Bottoms up budgeting builds a company's expense budget from the ground up, starting with every vendor in every department and every account and reviewing past spending with each department head to forecast what will be spent in the future.
The term is John's phrasing of what is more commonly called bottom-up budgeting or planning. Its counterpart is 📝Tops Down budgeting, which starts from 📝Boundary Conditions such as growth targets and cash runway and then sets the level of expenses the company can sustain. In a bottoms up process the detail comes from the people who run each department, so the budget reflects operating reality; in a tops down process it comes from leadership's targets, so it reflects strategy. Most planning processes combine the two, letting departmental detail inform goals set at the top.
In John's annual budgeting sequence, boundary conditions set the frame, a 📝Base Budget sets revenue at a level the company should beat in 90% of scenarios, and expenses are then filled in bottoms up to stay within the desired runway. As a company approaches its Series B, budgeting typically shifts from a centralized, tops down process to a distributed bottoms up one, in which department budget owners manage their own hiring and expenses and each department's budget to actual rolls up into the company view.