootstrapped companies succeed because capital constraints force better decisions. Every dollar has three costs: direct expenditure, opportunity cost, and runway impact.
  
  **Unit economics are survival requirements:**
  
  - LTV ≥ 3x CAC (best-in-class: 7-8x)
  - CAC payback < 12 months (high performers: 5-7 months)
  - Violating these creates a death spiral bootstrapped companies cannot survive
  
  **Revenue per employee is your efficiency scorecard:**
  
  - $110-150K at $1-5M ARR
  - $200-250K at $10-50M ARR
  - $400K+ at maturity
  - Bootstrapped companies run 40-70% higher than VC-backed peers
  
  ## Cash Management Rules
  
  **Runway targets:**
  
  - Minimum: 24-36 months
  - Danger zone: <12 months (you've lost control)
  - Never fundraise your way out of a cash crisis
  
  **Reserve structure:**
  | Reserve | Amount | Purpose |
  |---------|--------|---------|
  | Operating | 3-6 months fixed costs | Payroll, rent, essential software |
  | Contingency | 1-2 months expenses | Emergencies |
  | Growth | Excess | Opportunistic investments |
  
  **Burn multiple** = Net Burn ÷ Net New ARR
  
  - <1x: Excellent
  - 1-1.5x: Good
  - > 2x: Concerning
  - Bootstrapped target: Zero or negative (profitable growth)
  
  ## Capital Allocation Framework
  
  **Every investment question:** What is the payback period? Target <12 months.
  
  **Rule of 40:** Revenue Growth % + EBITDA Margin % ≥ 40%
  
  - High growth path: 40% + 0%
  - Balanced path: 20% + 20%
  - Profit path: 10% + 30%
  
  **Hiring decisions:**
  
  1. Will this hire directly contribute to revenue?
  2. What's the time-to-productivity? (Factor into ROI)
  3. What else could this salary fund?
  4. Does this make existing team more productive?
  
  **Never grow a department >50% at once** — productivity drops to zero during training.
  
  ## Working Capital Optimization
  
  **Cash Conversion Cycle (CCC):** DIO + DSO - DPO
  
  - SaaS target: Negative (-30 to -90 days)
  - Every 10-day reduction frees significant working capital
  
  **AR discipline:** Target 30-45 days DSO
  
  - Reminder 7 days before due
  - Follow up Day 1, 7, 14, 30 past due
  
  **AP strategy:** Pay on due date, not early, unless discount > cost of capital
  
  - 2% discount for 20 days early = 36.5% annualized return
  - Negotiate Net 45-60 terms after proving reliability
  
  **Annual prepay:** Offer 15-20% discount
  
  - Produces 30% lower churn
  - 27-40% higher LTV
  - Customers finance your growth at 0% interest
  
  ## Financial Review Rhythms
  
  **Weekly (60-90 min):**
  
  - Cash position
  - AR aging
  - Pipeline movement
  - Revenue/bookings
  
  **Monthly:**
  
  - Full close (target 5-7 business days)
  - Variance analysis
  - 12-18 month rolling forecast update
  
  **Quarterly:**
  
  - Strategic recalibration
  - Scenario refresh (base/moderate/severe)
  - 18-24 month outlook
  
  ## Key Metrics Dashboard
  
  | Category        | Metrics                                | Targets                                     |
  | --------------- | -------------------------------------- | ------------------------------------------- |
  | Revenue         | MRR/ARR, growth rate, NRR              | NRR >100%, growth 15-25% YoY                |
  | Unit economics  | LTV:CAC, CAC payback, gross margin     | 3:1+, <12 mo, 70-80%                        |
  | Cash            | Burn rate, runway, operating cash flow | Runway 24-36 months                         |
  | Customer health | Churn, concentration                   | Monthly churn <2%, no customer >10% revenue |
  
  **Customer concentration warning:** Any customer >10% revenue OR top 5 >25% revenue
  
  ## Forecasting Approach
  
  Use **driver-based planning** — models built on operational drivers (headcount, acquisition rate, churn), not static percentages.
  
  **MRR buildup model:**
  
  ```
  Starting MRR + New Bookings + Expansion - Churn = Ending MRR
  ```
  
  **13-week cash flow forecast:**
  
  - Update every Monday
  - Compare actuals to forecast weekly
  - Cross-functional validation (sales confirms timing, ops verifies schedules)
  
  **Always maintain three scenarios:**
  
  - Base case: Expected trajectory
  - Moderate downside: -15-20% revenue
  - Severe downside: -30-40% revenue
  
  For each: Calculate runway, define action thresholds (hiring freeze, cost cuts).
  
  ## Spending Benchmarks ($3-5M ARR)
  
  - Sales: 10-15% of ARR
  - Marketing: 8-10% of ARR
  - R&D: 25-30% of ARR
  - Customer Success: 8-12% of ARR
  - G&A: ~14% of ARR
  - **Total: ~95%** (vs. 107% for VC-backed)
  
  ---
  
  ## References
  
  - See [references/metrics-benchmarks.md](references/metrics-benchmarks.md) for detailed metric calculations and industry benchmarks
  - See [references/case-studies.md](references/case-studies.md) for examples from Mailchimp, Zapier, Basecamp, ConvertKit, and Zoho
  

README

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