Demand budgets
How a Startup buys demand at $0 by default, and how a founder-funded budget becomes a Play mix with a target and a stop rule.
A Demand Budget is the money a founder puts behind demand each month. A long-tail Startup runs at $0, and a funded budget buys a mix of demand Plays, each given enough to produce a readable result.
Zero is the default
Most Startups never fund a budget, and they still find Customers. The free Plays need no audience of their own: answer engines, search, directory and registry listings, launch sites and community threads. Borrowed audiences add the rest: referrals, house ads across the Portfolio, and posts from the Studio’s shared social accounts, which already have followers.
Zero means no media spend, not no cost. Prompt panels, rank tracking and enrichment are metered as platform usage, about $5 to $20 a month. Siblings that track the same queries share most of it.
Paid spend has a strict default: a paid Play opens only when the first transaction pays back its acquisition cost on day one. A funded budget is the one deliberate exception.
Minimum effective budget
Every paid Play declares a minimum effective budget: the smallest monthly spend that yields a readable signal on its Metric within its latency. Below it, money buys noise.
An ad network optimizing for purchases needs about 50 conversions per ad set each week to stop learning. A purchase test must buy that many.
Each Play also declares a cost curve: how the cost of the next outcome changes as spend rises.
| Curve | Shape | Plays |
|---|---|---|
| Flat | An asset; the next outcome costs almost nothing | Answer engine optimization, programmatic SEO, listings |
| Step | Lumpy units: a mailbox, a slot, an event | Cold email, sponsorships, events |
| Linear | A price per outcome | Customer referrals, commission partners |
| Concave | The cheapest intent goes first, then each click costs more | Paid search, retargeting |
| S-curve | Wasteful below the learning threshold, efficient in the middle, then saturating | Paid social, video ladder |
The Marketing Team never splits a budget across more paid Plays than their minimums add up to. A $1,000 budget runs paid search or a social test well, never both badly.
What each tier buys
Each tier includes every Play below it. At $1k, about $850 goes to media, $50 to data and $100 to creative; at $10k, video creative takes about $800.
| Tier | Adds | Default stop rule |
|---|---|---|
| $0 | Answer engines, search, listings, agent registries, launch sites, community answers, shared accounts, referrals, house ads | None: assets compound |
| $100 | Signal-led cold email, retargeting once the list qualifies, an exact-match test on Bing, app store fees | Under 1 percent positive replies after 500 sends |
| $1k | Paid search on Google Search, one test on Facebook and Instagram or Reddit, one sponsorship, five to ten flat-fee creators | Cost per first transaction above its margin for two weeks |
| $10k | Facebook and Instagram at scale, TikTok, YouTube and LinkedIn Ads, paid placements on G2 and Capterra, webinars | One placement above 1.5 times the target for two weeks |
| $100k | Every placement at scale, brand-search defense, conferences, holdout tests | Incremental lift below its threshold |
Funding a budget
A founder funds a budget by recording a Decision with three parts: the amount, a target and a stop rule. The target is a Metric value, such as cost per first Order under $40. The stop rule is the reading that ends the spend.
The Finance Lead sets the amount against runway, and the Marketing Lead composes the mix. The budget overrides the day-one payback default only for its own window and target.
When the stop rule fires, the budget closes and the Decision records the Evidence. Nothing is deleted, so the next budget starts from what this one learned.
Spend under Limits and windows
All spend runs under the Startup’s Limits. A launch, a raise, a new placement or an audience sync is a one-way act. It waits the ad-spend delay window, where any watcher can pause it.
A raise above twice the current spend waits one business day, and a pause never waits. Spend states bind every Play at once: a tight state blocks raises, and a hold blocks launches.
The weekly Play Mix
A Play Mix is the set of Plays a Startup runs this week, each with its state, budget and stop rule. PlayMix.compile builds a new version every week from the Demand Budget, each Play’s ledger and last week’s Acquisitions.
Each Play keeps a ledger computed from Events, never typed in: spend, workerCost, customersAcquired, outsideRevenue, margin and paybackDays. Revenue reaches it on Invoice.collected, which walks back to the Customer’s Acquisition and the Play named there.
The compile runs in a fixed order.
- Keep the Plays that fit the Offer’s Motion and the Startup’s Lifecycle state.
- Keep every free Play running.
- Give each paid Play at least its minimum effective budget, or leave it out.
- Open a gated Play only when its gate’s Metric crosses its threshold.
- Give the next dollar to the Play with the shortest marginal Play payback.
- Write the diff: one line per Play, with the reading that moved it.
A running Play holds until its loop window closes with its sample met, or until a guardrail stops it. The compile changes at most two Play states a week, and each randomized allocation logs its propensity.
Every version is kept, so a pivot reads as a diff. One week’s diff reads: "cold email paused at 0.6 percent positive replies; paid search raised to $1,200."
A worked example
A Startup selling a bookkeeping agent to freelance designers funds $1,000 for 60 days. Its target is cost per first paid month under $45, and its stop rule closes the budget after two straight weeks above $75. Answer-engine Pages and directory listings keep running for free.
The Marketing Lead cannot fund search and a social test together, so the Portfolio decides. Sibling Startups selling to freelancers converted better on search, so $850 goes to Paid search on six exact terms. The rest buys data and two landing Pages.
Weeks one and two bring five Customers at $68 each: over target, under the stop line. The Analyst cuts the two broadest terms, and weeks three and four bring 14 Customers at $38. The founder renews at $1,000 and the Decision keeps both readings.
Next
- Demand plays: every Play with its tier and minimum budget.
- Creator partnerships: borrowing an audience before paying for one.
- Marketing playbook: seed, then compound.