Ask HN: Please help, can't expand fast enough
6 comments
I try to raise money from time to time for my small biz/startup. Here are a few things I've learned:
Pay attention to the unit economic model. The lifetime value of a customer ($9.95 in your case) minus the cost to a acquire a ew customer. This requires you to show an investor how you can use the money to acquire new customers via ads, cold calling, PR, etc.
Market size is important. Can you make a rational guess as to who will buy your product and how many potential buyers there are?
Delegate. If any part of your job can more effectively be done buy a junior person, do that. As a single founder, it will help if you show you are capable if this.
Cash is king. Good people will join you for cheap if you can sell the upside for them, but they rarely do quality work for free. 5,000 bucks can go a long way!
Do you have an unfair competitive advantage? What makes it hard to copy what you do?
Take advice only from successful people who understand why they were successful. What sounds like a good idea and what actually works are often different. In my case, you might use some of my ideas in this comment, but you want to validate them yourself.
Talk to your customers. That's a frikkin' gold mine of information.
Learn to stop working when it isn't working. Try it, fail, stop, step back and look for an easier way or different way.
One book I found useful is the Art of the Start by Guy Kawasaki. Pitching Hacks buy the guys at Venture Hacks is a good read, too.
Pay attention to the unit economic model. The lifetime value of a customer ($9.95 in your case) minus the cost to a acquire a ew customer. This requires you to show an investor how you can use the money to acquire new customers via ads, cold calling, PR, etc.
Market size is important. Can you make a rational guess as to who will buy your product and how many potential buyers there are?
Delegate. If any part of your job can more effectively be done buy a junior person, do that. As a single founder, it will help if you show you are capable if this.
Cash is king. Good people will join you for cheap if you can sell the upside for them, but they rarely do quality work for free. 5,000 bucks can go a long way!
Do you have an unfair competitive advantage? What makes it hard to copy what you do?
Take advice only from successful people who understand why they were successful. What sounds like a good idea and what actually works are often different. In my case, you might use some of my ideas in this comment, but you want to validate them yourself.
Talk to your customers. That's a frikkin' gold mine of information.
Learn to stop working when it isn't working. Try it, fail, stop, step back and look for an easier way or different way.
One book I found useful is the Art of the Start by Guy Kawasaki. Pitching Hacks buy the guys at Venture Hacks is a good read, too.
Thanks for the reply.
I have a great dashboard for showing sales, revenue, time to upgrade, etc. I love analytics. Luckily as well, the lifetime value of the customer isn't $9.95 as while I have only had paid options available for 1 month, already people are coming back and purchasing again, which means my lifetime value of a customer keeps getting higher.
As for est potential market I can say that just by looking at Google searches over 20k+ per month search for the product / thing I am offering. Obviously I don't rank #1 for all of these search terms plus it doesnt calculate the other methods. Honestly I wouldn't know any further on how to estimate the potential buyers, only that I am in a growing space and other companies worth millions are already in there.
Delegation, 100% agree with there :)
An unfair competition advantage is always a hard one to answer. The advantages I have at this point in time (but can be copied) are freemium model, feature set and future feature set. I am focussed on one particular aspect where as other companies in the space are spreading out to other areas, diluting their focus. As time progresses it will be harder to catchup to code wise but not impossible.
I put customer service above all else and due to this receive so much praise and recommendations which is why I am getting repeat sales and increased users. Again repeatable but they are unlikely to take customers as loyalty is certainly being built.
I love talking to customers, you are right they give such an incredible amount of information and I have tailored and improved my product because of this. Someone actually contacted me due to bugs in the software. After she was so blown away by the customer service she is setting up a rolling purchase order to use our service for their 17 local tv shows. I didn't even know but it shows that you should treat each customer with the same amount of dedication. She wasn't even a paid customer at that point either. Obviously once that is setup my income increase significantly but larger corps take so long to get these things rolling. (I know, working in them for so many years)
Haven't heard of pitching hacks but will certainly check it out.
Thanks again.
I have a great dashboard for showing sales, revenue, time to upgrade, etc. I love analytics. Luckily as well, the lifetime value of the customer isn't $9.95 as while I have only had paid options available for 1 month, already people are coming back and purchasing again, which means my lifetime value of a customer keeps getting higher.
As for est potential market I can say that just by looking at Google searches over 20k+ per month search for the product / thing I am offering. Obviously I don't rank #1 for all of these search terms plus it doesnt calculate the other methods. Honestly I wouldn't know any further on how to estimate the potential buyers, only that I am in a growing space and other companies worth millions are already in there.
Delegation, 100% agree with there :)
An unfair competition advantage is always a hard one to answer. The advantages I have at this point in time (but can be copied) are freemium model, feature set and future feature set. I am focussed on one particular aspect where as other companies in the space are spreading out to other areas, diluting their focus. As time progresses it will be harder to catchup to code wise but not impossible.
I put customer service above all else and due to this receive so much praise and recommendations which is why I am getting repeat sales and increased users. Again repeatable but they are unlikely to take customers as loyalty is certainly being built.
I love talking to customers, you are right they give such an incredible amount of information and I have tailored and improved my product because of this. Someone actually contacted me due to bugs in the software. After she was so blown away by the customer service she is setting up a rolling purchase order to use our service for their 17 local tv shows. I didn't even know but it shows that you should treat each customer with the same amount of dedication. She wasn't even a paid customer at that point either. Obviously once that is setup my income increase significantly but larger corps take so long to get these things rolling. (I know, working in them for so many years)
Haven't heard of pitching hacks but will certainly check it out.
Thanks again.
You covered most viable options. If I were you I would continue with #4 and give that feature of monthly subscription to generate steady stream of revenue. You seem to have a product/market fit so in this situation I would outsource someone for a help with marketing, it seems you have good SEO potential, you can find good companies/freelancers on Elance. If you can separate wheat from chaff you'll reasonable SEO service for about $500 a month - I'm currently paying European based company for SEO services that much - zenoseo. If you have more cash find someone to help you with PPC, like Google Adwords, run few cheap test campaigns and see if ROI is good, if good continue otherwise wait some time. Additional customers you get from marketing will give you more cash. Then hire a developer. If at that time you still need cash try to get an investment. The simplest way to start is with angels. See if there is local angel group or try AngelList - there are good guides how to pitch to an investor. Good luck!
Thanks, I am currently working on the recurring revenue as my major priority. At the moment I certainly believe I must act on what will give me the revenue to help expand.
Thanks for the suggestion on AngelList. I assume you are talking about Angel.co - I just typed in angellist.com into my browser and it took me there. I will have a look around.
Thanks for the suggestion on AngelList. I assume you are talking about Angel.co - I just typed in angellist.com into my browser and it took me there. I will have a look around.
Before hiring a developer, why don't you try to outsource parts of the dev for example on oDesk/eLance. Granted, it will take you some time to find someone good, but if you give a few small projects to several devs and take the best, you'll get to it. Also, it won't cost $5k/month so you don't need to do consulting for it, but you can just throw the revenues you get from the app at it.
Same for design, and other things that can be outsourced. I recommend reading "start small, stay small" by rob walling, for all things outsourcing and small apps.
Anyways, it's much better to be in your position than just not having any revenue :-) So keep going at it, and keep us posted!
Same for design, and other things that can be outsourced. I recommend reading "start small, stay small" by rob walling, for all things outsourcing and small apps.
Anyways, it's much better to be in your position than just not having any revenue :-) So keep going at it, and keep us posted!
I have thought about outsourcing though am concerned since it's an in house developed product and I am working on it all the time I would prefer someone who I know and can trust and who is focussed on it and not freelance work.
However I dont have any experience in outsourcing small sections of a larger project, so a learning curve ahead if I choose that approach. Then if bugs appear the coder who developed it might not be available hence I would have to take time learning newly written code to solve issues.
Thanks for the book recommendation I will check it out.
However I dont have any experience in outsourcing small sections of a larger project, so a learning curve ahead if I choose that approach. Then if bugs appear the coder who developed it might not be available hence I would have to take time learning newly written code to solve issues.
Thanks for the book recommendation I will check it out.
No matter what path you take, you need to solve the labor issue. And at this stage, if you don't have enough money to properly hire someone, have you considered asking HN if someone is interested in being a cofounder? If the idea is interesting enough (but I guess you can't discuss it in much detail) I'm sure there's some reader out there who could do it.
If you don't want to broadcast more details to the world, you can send me a private email. Intransigence123 at gmail dot com. I'm sure a lot of other people would give more specific advice or help you find someone
If you don't want to broadcast more details to the world, you can send me a private email. Intransigence123 at gmail dot com. I'm sure a lot of other people would give more specific advice or help you find someone
The idea itself isn't new. I haven't invented something that no one already has (just yet anyway, coding the next move). The idea involves actually taking the current industry to the next level but requires I get all the basics done first, which is where I am almost complete on. I am suprised how quickly I got to this level actually.
Also as far as I am aware having researched many companies in the industry, I am the only 1 that can target multiple platforms on the web simulatenously. Most only target Facebook. I also only focus on 1 aspect at the moment. That is I suppose my strength in the market. And I am also the only one offering a solid freemium model which is why I am gaining quick popularity.
Also as far as I am aware having researched many companies in the industry, I am the only 1 that can target multiple platforms on the web simulatenously. Most only target Facebook. I also only focus on 1 aspect at the moment. That is I suppose my strength in the market. And I am also the only one offering a solid freemium model which is why I am gaining quick popularity.
its good you're making money.
1. Without knowing the idea, it may not even be a fundable idea. As they call it a lifestyle business. So this is always the hardest thing to do, Raising is a time sink.
2. co-founder will be hard to find someone to work for equity.
3,4,5 - yes , make some money, and outsource parts that you can. Hopefully your site will make money, and put it back into the business.
1. Without knowing the idea, it may not even be a fundable idea. As they call it a lifestyle business. So this is always the hardest thing to do, Raising is a time sink.
2. co-founder will be hard to find someone to work for equity.
3,4,5 - yes , make some money, and outsource parts that you can. Hopefully your site will make money, and put it back into the business.
Also just thought I would add so you could get better understanding of my business, is that other similar companies in the same industry have been funded by VC's.
So certainly a fundable idea maybe even more so as the others don't a significant recurring revenue stream due to their model.
So certainly a fundable idea maybe even more so as the others don't a significant recurring revenue stream due to their model.
Thanks for the reply.
It does have a lifestyle business aspect to it, but as stated they are people looking for the monthly option already. So there will be lifestyle + recurring revenue depending on the businesses needs.
It does have a lifestyle business aspect to it, but as stated they are people looking for the monthly option already. So there will be lifestyle + recurring revenue depending on the businesses needs.
There's an option you may not have considered (and I know this is a heretical suggestion on HN):
Get a job at an established company doing this. If your product was independently developed in your spare time and in an area that has other companies in it you're probably the sort of person that other people who have money want to hire. There are developer jobs out there that pay $100k a year. It's likely more than you'll make with your startup and might give you more time with your kid rather than working current job + part-time at night. It might also be less stressful and eliminate concerns about taxes/incorporation, etc. There's a boom on right now for talent with a demonstrated interest. You might want to consider taking advantage of it.
Get a job at an established company doing this. If your product was independently developed in your spare time and in an area that has other companies in it you're probably the sort of person that other people who have money want to hire. There are developer jobs out there that pay $100k a year. It's likely more than you'll make with your startup and might give you more time with your kid rather than working current job + part-time at night. It might also be less stressful and eliminate concerns about taxes/incorporation, etc. There's a boom on right now for talent with a demonstrated interest. You might want to consider taking advantage of it.
Thanks for your suggestion.
Actually I am working 100% on this startup, day and night. No other income. It is a fully setup company, family trust, pty ltd (similar to inc, in the US).
I have had job offers of over $200k but startup life is for me. Getting a job is lower on the list than going bankrupt :)
Actually I am working 100% on this startup, day and night. No other income. It is a fully setup company, family trust, pty ltd (similar to inc, in the US).
I have had job offers of over $200k but startup life is for me. Getting a job is lower on the list than going bankrupt :)
Good luck!
I know I can't be alone in hoping to see more from you on this. I'm curious what the service is and will watch for another post about a $9.95 one-off fee Perth-based web business :).
I know I can't be alone in hoping to see more from you on this. I'm curious what the service is and will watch for another post about a $9.95 one-off fee Perth-based web business :).
6. Work on introducing efficiencies into other parts of your life in order to free up more time/energy/mental focus for the business.
You have mentioned that you are eating better and exercising more. But what time sinks do you have that could be eliminated or reduced? Most people (at least in America) spend quite a lot of time on just maintaining their personal possessions. I have few personal possessions and it gives me more time for other things. Most people have lots of very inefficient processes in their personal lives and are typically reluctant to consider making changes which would eliminate housework or reduce travel time for common tasks and so on. For example, many Americans have long commutes to work and complain about how negatively this impacts their lives but will not consider moving to shorten the commute. (I know that is a poor example for you since you work from home, but it comes to mind because I find it so baffling. They typically state that they live far away because they don't want work to consume their lives but the net result is that work consumes more of their lives due to the longer commute eating up more of their time.)
You have mentioned that you are eating better and exercising more. But what time sinks do you have that could be eliminated or reduced? Most people (at least in America) spend quite a lot of time on just maintaining their personal possessions. I have few personal possessions and it gives me more time for other things. Most people have lots of very inefficient processes in their personal lives and are typically reluctant to consider making changes which would eliminate housework or reduce travel time for common tasks and so on. For example, many Americans have long commutes to work and complain about how negatively this impacts their lives but will not consider moving to shorten the commute. (I know that is a poor example for you since you work from home, but it comes to mind because I find it so baffling. They typically state that they live far away because they don't want work to consume their lives but the net result is that work consumes more of their lives due to the longer commute eating up more of their time.)
>They typically state that they live far away because they don't want work to consume their lives
People typically have long commutes because they a) can't find suitable employment within a reasonable distance of their existing home, or b) can't afford to live within reasonable distance of where they work. Not everyone can simply pick up and move. In a two-income household, it's a balance in commute distance for both parties. Some people would rather commute an hour for work and live near family. Some people simply can't sell their homes. I've never, however, heard anyone say that they live far away because they don't want work to consume their lives.
People typically have long commutes because they a) can't find suitable employment within a reasonable distance of their existing home, or b) can't afford to live within reasonable distance of where they work. Not everyone can simply pick up and move. In a two-income household, it's a balance in commute distance for both parties. Some people would rather commute an hour for work and live near family. Some people simply can't sell their homes. I've never, however, heard anyone say that they live far away because they don't want work to consume their lives.
Well, you and I clearly know different people. The most common reason I have been given for a long commute to work is that they don't want to live near their job. I am well aware that in two income families and other situations, sometimes compromises are necessary. But I know people currently and have known people in the past who really were free to choose and freely chose a long commute, not because they had to for any of the reasons you cite. And I have also known people who complained bitterly about the cost of gas and other burdens of living with a long commute who blew off (as in dismissed without a real reason) any and all suggestions for trying to improve the situation. After a while, I stop being sympathetic.
Thanks for the suggestions. I am fairly good on everything. I may watch a movie at night and spend a bit of time exercising, family time as well. No game consoles, no fancy shopping (cash prohibiting there :) ). Other than that I work 7 days a week, and most nights. I have to have a break occassionally :)
I have actually been on HN for over a year but wanted to create a new account so that these more private details of my company can't be tied to my actual business.
I am essentially a sole founder. My wife is excellent and runs a business as well yet we have kids so when 1 is working the other is not. While we both work into the night I say we would only accomplish the work load of a single person working full time on a startup with no kids.
After 3 months of development I finally launched my paid service, launched my free part of the product 3 months ago. (using a freemium model) and instantly started getting sales.
I have done no marketing other than to get at the top of a low searched keyword on Google (which I didnt actually try hard to get anyway) and this brings in around 20-30 users per day of which about 10% convert to premium within 7 days.
But with that I am only getting $20-$30 per day. ($9.95 once off payment) Yes this model only works for once off payments as they use the product for a set amount of time, then they may use it again later but it isn't a continuous payment model.
I also listed more advanced monthly options that aren't actually available yet, as I am still coding them, yet I have already received 3 requests on when will they be ready. So who knows how many more actually want it yet didnt bother to ask.
On top of that I need to work on upgrading to the cloud as I am currently getting anywhere from 3k - 8k page views a day with a steady increase and outputting about 2.5Gb per day in bandwidth.
The problem I am facing is as you can see the potential is great, its gaining traction, I have testimonials on how great the customer service and the product is compared to others out there.
I have ideas and stats that show I could push to the head of the industry if implemented. Yet I just need the time to code and market it.
I just don't have the resources to push out things fast enough, let alone even start marketing it. I have consulted with a lot of retail stores and other companies with their online advertising, conversions etc and I know exactly how to push this forward, again if I had the time to market. Yet if I brought on more users could I keep up with support questions and feature requests?
Just to let you in on my experience: I am also coding this myself having worked 7 years from developer to lead architect previously. Then have been running various business / startups for the last 3 years.
I have done other startups in the past, obviously they didnt work out as hoped, unlike this one :)
How can I progress forward? So far the options I have thought of are below. Hoping for some new ideas.
1. Investors. Certainly open to the idea although wasn't originally but now I actually have a reason for investment (to fund growth) and not just keep me working to see if an idea pans out.
Initial problems with that are: I have never pitched before, do not know any investors specifically in tech and am based in Perth, Australia (so about as far away from the tech industry as I could get :) ) And while Perth is booming due to our mining sector in the state I do not know of any investors or if there are how to get in contact with them and if they are knowledgable enough to look at tech.
I don't just want the money, I would love experience and mentoring as well. I know they could give great general business advice but tech experience would certainly be an advantage.
2. Co-Founder. Again another idea that is worth looking at, but I am unsure how you would find the right person. They are tech conferences around but mainly for employees of the large mining sector. Not anything entreprenuerial (as I am aware of). I could look online overseas but again wouldnt know where (except on HN)
On top of that, any recommendations on how you would know they are a right fit? Or even how I would split considering I already have a business generating revenue.
3. I can easily get 1 week dev contracts to bring in about $5k and that could be used to hire a dev for a month.
The problem with this and why I am VERY hesistant towards it, is it seperates my focus from the product and I need to keep doing it until the startup generates enough revenue to hire them. I believe startups need 100% focus and this is just a distraction.
4. Just keep going. Looking like the option I am taking at the moment, is just to keep pushing forward and see how far I can get. I already work until 2-3am in the morning (which actually works out well as that is when the US is awake) and I don't watch tv. The reason I probably have kids I suppose :)
Over the last month I have been exercising more and eating better and it is giving me a boost in energy. Not enough to boost my productive by the amount needed though.
5. Bank loan - unlikely in my situation, I no longer have my cushy $150k yr job. Like I said, have been building startups for the last few years and I don't have the cash or income to justify it, especially in these times.
Any advice, other options appreciated. It is certainly on the brink and just need to push through the last stretch to profitability.