AMA HN: I launched my profitable startup one year ago today.
14 comments
What is your infrastructure like? AWS? shared hosting? self hosted?
Are you using any interesting solutions for storage of the video?
Are you using any interesting solutions for streaming the video?
Are you using any interesting solutions for storage of the video?
Are you using any interesting solutions for streaming the video?
Just about everything is on AWS. I use EC2 for the servers, S3 for storage, CloudFront for streaming, Route53 for DNS, SQS for messaging, and CloudWatch for monitoring. So, there are no real interesting solutions for the storage or streaming of video unless you consider S3 and CloudFront interesting.
What is your estimated combined monthly bill for all those AWS services?
Can you please talk about the economics of doing a video based small startup?
I have a couple of ideas that would involve users uploading large video files and me having to store them at least temporarily.
I don't yet know if this is a show stopper for what would be a on the cheap side project.
I have a couple of ideas that would involve users uploading large video files and me having to store them at least temporarily.
I don't yet know if this is a show stopper for what would be a on the cheap side project.
There are pretty much three major costs to consider when it comes to video online. They are storage, delivery and encoding.
Storage is pretty cheap. S3 starts at $0.14 per GB for the first TB and then drops to $0.125 for the next 50TB and so on. There might be some cheaper cloud storage options out there. If you don't need the durability that S3 provides, you can use their reduced redundancy option which is like 40% cheaper. There are other cloud storage provides out there worth considering like Rackspace's Cloud Files, although I think S3 is the cheapest. CDNs also often include their own storage so that might also be something to consider. You might be able to get a good rate if you committed to a minimum storage and bandwidth package. If you wanted, you could even go the route of building your own storage units (http://blog.backblaze.com/2011/07/20/petabytes-on-a-budget-v...) which presents it's own pros and cons.
Delivery also isn't that expensive. CloudFront, for instance, charges $0.12/GB for the first 10TB and $0.08/Gb for the next 40TB. If you're streaming over 10TB per month, you can start to get discounts by committing to monthly minimums. Again, there are other providers out there, such as limelight and akamai, but as far as I can tell, they don't publish their prices. That usually means you probably need upfront commitments with them. Because of that, there is probably a lot of room to negotiate the price of bandwidth. Delivery will most likely be your highest cost just because of the volume unless you don't plan to be streaming that much video.
Lastly there is encoding. Encoding can either be done by yourself on your own serves or through one of the many providers online. Doing it yourself takes a bunch of time to figure out all of the quirks of all of the different video and audio codecs and containers. It's not a fun process, but ultimately, if you can get it right, it might be cheaper. There are a bunch of transcoding services out there. They have different pricing models so you'll want to make sure that the model fits your use case. For instance, Zencoder charges for the minutes of output video created but something like Encoding.com charge by GB (Combined input and output file sizes). If you're dealing with a lot of short, but really large, videos, the Zencoder model would fit better. If your files are small, but really long, (like webinars) the Encoding.com model might work better.
Storage is pretty cheap. S3 starts at $0.14 per GB for the first TB and then drops to $0.125 for the next 50TB and so on. There might be some cheaper cloud storage options out there. If you don't need the durability that S3 provides, you can use their reduced redundancy option which is like 40% cheaper. There are other cloud storage provides out there worth considering like Rackspace's Cloud Files, although I think S3 is the cheapest. CDNs also often include their own storage so that might also be something to consider. You might be able to get a good rate if you committed to a minimum storage and bandwidth package. If you wanted, you could even go the route of building your own storage units (http://blog.backblaze.com/2011/07/20/petabytes-on-a-budget-v...) which presents it's own pros and cons.
Delivery also isn't that expensive. CloudFront, for instance, charges $0.12/GB for the first 10TB and $0.08/Gb for the next 40TB. If you're streaming over 10TB per month, you can start to get discounts by committing to monthly minimums. Again, there are other providers out there, such as limelight and akamai, but as far as I can tell, they don't publish their prices. That usually means you probably need upfront commitments with them. Because of that, there is probably a lot of room to negotiate the price of bandwidth. Delivery will most likely be your highest cost just because of the volume unless you don't plan to be streaming that much video.
Lastly there is encoding. Encoding can either be done by yourself on your own serves or through one of the many providers online. Doing it yourself takes a bunch of time to figure out all of the quirks of all of the different video and audio codecs and containers. It's not a fun process, but ultimately, if you can get it right, it might be cheaper. There are a bunch of transcoding services out there. They have different pricing models so you'll want to make sure that the model fits your use case. For instance, Zencoder charges for the minutes of output video created but something like Encoding.com charge by GB (Combined input and output file sizes). If you're dealing with a lot of short, but really large, videos, the Zencoder model would fit better. If your files are small, but really long, (like webinars) the Encoding.com model might work better.
Thanks very much! So it sounds like from every aspect the cost scales fairly smoothly from zero on up, is that right?
If that's the case then it makes life easy as from day 1 you can pass the entire cost onto the customer in your pricing. Has that been your experience?
If that's the case then it makes life easy as from day 1 you can pass the entire cost onto the customer in your pricing. Has that been your experience?
As long as you pass on all of the costs onto the user, it works out pretty well and you should never lose any money on a customer.
NYC is different than the Bay area with respect to moonlighting/IP-ownership issues when you have a full-time job and you do projects. Did you clear this with your employer, were you in a contract that didn't have restrictions, did you hope for the best, etc. ? Thanks for sharing!
I had talked it over with both my manager and CEO. I just took a look at my employment agreement and there was an attached Proprietary Information and Inventions Agreement. In it, it states that the company shall own all right, title and interest in and to all Inventions which arise out of research or other activity conducted by, for or under the direction of the Company, or which are useful with or relate directly or indirectly to any “Company Interest”. While that is somewhat broad, the work I did was neither for nor under the direction of my old company so I'm fairly certain it doesn't fall under that agreement.
How did you determine this was a service businesses needed? It appears to me they could do it all on any number of other well known video hosting services.
Related to this: http://news.ycombinator.com/item?id=2832961
I used to work for a company that offered a very similar service which had many paying customers who validated the idea. The company was acquired, but not that particular business unit. We essentially stepped in and took over that unit so the customers would not be left out in the cold.
I used to work for a company that offered a very similar service which had many paying customers who validated the idea. The company was acquired, but not that particular business unit. We essentially stepped in and took over that unit so the customers would not be left out in the cold.
Do you have collaborators ? Did you take care of everything or did you outsource some tasks to freelancers (for instance, design, etc.) ?
I had (well still sort of do, but that's a whole other story) a co-founder for the first couple of months. He's a non-technical person, so he didn't contribute any code. He mostly contributed with product guidance and some design / UX stuff.
Our site is based on a combination of two template we bought and we outsourced our logo design to oDesk.
Our site is based on a combination of two template we bought and we outsourced our logo design to oDesk.
How long did you wait until you quit your job? Where did the idea come from? Did you outsource the web design?
I wound up quitting my job about midway through October 2010 because customer support was beginning to require too much of my time.
The idea was in no way original, but came out of an opportunity to both prevent hundres of people from losing their videos when my old company was sold to SnapFish and make a bit of money. See: http://news.ycombinator.com/item?id=2833008
The web design came from a combination of two templates that we bought. I'm currently talking to a designer about redesigning everything so it doesn't feel so much like a template site and does a better job of showcasing the product.
The idea was in no way original, but came out of an opportunity to both prevent hundres of people from losing their videos when my old company was sold to SnapFish and make a bit of money. See: http://news.ycombinator.com/item?id=2833008
The web design came from a combination of two templates that we bought. I'm currently talking to a designer about redesigning everything so it doesn't feel so much like a template site and does a better job of showcasing the product.
How long from first line of code to launch? And what were your expenses for that time?
In other words, what was the bootstrap amount you needed?
In other words, what was the bootstrap amount you needed?
My first commit was on June 25, 2010. So, 37 from first line of code to launch. I was still working a full time job at the same time, so it was coded during nights and weekends only.
There were very few costs durting that period other than maybe a hundred dollars in server costs for testing and food.
Edit: Now that I think about it there actually were a few other costs such as incorporating the company, outsourcing the logo and business card design, setting up the bank account, and so on. The total came to around $2k.
There were very few costs durting that period other than maybe a hundred dollars in server costs for testing and food.
Edit: Now that I think about it there actually were a few other costs such as incorporating the company, outsourcing the logo and business card design, setting up the bank account, and so on. The total came to around $2k.
How long before you were profitable? Have you managed to maintain growth since then?
The company was profitable pretty much from day one. We don't have a free tier, so all of our customers are paying customers. We made sure that our initial pricing structure ensured that, in almost all cases, the users at least covered their own costs. We've added four pricing tiers since launching and this still pretty much holds true (except for the lowest tier).
To maintain growth, we've mostly marketed our site using PPC though AdWords. So far, even without much optimization, it seems to be working fairly well. When I have more time to devote to it, I'll be able to spend more time optimizing our ad campaign and explore other methods of marketing.
To maintain growth, we've mostly marketed our site using PPC though AdWords. So far, even without much optimization, it seems to be working fairly well. When I have more time to devote to it, I'll be able to spend more time optimizing our ad campaign and explore other methods of marketing.
Can you share some basic marketing numbers?
What price range is your PPC? What % of clicks convert? What is your customer's total lifetime value?
Thanks!
What price range is your PPC? What % of clicks convert? What is your customer's total lifetime value?
Thanks!
The average CPC for last month was around $4.21. The conversion rate was around 4.86%. I don't feel comfortable giving away the CLV, but it's considerably higher than the cost of acquisition.
What methods did you use to determine how much the average user cost?
Before we launched, we had hard data from my old company about how much the users cost and how many resources they used (encoding, streaming, storage, etc.) We were able to use those numbers to calculate what our costs would be per user.
What is your technology stack?
Ruby on Rails, Node.js, MySQL and MongoDB
Do you think the business would have worked if Node.js and MongoDB were not available, or are they absolutely essential to your core business?
Node.js and MongoDB are not essential to the core business. I just chose to use them because they made my life somewhat easier.
How long did it take you from idea to launch?
Related to: http://news.ycombinator.com/item?id=2832865
It's hard to say when the initial idea came about, but it probably existed in some form or another for 6-8 months before launching although no action was taken until around a month or two before launch.
It's hard to say when the initial idea came about, but it probably existed in some form or another for 6-8 months before launching although no action was taken until around a month or two before launch.
How did you get your first customer? How much of your time (%) is marketing vs. sys admin vs. coding vs business?
I used to work for another company called Motionbox which offered a similar service in addition to a more youtube style type service. Motionbox was sold to SnapFish/HP. SnapFish, for whatever reason, was only interested in acquiring the youtube style customers. That left all of the commercial, paying, customers available. We made a bid to buy them from Motionbox and the bid was accepted. We then gave the customers the option to migrate all of their videos to SproutVideo and become customers. Around 200 made the transition.
It's somewhat hard to calculate where my time is spent as I don't really keep a good record of it. If I had to guess, I would say the breakdown is something like this:
40% - Coding
30% - Customer Service
10% - Marketing
10% - Sys. Admin
10% - Business
40% - Coding
30% - Customer Service
10% - Marketing
10% - Sys. Admin
10% - Business
How did you get your first set of customers? After those were done, how did you get your second set? What marketing, if any, did you do to get those customers? How much time did it take to get them? Did the standard stuff work "AdWords, etc" or did you need to do more innovative stuff to get them?
How did you handle the terms and conditions? Did you have to go to a lawyer? If it was just stander boiler plate, where did you get it?
p.s. I figured I'd give doing an AMA a shot on HN, but if it's the wrong place for it I'll move it to anyasq.com or somewhere else.