Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

news.ycombinator.com

Post reply on HN
Print view View original

41–50 of 134 posts

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

#41

Post by sthielen »

jonlucc wrote: post #37
sthielen wrote: post #14

Earlier quoted context omitted.

We're actually at three schools in California--Loyola Marymount University in Los Angeles, Chapman in Orange, and the University of San Diego. We've been able to replicate our success pretty similarly in three unique areas, and have plans for Campus Reps/Brand Ambassadors to help us out "on the ground" at some of the larger schools we're planning on targeting.

It seems like your biggest hurdle might be getting local advertisers in an area. Maybe I don't know anything about small-scale ad sales, but I would think that part of the business would really benefit from having local/regional people doing ad sales. Do you have a way to get around that? Is it a solved problem that I just don't know about? For that reason, it seems very obviously simpler to grow into regions, maybe…

Yeah, it definitely seems as though walking in to the businesses dressed nicely and giving an engaging demo has been a big part of our success. We plan to do some phone-only sales and see how those metrics compare, and then hopefully with the money we can get some people with actual sales experience (none of us have any background in sales). We're also planning on experimenting with some kind of referral system for advertising, where anyone can make a quick $100 if they can convince the local pizza shop to put up an advertisement. Of course, this opens up a whole slew of other issues, but it's something we're going to experiment with if phone sales proves ineffective.

And yeah, the 150-school roll-out is divided by region, they're all primarily west-coast schools, and we plan to launch at a large school and then follow with all the smaller schools in the surrounding areas, just because their markets will overlap and it'll make our work easier.

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

#42

Post by will_work4tears »

sthielen wrote: post #26
ChuckMcM wrote: post #20

Are you paying yourselves salaries? Do you have an actual office? Benefits? etc? I would suggest that you not get ahead of yourself with "making it big" and instead focus on making it a solid business. Get to the point where you're paying yourselves and everyone who works for you a market rate salary and benefits, and you have office space, and you're cash balance is growing. Basically this is the classic definition…

No salaries, no office. My two cofounders and I have been throwing everything we've got into this; we're all broke. Our business model requires people actively maintaining property listings at each school, and then growing student traffic at that school and then, once we're established, securing advertisement deals. Our rationale behind raising funding is that we can either cut corners and struggle and keep adding on…

How are you currently finding ad deals at other schools? Have you thought about affiliate style sales? You promise a cut to affiliate members of those ads to the member that brings in the ads. Maybe too much overhead tracking all of that, though.

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

#43

Post by santoshsankar »

Another thought-- Since there is all kinds of advice coming out of this which can be confusing / hard to parse, here is a slideshare on raising seed capital. It reflects what almost everyone is saying to focus on product.

If you need funds to help that happen, try an Indiegogo / Kickstarter / etc. This is a serious problem so it could see some interest

http://www.slideshare.net/schlaf/raising-a-seed-round

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

#44

Post by 11thEarlOfMar »

Have you gone back to the businesses you've sold to to see how much traffic or actual $ sales have been brought in by your service? If there is a measurable and verifiable ROI for them, you have a powerful lever moving into new markets. Those testimonials would be priceless.

What I would think about is recruiting commission-only sales persons in new markets rather than trying to go manage them yourselves. Likely, you'd use other college students. Start with another local school so you can jump in if necessary. Write up a 'how-to' guide with marketing materials for the prospects, and then look for self-starters who will go do the selling on commission only. Do some training. If they are empowered with testimonials from businesses who have seen a real return, they will find it as easy to sell as you did.

So the question is: can a single sales rep, likely a college student themselves, make enough money selling ads for you that it would be worth their while?

The goal is to get cash coming in without having to spend any to get it started.

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

#45

Post by ChuckMcM »

sthielen wrote: post #26
ChuckMcM wrote: post #20

Are you paying yourselves salaries? Do you have an actual office? Benefits? etc? I would suggest that you not get ahead of yourself with "making it big" and instead focus on making it a solid business. Get to the point where you're paying yourselves and everyone who works for you a market rate salary and benefits, and you have office space, and you're cash balance is growing. Basically this is the classic definition…

No salaries, no office. My two cofounders and I have been throwing everything we've got into this; we're all broke. Our business model requires people actively maintaining property listings at each school, and then growing student traffic at that school and then, once we're established, securing advertisement deals. Our rationale behind raising funding is that we can either cut corners and struggle and keep adding on…

Well that helps clarify the question considerably.

   > No salaries, no office. My two cofounders and I have 
   > been throwing everything we've got into this; we're 
   > all broke
To put it nicely, "So what?" (I know that sounds cruel but trust me it isn't) What you have is a bit of traction, you don't actually have a business yet and as such its probably too early for any but the most inexperienced of investors to invest in you.

You know you need more than the three of you, but lets focus on one school for the moment.

You need a "listings manager", a "sales person", a "student rep" for a school. Lets say your "unloaded" salary pool is $100,000/year (that is salary but not benefits cost[1]). You'll need revenue from advertising at that school to exceed $100,000 annually. Since you're just proving this out you three can presumably "play the role" of the three people you would hire here to do this. So you need a minimum of $8,500 per month in advertising revenue. You should target double that or $17,000.

Once you have one campus working, where it is paying more than enough for your three "campus specific employees" then you can start to think about investment to go further. An investor is going to ask you questions about "What does it cost per campus? what can you make per campus? What are the limits on that?" you will need to have really good answers to those questions which you don't currently have.

[1] This is a 'swag' or scientific-wild-assed-guess on an number, I based in a student working part time during the year getting about $10K/year (1000 hrs @$10/hr) A sales person being paid mostly on commission ($30K/year + 10% commission for $10K out of the advertising sales, and your listings manager making $50K a year straight up) You should adjust those numbers based on your own experience/insight

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

#46

Post by sthielen »

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 the downtime in our cycles to promote and brand ourselves through our blog and things like that. We want students to know about us before they even need to use us, and we're doing that by selling the "off-campus lifestyle" and glamorizing the idea of getting out of the dorms and living on your own.

(Unfortunately this involves writing up a bunch of mindless top 10 buzzfeed style lists)

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

#47

Post by pbreit »

If you want to pay yourselves even $50k/year you're going to need a few hundred grand. You could start with friends and family. But it does sound like some sort of accelerator might be a decent idea. Are there any in your vicinity (or in vicinities you would consider moving)? The accelerator would ideally help you with funding and pretty much every question you're asking.

If you do go the outside investor route, be careful with your pitch. Most startup investors are wary of near term cash flow & profits. That indicates a small return for them.

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

#49

Post by pbreit »

jonlucc wrote: post #37
sthielen wrote: post #14

Earlier quoted context omitted.

We're actually at three schools in California--Loyola Marymount University in Los Angeles, Chapman in Orange, and the University of San Diego. We've been able to replicate our success pretty similarly in three unique areas, and have plans for Campus Reps/Brand Ambassadors to help us out "on the ground" at some of the larger schools we're planning on targeting.

It seems like your biggest hurdle might be getting local advertisers in an area. Maybe I don't know anything about small-scale ad sales, but I would think that part of the business would really benefit from having local/regional people doing ad sales. Do you have a way to get around that? Is it a solved problem that I just don't know about? For that reason, it seems very obviously simpler to grow into regions, maybe…

I bet you could find 1 enterprising student at each school to sell all the ads you need for cheap.

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

#50

Post by josephjrobison »

What school do you guys go to? I went to USD, and was surprised to see it listed as one of the 3 schools. Definitely think this is a great alternative to Craigslist, and the fact that the properties are pre-selected to accept college students saves a ton of time. And it's beautiful - good work. I don't have much advice on the raising money side, but as a user I love it.
Post reply on HN