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Ask HN: idea for a startup, how important should be the path to revenue?

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Ask HN: idea for a startup, how important should be the path to revenue?

#1
Hi HNers, So here is the situation : having recently graduated ( in CS ), I'm currently refusing job offers as I want to start a company.

I've been reading HN and startup-related news for a while, but it turns out I'm still extremely confused when it comes to my next step : in which direction to go ?

I mean, should I think about starting a company that can clearly generate revenus ? Or should I aim at doing something that add value, build traction and then figure out how to monetize it ? ( let's say for instance a web/mobile app for a new kind of social photo sharing )

I have the feeling that starting a company based on a "fun" or/and useful product without any idea on monetizing it works only if you're in the Sillicon Valley area. Does anybody else share that feeling ?

So basically I'm just wondering if I should really focus on a product that generates revenue from day 1 ( à la Wufoo ), or do something more risky that might one day make money once it has traction ( à la social apps ).

Reading blogs/HN etc make me even more confused since a lot advices/recommandation contradict themselves.

Any help is appreciated, thanks.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#2
hey gilbax, from what i have read/realized, successful startups don't aim at building the world's best business model... u build the model around your product... i think if your product is good (it solves a pain), your customer's will buy it... so.. focus on getting a kick a*s product out... and don't just try to build something just becoz you want to do it... build something that can actually solve the pain of a million people... and it will bring revenues in before you know it :)

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#3
A lot of it depends on your goals.

Are you wanting to build the next reddit, google or Facebook? You'll probably need VC money to do that.

Are you trying to build a lifestyle business that pays 20-30k the first year and could grow after that, skip the VC money and go after a small niche product like Bingo Card Creator. For this you need to monetize earlier than with a VC funded type of startup.

The business you build will reflect your goals, so work backward from them.

As always, advice is situational, and so it will contradict. The idea is to apply the advice to your situation and don't forget to do a gut check to see if something feels right.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#4
If you don't have an idea yet, why are you refusing job offers to start a yet-to-be-determined company?

Anytime someone asks "What kind of business should I start", the correct answer is none. You should continue learning, working on things and find your passion. That passion will create an undeniable pull that will lead you to starting a business you'll stick with through good times or bad.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#5

hey gilbax, from what i have read/realized, successful startups don't aim at building the world's best business model... u build the model around your product... i think if your product is good (it solves a pain), your customer's will buy it... so.. focus on getting a kick a*s product out... and don't just try to build something just becoz you want to do it... build something that can actually solve the pain of a mil…

In addition, try and solve you're own personal pain point. You'll find yourself to be greatly more motivated and informed to solve your own problem.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#6
There's a short and pat answer, and there's the longer and more thoughtful answer.

But the short version is this: businesses fail when they run out of cash. Period. Keeping that in mind, we can logically conclude that you need either to monetize before the cash runs out (thus becoming organically cash flow positive) OR gather enough outside funding to support operations until such time as you become cash flow positive.

How do you get there? Well, ideally, you have a product that solves a clear need which can be monetized immediately. If not, then you need a product so compelling that you can get to X users in Y months (where X is an impressively large number, and Y is an impressively small one) -- thus attracting partners or investors.

But the bottom line is that you need to generate cash flow or generate funding as quickly as possible.

And yes, generally speaking, it's easier to keep a "fun" product alive in the Valley than it is elsewhere, if only because that's where most of the funding money resides, and because many of the potential funders there have more speculative appetites. Your odds of getting a cool product without clear monetization paths funded outside of SV drop significantly. That's not to say, of course, that getting a cool product funded in SV is easy, because it's not. You still need a good product, and by "good," I mean a product that solves clear needs for its users or else provides its users with functionality or utility that solves problems users didn't even know they had.

Best advice for you is probably to take a job at a startup or larger firm, and build some cool products in your spare time. If and when one of those products becomes extremely cool -- and you'll know it when you see it -- that's when you start looking for users or for funding. No sense in turning down job offers now on the purely hope-driven premise that you'll build or invent something later. Build first, -then- act.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#8
I would probably think about it terms of how many people would/could use it. If a million people use your product, monetizing it wouldn't be too hard to figure out later.

Haven't spent a lot of time thinking about enterprise stuff, so maybe this doesn't apply to that type of business.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#9
Depends on your product. A 37signals strategy would be to bootstrap it and charge for your product (works well with b2b). Or do what Facebook initially did which was start with no monetization strategy and scale it. I would say if you have a great idea in mind that you feel can drive millions of users to use your web-app, do not charge for it and raise money.

Re: Ask HN: idea for a startup, how important should be the path to revenue?

#10
post #4

If you don't have an idea yet, why are you refusing job offers to start a yet-to-be-determined company? Anytime someone asks "What kind of business should I start", the correct answer is none. You should continue learning, working on things and find your passion. That passion will create an undeniable pull that will lead you to starting a business you'll stick with through good times or bad.

Sort of like asking "Am I in love?", "Am I popular?", if you have to ask, the answer is no.
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