Happy to chat as well. I know this space well. Would chat with a few seed funds to gauge interest - Resolute is a good place to start.
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
#92Nice site.
You are creating something similar to the change of address packet and welcome kit by the USPS. When you move to a new area, you get an envelope with a ton of local offers for new movers.
This is what I am talking about: http://imagitas.com/mover-advertising-solution/welcome-kit.h...
You will find its companion Mover's Guide at your local post office. Simply ask for it from any USPS clerk. Studying it may prove to be very interesting as it will help you identify which companies already advertise to movers.
I like that you offer to connect prospects with landlords by prompting the site user for her phone number. Someone needs to figure out how to get them to pay you. You may want to offer landlords pre-filled rental applications instead of just phone calls.
"Apply Online" becomes a premium feature for which some landlords may be willing to pay (this needs to be tested).
We should talk as I may have a way for you to make more money involving my product. I also have contact information for every moving company. I am wiseleo on skype, gtalk, gmail.
Re: Tell HN: My startup is making money and I don't know what to do
#93Earlier quoted context omitted.
Agree with the above - altho forming a Delaware C Corp at this early stage is not necessary. It's become much easier now to form an LLC in your state of residence and convert at a later stage (if at all) to Delaware C if you end up raising money.
Thank you- somewhere it became lore that filing in Delaware is a necessary step to running a successful business. Most businesses that are cited as examples didn't start in Delaware, but did so after they had much to lose and on the advice of their highly-paid counsels. If you have $1k in revenue, congrats, that's a great accomplishment, but with all due respect, nobody is going to file suit against a group of colleg…
The advice to just get an LLC going first then convert to a C corp is fine for their stage, I won't argue against it. However, what you're saying in opposition to forming a C corp early doesn't feel very rigorous.
From my limited experience as a founder, forming a C corp early has made some things easier. The time we had to convert a California C corp to a Delaware C corp became messy and I imagine converting a {whatever state} LLC to a Delaware C corp also has the potential for being messy.
The conversion cost us a lot of money to have done right when instead taking boilerplate docs and simply forming in Delaware first would have been much easier.
Angels and incubators will generally want you to be a C corp first or convert ASAP, too (which is a valid option but I feel like there are other more important things to be spending cycles and money on). Raising money without worrying about converting your corporate structure is a pretty big reason to just do it as a C corp from the start.
Re: Tell HN: My startup is making money and I don't know what to do
#94Well done! The site looks great. I've actually been thinking about a similar product in a totally different space. If you could spare a couple minutes to answer, I have a couple questions that are probably really basic but I've been struggling with:
1. I see that you have a "LIST YOUR PROPERTY" feature, but how did you seed your DB? Just search CL, call the owner and ask if they're open to renting to college students?
2. How did you settle on making your own advertising platform your main revenue stream? When you have a niche market like this, is Adwords (or similar) not a viable alternative? Have you thought about charging the listing agent directly?
Re: Tell HN: My startup is making money and I don't know what to do
#95Curious if you thought about franchising your site. It might work in terms of cost because you would only have to profit from your first location and keep growing it.
i.e. Offer an instance of universityniche.com but purchase a domain, host the site, setup the login and credentials, configure, maintain, and support the site. Control all the features. Let the person decide what domain they want.
In my instance you could offer torontouniversityhousing.com and I would only have to manage the sales/listings. Charge say 80% of profit or fee based or something a lawyer/accountant recommend.
Re: Tell HN: My startup is making money and I don't know what to do
#96Earlier quoted context omitted.
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…
Why not grow at the rate you can sustain? Rather than taking on 150 schools, grow by as many schools as you can afford with the profits from the initial set.
I think the answer is already in his comment:
"we really want to be available to as many students at as many campuses as possible before we lose any "buzz" that we're cultivating (either organically or through marketing efforts)"
Another fear can be competitors who may have more money and can grow faster than them, especially after posting his story here on HN.
Re: Tell HN: My startup is making money and I don't know what to do
#97Happy to chat as well. I know this space well. Would chat with a few seed funds to gauge interest - Resolute is a good place to start.
Mike from Resolute here. We'd be happy to chat and see if we can be helpful. Mike@resolute.vc.
Re: Tell HN: My startup is making money and I don't know what to do
#98You have an absolutely gorgeous product. I say that as someone who contributed on a contract basis to a similar system for a couple of guys in Arizona trying to do the same thing. I think that your local advertising model is going to be extremely difficult to execute and is going to scale poorly, so I would recommend moving that to a secondary revenue model. There are lots of ways to make money in this market that does not involve inefficiently calling up shops and asking them to part with advertising dollars. My feeling is that you are technically savvy enough to create a more complete property management solution that landlords would pay for. One other revenue stream that I thought was interesting for the guys I worked with was pre-approving tenants with a background check, credit report, etc. That way, the tenant would pay an application fee once to you, and then that application could be used at different properties during the tenant's search process (think of it as The Common Application for housing).
Additionally, your advertising prices are obscenely low. Your largest package tips the scales at $1,200/year. To be perfectly honest, selling five of those packages is not especially impressive. Assuming that you sell your largest package to every advertiser, you will need 83 advertisers to clear $100k revenue, assuming no turnover and nobody ever calls you to complain or whatever (and believe me, they will). Furthermore, your UI can probably only support fifteen or so advertisements per university without becoming utterly saturated, so you are constrained there as well.
Suppose that you sold fifteen placements per college and had no turnover, your max revenue is $2,700,000 and now you have 2,250 advertising customers to coddle and keep happy. Granted, that is a huge pile of money and anyone would be absolutely thrilled to make it, but now you have to back out your expenses.
Assume that each of the three of you are going to draw $100k salary, now you are talking $2.4M, and now you need to pay account managers, sales people, customer representatives, not to mention all of your technical staff and infrastructure.
You have a phenomenal product, but find out how to sell it for money to people that use it instead of advertisers. Advertisers should be the gravy!
Feel free to email me if you want to discuss further. Email is my username [at] the gmail.
Re: Tell HN: My startup is making money and I don't know what to do
#99Are 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…
Now that you're established at a couple of schools, I wouldn't look for local 'establishment' everywhere you plan to expand to.
I would map out 4-5 new areas for your business to expand to -- if possible, try and optimize for expected ad revenue (ie., ease of getting advertisers on board) and student base, housing availability, etc.
Then target businesses in those areas, emphasizing you are already highly successful in other areas and will be launching locally soon. Get some testimonials from your current advertisers to help convince new ones.
In short, get ads on the site (=> money in the bank) before you have accommodation listed. Launch new areas with a 'coming soon' page. Build up a buzz amongst students about your product. Register sign-ups to gague interest, and use these to attract advertisers and landlords ("Hey, look, we have 400 signed-up students, just waiting for us to launch here!"). Make people impatient for it. Then deliver the platform.
Rinse and repeat, as quickly as you can (but not so quickly you'll run out of money, or fail to deliver).
Offload as much work as possible onto your users. If you're currently curating or creating property listings, get landlords/estate agents to advertise their own properties instead. Show them how Niche will be a one-stop shop for the majority of students looking for accommodation.
Once even 1-2 estate agents in an area have tenants who 'found' them through Niche, you'll have enough credibility that business will come to you instead of you having to chase it. Encourage this local credibility to snowball nationally as you spread out further, through testimonials, blog posts, social media, well-timed interviews with local newspapers, etc.
Re: Tell HN: My startup is making money and I don't know what to do
#100Choose 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…
Hi Patrick,
Thanks for the advice! I'm an avid reader of your blog, so it's cool to get feedback from someone I admire in this industry.
A lot of the comments here are bringing up the question of if and _why_ we need to raise funding, which has been something we've asked ourselves (and are asking ourselves even more in light of these comments). Essentially it's a combination of necessity and validation. We're college students ourselves and we realized early on that the only way we're going to be able to make this business successful is if we treat it as a full-time job and throw everything we have at it. We all quit our actual jobs because the website needed the focus, and that isn't a sustainable path for much longer, even if we do have a couple thousand dollars revenue in the business bank account. However, I definitely have to disagree with you that this should lead us to consider closing up shop, just because we personally don't have enough funds to continue running this out of pocket until it can run itself doesn't mean the business doesn't have potential and should be abandoned.
Choosing Door #1 while continuing to knock on Door #3 has always pretty much been the plan, we just don't know where to find the investors for Door #3 and that was what led me to posting here. I didn't really expect it to get so much attention, haha.
And a lot of people are critiquing our business plan/strategies--which I am grateful for and do actually appreciate--but I didn't really intend for this to be an elaboration of our business and I didn't really write my OP in order to explain how everything works and what all our financials/projections are, rather I wanted advice about moving forward from here. Yes we can keep doing the same thing we're doing and slowly build (and that's what we're going to be doing), but we don't think it's unreasonable, as a tech startup, to be seeking some sort of funding in order to grow faster and more efficiently.
We're actually using some of the money we've made to hire someone to come over to our house for 15 hours a week and sit on Skype and find/maintain the property listings in our database, as that's the most menial and time-consuming bottleneck we've identified. That way we can continue to focus on product dev and sales instead of having to devote a good chunk of every day to making sure the website is up to date. This should free up enough time for the three of us to take on another school, and just keep doing what we're doing.
Thanks again for the advice!
Sean