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Tell HN: My startup is making money and I don't know what to do

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Re: Tell HN: My startup is making money and I don't know what to do

#81

Post by pbreit »

larrys wrote: post #75
patio11 wrote: post #67

Choose your own adventure: 1) You currently have approximately $500 to $2k in revenue. That's great, because it is $500 to $2k in revenue more than the vast majority of people will ever achieve. You need to work the numbers on whether the founding team can solo-close $100k in revenue in the next twelve months. If that appears achievable, you tighten your belts, perhaps run up larger balances on your credit cards than…

"you're going to hire a bunch of folks who will do that job to your script on the telephone all day, every day" Cracking this particular market without a super motivated and nicely paid phone force is really difficult. SMB are hard to get on the phone and to pitch. Over the long term of course. Anything short term is possible. I've been in this market and even purchased a company that did this where the previous owne…

I would think 1 student-employee per school could do it. You're only going to get 20-100 advertisers per school.

Re: Tell HN: My startup is making money and I don't know what to do

#84

Post by leonhuu007 »

I believe you should concern on the quality of the business first before you raise any capital. $695-$1200 can be alot of money for some local businesses since landlords are killing them with high rent. The key here is to train your sales team to show your potential advertisers the Math. Compile data and show them if they spend $695 they can get 3-6x that in return otherwise chances they will call you can cancel 6 months later. Numbers never lie so try to focus on tracking how many students click or view a particular ad and maybe come up with a conversion funnel analytic data for the local business owners. This can be a powerful selling tool.

If you can bootstrap it with profits then stick to it. Growing something too fast can lose the quality of the product. Once you have happy paying customers, growing it exponentially won't be so hard.

I love your idea, love your design, keep it up.

Re: Tell HN: My startup is making money and I don't know what to do

#85

Post by leonhuu007 »

I believe you should concern on the quality of the business first before you raise any capital. $695-$1200 can be alot of money for some local businesses since landlords are killing them with high rent. The key here is to train your sales team to show your potential advertisers the Math. Compile data and show them if they spend $695 they can get 3-6x that in return otherwise chances they will call you can cancel 6 months later. Numbers never lie so try to focus on tracking how many students click or view a particular ad and maybe come up with a conversion funnel analytic data for the local business owners. This can be a powerful selling tool.

If you can bootstrap it with profits then stick to it. Growing something too fast can lose the quality of the product. Once you have happy paying customers, growing it exponentially won't be so hard.

I love your idea, love your design, keep it up.

Re: Tell HN: My startup is making money and I don't know what to do

#86

Post by hkmurakami »

pbreit wrote: post #81
larrys wrote: post #75

Earlier quoted context omitted.

"you're going to hire a bunch of folks who will do that job to your script on the telephone all day, every day" Cracking this particular market without a super motivated and nicely paid phone force is really difficult. SMB are hard to get on the phone and to pitch. Over the long term of course. Anything short term is possible. I've been in this market and even purchased a company that did this where the previous owne…

I would think 1 student-employee per school could do it. You're only going to get 20-100 advertisers per school.

Lots of programs/companies have "student advocates" on their payroll for their very role. :)

Re: Tell HN: My startup is making money and I don't know what to do

#87

Post by the_watcher »

sthielen wrote: post #21
cglee wrote: post #13

First, decide if you really need to raise money. Can you bootstrap (ie, self fund) your business? Too many people immediately go for capital when they don't need it. It's extremely distracting and not all that necessary. You should only look into raising capital if you have a capital constrained opportunity or problem. So many problems initially look like money problems, but they're really disguised as something else…

We've been bootstrapped since the beginning, but, as much as we don't want to admit it, we're starting to outgrow what we can do as our very limited personal savings start to decline. Yeah, it's cool to have some money in the bank after doing these advertising deals, but it's not nearly enough that it's sustainable right away. We have plans to expand to 150 schools across the country, and if we do that we project to…

Piggybacking on some earlier comments, the "sell ads to local businesses" model is a tough one to scale (using the common startup definition of scale to mean "grow exponentially"). However, that doesn't mean you can't grow your business into a nice little income source that, ideally, won't take much management (since your users are college students, people who move often, and a market that has a built in supply increase every year, if your service works for them, advertisers who see a benefit will likely continue to pay you once they are onboarded). You can probably get to this point (focus on the top 10, then 25, then 50, etc. colleges in terms of student population - I'd look at new student population, to be honest, as well as adjusting for % that live in non-university housing).

From your comments, I don't think you should worry about trying to join an accelerator or get a largish amount of funding - that will just push you to make the Groupon mistake and spend too much money on local sales. My recommendation - see if you can raise money from friends, family, your university, or any local entrepreneurship groups (in Austin, for example, there are several organizations that exist nearly entirely to help students get through the part of founding a company you are in). From there, were I running the company, either you or your cofounder should shift entirely to onboarding schools (or hire someone to focus full time on this if you each are actually needed on other projects). Create a "college rep" program, and offer either a small stipend (college students will work for tiny amounts of money, especially if they can then put "worked at startup in school" on their resume) or in kind services from your advertisers (half off mattress, free move, whatever they'll offer to you). Build quickly from there, and keep promoting it. If you're business model is real, it will become apparent quickly, and you can think about raising real money then.

Re: Tell HN: My startup is making money and I don't know what to do

#89

Post by trumbitta2 »

sthielen wrote: post #46
oniTony wrote: post #39

> We've seen a lot of success (~40% w/w growth, 100%+ m/m growth). This _might_ be, in large part, seasonality. Once the school starts in September, most of the target demographic would have already found _some_ place to live for the school year.

Oh, absolutely, the business is incredibly cyclical--that's something we did a lot of research about before starting. The housing market is in full swing Apr/May/Jun, but students are still looking through September. Then it's going to die down a bit until December (though some will be coming in the middle of the year, or returning from study-abroad), and people start looking again as early as January. We plan to use…

Sorry if I sound naive, but I was a college student myself not so long ago and... I stayed at the same place even when I hated it, just because it was so difficult until Apr/May/Jun to find a better one.

Enter your service.

Difficulty starts going down, business starts being less cyclical. Who knows how much less?

Re: Tell HN: My startup is making money and I don't know what to do

#90

Post by alasdair_ »

I have a very similar problem. We have built a system for building niche websites for collectibles and plan on scaling horizontally - adding new collectibles in a similar way to the way you add universities and re-using the same code to power each niche.

We're making some money on the trial niche ($5000/ MRR and growing) and have our first 100K monthly users close to product/market fit (78% would be "very unhappy" to lose us).

Just like you guys, we don't really know where to go next. Right now, we plan on bootstrapping (we both work full time for well-known firms so all the revenue goes to contractors) but raising a "real" seed round could change everything.

Just like you, we have no idea if we should raise a seed, crowdfund (people LOVE their collections and we made 10K in 3 days in a small crowdfund) or continue to bootstrap.

Not sure it matters, but coming from someone in a very similar place - we are rooting for you!

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