
Tell HN: My startup is making money and I don't know what to do - sthielen
I started University Niche[0] with two friends to help college students find places to live off-campus around their universities.<p>If you&#x27;ve been through the college system in the US, chances are you know how difficult it is to find a house to rent. Many landlords will simply hang up the phone the second you tell them that you&#x27;re a college student. University Niche is a database of rental properties that are open to renting to college students, with information curated specifically toward helping students find the best places to live.<p>We launched April 2014, and are now at three universities. We&#x27;ve seen a lot of success (~40% w&#x2F;w growth, 100%+ m&#x2F;m growth).<p>For many students, this is their first time living on their own, so we wanted to sell ad space to small businesses that would help students with their move (storage, furniture, etc.) and then to small businesses that would help them once they&#x27;re situated (grocery stores, gyms, etc.). I coded up a basic self-serve advertising platform, and my cofounders and I went and found a local moving company. Walked in the office, talked with the owner for about 15 minutes. Sale.<p>Went to a mattress store. Sale.<p>Small restaurant, same thing.<p>We&#x27;ve walked in to six random businesses, and only one said no.<p>So we&#x27;re pretty excited it works, but we have bigger plans than this. We have projections and budgets to expand to 150 schools nationwide.<p>We know how we&#x27;re gonna do it and we know how much it will cost, but we are all at a loss for how to take that next step.<p>We have a validated product and now a validated revenue model. We&#x27;ve got traction. But we don&#x27;t have the funds to take this thing to the next level, and we don&#x27;t know how to meet the people who can help.<p>Anyone have any advice or been in a similar situation?<p>[0]http:&#x2F;&#x2F;universityniche.com
======
cglee
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 (culture, product/market fit,
market timing, etc). Usually, it's best to really get to know your market
really well first, before reaching for funding.

Second, make sure your legal documents are in order. Incorporate, if you
haven't already, and open up a business bank account. Make sure to use your
business bank account for all business related expenses. This will make
accounting much easier down the line.

Third, hire a great bookkeeper. Trust and loyalty is really important here, so
best if you hire someone who is somehow connected to you.

Fourth, hire a great accountant. Some accounts will also do bookkeeping for
you. I don't think this is a good idea, as you typically want someone "on your
side" watching out for your day to day finances. Intelligence and industry
expertise is really important for an accountant.

Fifth, if you're making real money, it's important to put some words on paper
about how the company ownership is divided, and other "what if" scenarios. You
typically also want some sort of Operating Agreement between the founders.
Usually this document covers: 1) ownership division 2) provisions for
terminating members 3) provisions in case of long term disability or death of
a member (for example, do you all of a sudden want your cofounder's spouse or
parents as your cofounder in case of death? Look into "key man" insurance.) 4)
provisions for adding new members

Some people say get a lawyer for these documents, which isn't a bad idea, but
most of these types of documents at this stage is pretty boilerplate. If you
have some unique circumstance, like an international cofounder or something
like that, then perhaps consulting a lawyer is best.

~~~
sthielen
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 be cash-flow positive within 6 months. But right now we don't
have enough resources to expand to even 10 schools and try and maintain that.
And especially with how our demographic (college students) respond to word-of-
mouth with services like these, 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).

With regard to legal documents and accounting and all that, we have an LLC
right now, with Quickbooks and a boilerplate operating agreement that I found
in a book at Barnes and Nobles. I definitely agree that it is incredibly
important to be on top of the legal side of things, but we honestly don't even
have the money for that right now.

~~~
Blahah
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.

~~~
spyder
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.

------
ChuckMcM
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 of being 'profitable' (you have net
income). Then hire a CFO.

The CFO will help you organize your thoughts around how much money you make
and need to make in order to maintain a level of profitability. Then take your
net revenue and feed it back into the business, pick up your next campus. Work
on the process for organizing a campus, what you need to know who you need to
contact. You will be able to start hiring sales people. These people should be
paid based on advertising sales delivered, not 'leads generated'.

Once you've got your next campus, quickly post mortem what went well and what
didn't. Then move on to the next one.

As you add campuses your revenue stream will increase and you will be able to
add additional engineers to help integrating the data. Every million dollars a
year in revenue shines more light on what works and what doesn't in your
business.

Have fun, enjoy the experience of all the things you are learning, (even the
bad things teach something).

~~~
sthielen
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 one or two schools a month until it's simply
impossible for three people to maintain, or, with a little bit of money behind
us to do our own advertising, have someone making cold-calls to collect
properties, and have a student representative on the actual campus helping us
brand locally, we can streamline the process and achieve the kind of wide-
spread adoption we need in order to secure large advertising deals (right now
we target our placements toward local businesses, but once we are established
we'll be able to secure deals from places like banks or office supply
retailers).

~~~
ChuckMcM
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

~~~
sthielen
Haha don't worry about the harshness--comments like yours are why I posted
here.

The point I wanted to make with needing to hire people is that it becomes more
cost-effective to have one "listings manager" maintaining 35 schools (we've
budgeted for four "listings managers" total, once we're fully operational at
the 150 campuses--the job mostly a lot of calling), and one sales person
handling multiple schools, etc. The more schools we've onboarded, the more
effective our HR spending is going to be.

We've calculated revenue per campus as well as cost per school/cost per
student/revenue per student and all that, it's just not something we're really
comfortable discussing publicly (if you want, feel free to shoot me an email
at sean-at-universityniche.com).

~~~
ChuckMcM
Ok, that makes it easier and harder.

Start here: _" We've calculated revenue per campus as well as cost per
school/cost per student/revenue per student and all that..."_

There are some businesses where the economics get better with scale (search
advertising for example) and some where scale doesn't have nearly the same
level of impact (a lot of service businesses, grocery stores, etc) Yours would
seem to be more of the latter.

As much as they dislike the characterization, many sales people are coin
operated, specifically the profession attracts people who like an easy to use
'scoring' system for how good they are, and sales is great for that since the
score is built into the job. Since you feel like a listings manager can handle
35 schools, and there is three of you, why don't two of you start in the role
of 'listings manager' and the third hire a sales person and focus on getting
student "reps" signed up. Plug into the student financial aid department, they
love having part time work opportunities with flexible hours for students. The
sales person is going to want to be "hands on" and talk to people directly.
Ideally the person you hire here is going to eventually be your VP of sales
and will train other sales people, so consider making a deal of equity for
work early on.

Challenge yourself to take the people you have, add exactly one sales person,
and make enough money to pay everyone salaries. If you can't do that, with 35
schools then you don't have a business yet. Don't be afraid to fire your sales
person if they don't deliver. I isn't anything personal it's just a fit thing,
either they can sell your product or they can't, either the product can be
sold or it can't. If getting advertisers is "easy" then your sales guy will be
very productive, make themselves and you a lot of money. Also don't be too
surprised if you can't work a very large territory with a single sales person.
Getting people to part with their money is an art and it takes skill just like
writing code does, respect that.

Always keep in mind the 'big plans' and so when you make decisions make sure
they don't cut off future plans (for example don't sign off advertising rights
to a third party for the rest of the world or something) but get the core of
the business running and tuned, _then_ take it to the next level.

------
larrys
Used to own a business that sold advertising in the same college market.

Be very careful when extending credit to advertisers. The sale is only one
part. The other part is collecting the money. Would suggest you try and not
extend credit and get paid if at all possible by credit card. The back office
and aggravation can be quite aggravating. People will take advantage of you.
They will tell you to show up to get a check (after you pester them) and then
they won't have the check and tell you to return.

Edit: I made this comment because the op had mentioned closing sales in person
(or perhaps over the phone). This is not the same as a website with a "pay
here" link. When you close in person there will always be customers who
attempt to get credit terms. Think in particular what a chain restaurant would
do or a company where the management is located elsewhere. They will say "send
us a bill and yeah sure we will pay" or "can I give you a PO". So the question
is how lucky do you feel. Of course if the COGS is very low it pays to take a
risk. But just get ready to have to follow up multiple times over many months
to collect that money. And don't act like it's in the bank because it's not in
the bank.

------
state
Just grow the business. You can "take it to the next level" by just making
money and reinvesting it in the company.

~~~
late2part
Another way to look at this is that you can meter and invest in the risks and
opportunities regarding your upside and your downside. If you over-invest in
your upside optionality, you may risk big downside. If you are too
conservative, you'll limit your upside. Only you can figure out the right risk
reward balance.

------
patio11
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 usual, and start solo-closing every
business you can find locally. You'll spend approximately 95% of your effort
in the short term on ad sales and 5% on everything else. After you can
consistently keep the lights on, you're going to hire a bunch of folks who
will do that job to your script on the telephone all day, every day. They will
be the heart of your business. They will always be the heart of your business,
for values of "always" which map to "as long as you primarily keep the lights
on by convincing local businesses to buy advertising."

There is a reasonably achievable path to you having a business here which
closely resembles a well-run local newspaper (except you'll potentially have
nationwide reach): millions of revenue, ~20% margins, etc. Much like local
newspapers, it may be a not-quite-straightforward proposition to confidently
say "The people who pay us get great value for their advertising spend."

If your team cannot reasonably solo-close $100k in revenue by repeating your
current model, which I allocate a very non-trivial percentage of the
probability space to, you do not _actually_ have a revenue model yet. I'd have
a hard look at my bank account and say "Can we figure out a revenue model
before I get thrown out of my apartment for non-payment of rent?" If not, you
may consider winding down the business. There is _no shame in this_ and, while
you may think your current level of success is a once-in-a-lifetime
opportunity, if you hypothetically believe that I would take the other side of
that bet.

2) You have a very compelling pitch for getting into YC, 500 Startups, or
another incubator. You have actually shipped a software product. You won't
believe me when I tell you, but many, many people who you might think are
better fits for incubators cannot actually ship a software product. You have
also successfully demonstrated hustle, by being able to walk into a furniture
store and ask them for money, which is something which is lamentably rare
among people who are capable of actually shipping software products. The
combination of shipping and hustle is pretty much exactly what incubators look
for.

This is a straightforward pathway into Door #3, in case executing on Door #3
doesn't sound straightforward to you.

3) You have all the elements necessary for raising a small seed round. You
make an AngelList profile and curate it diligently. You approach a few
investors privately, show them your stats and paint a rosy picture of the
future ("We've potentially got Groupon's growth trajectory ahead of us! [+]"),
and secure, say, three to four commitments of $25k each. You start to trend on
AngelList and fill out the rest of the round, probably for $250 to $500k. (I'm
unaware of what the Going Rate is for valuations at the moment -- probably mid
single digit millions but ask someone who does this professionally to fill you
in there.) You bump yourself up to greater-than-subsistence salaries, hire
three or four people who are young and hungry, and aim to sustain those growth
rates for the next 8 to 12 months. If you do, you will sail easily to Series
A, on your way to creating an rather large business which may or may not
resemble the one you are presently running. If you don't, your company
implodes.

[+] "Patrick, is that a good thing?" None of the seed stage investors in
Groupon are cursing their name right now. To put it mildly.

~~~
sthielen
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

~~~
swalkergibson
> 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.

In order to properly provide advice about the next steps, this context is
necessary. If it is costing you $10,000/month to pull in $500/month revenue,
then you must begin to consider its viability in its present form and come up
with a different revenue model before you go from broke college students to
indebted college students.

It sounds like you have already made up your minds about the way you want to
go. I would recommend really reading all of the commentary here, because these
are all questions that anybody with any money is going to ask, so you should
have good answers.

~~~
sthielen
Yeah, I understand what you mean and I tried carefully to phrase that in a way
that avoided sounding dismissive of what has been good and insightful critique
--we've all been reading everything posting on here and following up with a
lot of commenters off-site, which has been really cool and helpful.

~~~
swalkergibson
Glad to hear it! Congratulations on the success so far. It is exciting when
someone pays you money for your product, definitely a great buzz!

------
swalkergibson
You 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.

------
sharemywin
I'm not sure your upside is very big. you might what to think about where you
go from there. 150 universities. real busy once a year when everyone is
looking for housing but not much most of the year. how big were you
advertising deals? have you had anyone re order adverting? Any business owner
is willing to give a couple kids just to starting out $200. Most investor
would want this to be at least $10M business. 60k per year per university. 5k
mo per univeristy. Not trying to be negative but, I would hate for you to
chase a bad path when you can focus on what could work. if someone has better
incite let me know? Also, maybe you want to talk to the group doing rent a
sales force. saw it a couple of days ago on here.

------
santoshsankar
While everyone has suggested bootstrapping, friends and fam, local angel
groups and Angel List, have you tried your university?

Many large public institutions have launchpads and accelerators (they just
don't always market it well). This could be a natural fit for them.

I think like most people are echoing, continue to fund it out of pocket (maybe
with the help of family) to get it to be the best product possible. From
there, slowly build out into other geographies. You can learn lessons from
your early expansions so as to not repeat it. Given the product is still
young, there is likely a good amount you can build on prior to scaling out.

Good luck and will def be monitoring University Niche

------
mmaunder
First ask yourself if you really are making money. Does the amount of money
you will bring in equate to market rate salaries for you and your co-founders
12 months from now? With some money left over for growth?

If the answer is yes then it sounds like you have a business on your hands.
Create a cash flow plan. It should show how much you'll be bringing in and how
much you'll be spending on a month by month basis. Do it 18 months out. Make
it as close to reality as possible.

Then try really really hard to make it work without raising money. If that
means you grow a little slower, that's OK. If it means you have to be a bit
more frugal, that's OK because that's the cost of your own company's stock.
(The alternative being, you sell that stock and get money to grow the
business, so you lose that chunk of ownership).

Assign someone as your CFO. They're the cash-flow tzar. Anytime someone wants
to spend, they have to go through that guy. The tzar should also have a talent
of finding new pockets of money even when it seems that you're about to run
out.

Just because you're going to get a TON of offers from investors doesn't mean
you should raise money. I'm sure you get a lot of offers from credit card
companies too.

Once you raise, your definition of success is no longer 1 million bucks a year
in revenue and $300,000 a year salaries for you and your two buddies (which
would be awesome right????!). Instead you're going to have limits on how much
you can pay yourself, who gets to be boss and how much of a boss you get to
be, and your definition of success becomes $10 million a year in revenue
instead or you raise again and again and then you have to IPO.

~~~
danesparza
OP also posted "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."

It sounds like they have revenue, but they do not have profit.

------
illini123
Have you raised a family and friends round? What amount of capital are you
looking for? If you just launched 3 months ago, I'd say seed level, but I
don't have enough specifics on what you need / burn rate to judge.

Depending on where you're based, I would look at getting in touch with some of
the angel investing syndicates. Also, be realistic about the runway you're
giving yourselves. My personal philosophy is to meet with investors in my
network right at launch (not for money, but to alert them that I might be
coming to them at some point). These relationships take time, and even an
angel investment can take a month or more for due diligence. Expect Series A
to take months longer.

Given that you're not currently in touch with angels, I would start
identifying 1-2 groups in wherever you're based (I hope the answer is a larger
metro area). Find out if you have a mutual contact. If not, and I hesitate to
say this, but make a cold call to the angel / angel group. You don't have
anything to lose.

~~~
sthielen
We haven't raised anything. We're three broke college students who have been
putting everything we have into keeping this thing going.

We're planning to expand to 150 campuses and bring on some people to man the
phones/maintain our property listings, as well as hire campus reps/brand
ambassadors at 20 key schools from that set of 150. Our 1y budget for all of
this is <1M.

And yeah, we're based in LA, but we're all new to this and don't exactly have
any connections with anyone in this industry, so we'll definitely start
researching some groups and, I suppose, calling until someone wants to talk to
us.

Thanks for the advice!

~~~
webmaven
Do you really need to roll out to 150 campuses in one year? Use the profits
from your first to roll out to a 2nd, then use the profits from 1+2 to roll
out #3, etc. BTW, for each new city you roll out to you should be trying to
figure out how to do it better.

When you've proved you have a repeatable, scalable model, you can take on
investors to accelerate the growth.

This is more or less what FB did.

~~~
sthielen
Our roll-out process involves having people getting and maintaining the
property listings (a fundamental component of our business involves vetting
properties to make sure they will take students, as about 60% will not), then
building traffic at the school, and then securing advertising placements.
We've successfully rolled out to three separate, unique campuses, and yeah,
we've definitely learned a lot from each one.

But it's a lot of work for three people, in addition to the rest of the
business development and sales and all that. As we add more campuses it's
going to become impossible. It makes far more sense to hire a campus rep at a
school to go around getting students to use the site, putting up posters,
talking with administration, sharing on facebook, etc. than it does to have
the CEO and CTO of the company driving down there once a week and spending the
whole day doing that. And even though we have revenue it's still not enough to
start doing that while simultaneously keeping the lights on.

We're looking to raise money to streamline this whole expansion process and
keep our business alive long enough to see that expansion through. We've
validated our product and revenue model, but we need some initial capital in
order to, for lack of a better phrase, do things right.

~~~
webmaven
If your current cost structure doesn't allow you to fund the addition of a
single campus rep for the _fourth_ campus out of the revenues from the first
_three_ , you may need to rethink things, as that doesn't sound like you've
found a scalable growth engine yet.

~~~
late2part
Agreed. Get 1 campus profitable, prove the model. Then expand to your closest
5 campuses. Prove the model there. Find a way to make a lean profitable
business. Then, the world is yours.

------
mikekij
First, congrats. Having real revenue probably puts you in the top 5% of
startups already. Great work.

\- Incorporate. You want the legal protection of (at least) an LLC.

\- Really think about if you need to raise money. If you do, it should be easy
to raise $100k-$200k with real revenue and traction. But it sounds like you're
in a position where you could actually bootstrap this. Equity is expensive.
Think twice before raising money.

\- Think in terms of milestones. What can you do to get to $XX,XXX in revenue
per [week,month,year]. Then, what can you do to launch at an additional school
while still staying cash-flow positive? This sort of thinking breaks the
process into bit-sized chunks. Much easier to digest.

\- Your biggest problem will likely be scaling the ad sales efforts. Walking
into local businesses works great for 1, 2, 3 schools. But it will be hard to
scale that to 100 universities.

I'd love to help out in any way I can. I started a company in grad school that
I sold last year. I've been through many of these issues before. mkijewski at
g mail.

~~~
giarc
I'm thinking they should set up school representatives. Post an ad at each
school they are interested in. Have a 3rd/4th year student at each college who
is familiar with businesses that are particularly keen to attracting students.
They know the student area's and housing issues.

------
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.

------
thedmitry
Contact me, I can help - [http://about.me/dmitry](http://about.me/dmitry)

------
rwhitman
To have such a slam dunk in the apartment rental space, and such big wins
selling advertising to small businesses so quickly, thats huge.

I've met so many people over the years struggling so hard with products trying
to get in on this market and never making a dent.

The product design is top notch too. No wonder its a hit. Congrats

------
peterjancelis
You should sit down with the team and work out the unit economics per city.

This will give you a tangible and precise target for what it takes to make the
next city profitable. (E.g. "70 apartments available, 4 ad sponsoring business
for break even.")

Once you have that you can do like all franchise models do, reinvest your
profits organically for company-owned cities and let franchisees come in to
fuel growth beyond that, with the process manual based on the cities you did
yourself.

You got to where you are by focusing on just the client. Think hard before
spending time trying to play the venture capital game.

------
zefi
Submit a late application to YC? I'm an Alum and would be happy to chat more.
My email is in my hn profile.

~~~
tejasm
This actually sounds like a good idea!

------
smoyer
I'm probably going to be a minority voice here but I think there are a couple
opportunities/risks ... since you're curating properties around each campus
_AND_ selling ads to local businesses, I think there's a pretty good
opportunity to franchise the "feet-on-the-ground". You might be able to charge
for the franchises, but even if you can't, you can still pay straight
commissions as a percentage of the income from each campus area. If the
franchisee gets 50% of the ad revenue and is in charge of driving traffic to
your site, the 50% you keep would need to cover your server costs and the
founders living expenses.

As an aside, I'm near Penn State and I'm not sure whether this would work
here. Most of the properties that will rent to students at all are managed by
property management companies and the students tend to find those companies
first (there's a lot of local advertising). First year students are required
to live on campus, but they tend to start visiting the "apartment stores"
during their second semester. Do the three campuses you're currently servicing
operate in a similar way? Maybe the current crop of tech-savvy students look
to the Internet first since they've had it from birth?

In any case, great to hear you're making money and good luck!

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

------
mikeho1999
First of all.. congrats! It's always exciting to see something you've created
grow and start to gain traction.

Second of all, please take all of the advice that you see here with a grain of
salt. I think most of the ideas that people have shared are really good things
to keep in mind for consumer-oriented SaaS platforms _in general_ , however,
IMHO the university / college student listings market is a completely
different beast.

Speaking as someone who co-founded the largest student classifieds system (at
our peak 4-5 years ago we had over a million students using our system at over
400 universities nationwide), I can tell you that a lot of the business
modeling that people do for consumer software service businesses are not
necessarily compatible with the market that you are in.

I couldn't help but notice from your site that you're in San Diego -- I'm
actually in SD as well, and if you're up to chatting more, I'd be more than
happy to meet up. From my HN profile you can link to my website -- the very
bottom of the "With Whom" section talks about the startup I helped to co-
found, and the "Where" section provides contact information if you want to get
in touch with me further.

Best of luck!

------
wiseleo
Nice 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...](http://imagitas.com/mover-advertising-
solution/welcome-kit.html)

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.

------
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.

------
Im_Talking
Jeez, everyone is talking incubators, YC, angels, etc. People don't realise
that this type of money is the most expensive you will EVER get. And trying to
get this funding will consume your business for the better part of a year, at
least, with everything else on-hold to the point where you have neglected the
actual business long enough that you will need the funding, and die without
it.

Bootstrap for as long as you can. Be smart. Be imaginative. Seek out
partnerships with customers as they can be a great source of
money/advise/contacts if they feel it can benefit them. Sounds like customers
love the concept, so get them to pony-up some money or contacts. Then, the
cheapest money is the money you don't need.

Equity should be treated as gold. And a lot of founders who create successful
businesses kick themselves for the mindless throwing-around of equity in the
early stages.

I would suggest setting-up an advisory board. I'm sure you and your co-
founders will know several smart people, or ask customers who they recommend.

------
ar7hur
> (~40% w/w growth, 100%+ m/m growth)

You should fix this enormous mathematical inconsistency, or everything else
you claim is suspicious.

------
dsugarman
1.4 _1.4_ 1.4*1.4 != 2

not really close and super suspicious. know if you actually need to raise
money and why and if you do, know your numbers. also don't just look to raise
money and hire whoever you can get your hands on to 'manage a business' know
who you need and why, plan a top line growth strategy, and a more humble
strategy with less capital

~~~
pbhjpbhj
This was actually the thing that leapt out at me - I don't really have
experience of investors except watching Dragon's Den(!) but they've always
been super-harsh on those that misrepresent their figures [or at least are
caught doing it].

1.4^5 ~= 5.4

Make sure you're being truthful about your figures with yourself - like don't
assume you're making a profit just because you're taking revenue, especially
not if you're not paying wages yet.

~~~
webmaven
I assumed that the _latest_ w/w is 1.4, whereas the m/m includes earlier weeks
that aren't as good, eg. 1.1 x 1.1 x 1.2 x 1.4 ~= 2.03

------
randomthoughts
I really like the interface. I think if you have enough properties listed you
can't fail. If it was me doing this the next step would be employing local
people responsible for taking care of schools in their region. The only
expense here could be legal fees for drafting a contract template making sure
those people are self employed "suppliers" paid a percentage of profit their
activity generates. This way you wouldn't need to worry about all other costs
associated with employing people.

Also, why not talk to few large property listing websites like (UK
examples)rightmove.co.uk or zoopla.co.uk to partner with them? Those guys get
fees when properties they list are filled. It is in their interest for them to
be advertised as widely as possible.

Or alternatively create another type of a user. An estate agency. You could
have hundreds of estate agents sign up and list properties on your website
paying extra to make them come up first etc.

------
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!

------
sbashyal
First of all, congrats on your success.

I am based in Los Angeles and I currently work in the apartment industry. I
can meet with you in person and provide you guidance and possibly help you
raise seed money if you choose to go that route.

Send me an e-mail to my user name at Google's e-mail service.

------
oniTony
> 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.

~~~
sthielen
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)

~~~
trumbitta2
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?

------
endeavor
Well 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?

------
JoshTriplett
What do you plan to do to "take this thing to the next level", and how much
money do you need to make it work? The scale will determine what route you go;
needing $10k is very different from needing $10M.

------
shyn3
Curious 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.

------
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.

------
hoopism
How do you plan on replicating in the new cities? Is the unique element in
this equation (it's certainly not the space that is novel) you and your team?

Track record goes a long way. You've proven to be effective in a very small
'niche'. You may want to consider taking seed (if needed) from F&Fs and then
prove it in another city. You may find that expansion step to be useful. It
will also help answer the question of expansion for potential institutional
investors.

~~~
sthielen
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.

~~~
jonlucc
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 not expand to the whole
country at once.

Edit: I would have killed to have this service when I was in college. Props
for making it work.

~~~
sthielen
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.

------
Paul_Dessert
At first, I thought, "Oh good, another classified site" but then I looked at
your site. Loved the UX. Nice work. One thing that seemed a bit "meh" was the
name.

Good luck!

------
codingdave
Take small, manageable steps, and do not be in too much of a hurry. Startups
don't have to have explosive, expensive growth... that may be the path that
makes news and excites people, but most small companies grow slowly.

If you have revenue, then your next step should be to decide what can be done
within the limits of that revenue. Nothing you described sounds like you need
any capital investment. Funding is a shortcut, not a requirement.

------
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.

~~~
sthielen
Glad you like the site! We are all Chapman students. The whole reason we
started the site was actually because we all had horrible experiences renting
properties when we transferred here last fall, and found out there weren't
really any resources to help college students.

------
InclinedPlane
Just keep doing the same thing until everyone working on the business is
earning a decent, regular paycheck and the business has built up several
months worth of operating expenses in savings. Then you can start to thinking
about investing in expanding elsewhere. Start by streamlining your processes
and keeping your expenses down.

------
peterlada
Incubators are a good idea at this stage. They will groom you, get your
ownership in order, teach you not to say stupid stuff and curate the VC space
for you. You will raise if growth keeps up. YC, 500, TS on west coast or TC,
DreamIt, ERA on the east. Go for it.

------
Killswitch
I have no real advice here, I just have to say your site is beautiful and well
done. Congrats.

------
allochthon
I've worked at a startup that got a large infusion of capital. I hope never to
work at such a place again. I would aim for organic growth over VC and plans
that aim for high-octane supercharged expansion any day. I would bootstrap if
necessary.

------
southflorida
You could put your idea on kickstarter. It may help you bridge the gap until
you can hire more help with your own resources. Or hire virtually to make
sales in each of the target states and pay on a commission base for closed
deals.

------
clark-kent
Find a successful entrepreneur who has gone through the process, get them
interested in your business and go from there. Take them in as an adviser for
your business. This will save a lot of headache and pain.

------
slapresta
Sadly I have nothing to contribute on raising money, but I just want to say
that the idea is amazingly well thought. It's uncommon to see a platform in
which ads are unintrusive and helpful. Well done.

------
gamerDude
1) Check online for investors. Angellist would be a great place to find Local
Investors interested in your space.

2) Search online for angel groups in the area and go talk to them. See if
anyone in that group is a connection somehow to do a warm call instead of a
cold call.

3) Tell your friends and family what you are up to and ask them if they know
anyone that is an angel. If you find an angel that isn't interested in your
industry, they probably know other angels, so you can ask them to reach out.

4) Ask the university for help finding people that are investors. They would
probably love to help and have a success story come from their college.

------
alexsherrick
I have a few associates that would probably invest in this type of company
rather quickly. Drop me an email if you want me to pass your name along.

------
ericwu01
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.

~~~
mhirshland
Mike from Resolute here. We'd be happy to chat and see if we can be helpful.
Mike@resolute.vc.

------
meerita
I would recommend hire someone with economics sale perspective while you focus
on getting the product better.

------
RamunasM
Awesome idea. I'd love to have a site like this in my country

------
ASquare
Perhaps you're ready for Series A: [http://avc.com/2014/06/what-seed-
financing-is-for/](http://avc.com/2014/06/what-seed-financing-is-for/)

~~~
sthielen
We've never raised money before this. We definitely want to do some kind of
seed round, but we don't really have the connections to find the right people.

We're all new to this game. We went to a few "pitch nights" back in March when
all we had was an idea and a barely functional MVP, but they're all really
theatrical and honestly we'd rather just sit down and talk with someone. We
just don't have a clue about how to find those people.

~~~
rhizome
Why do you want to raise money (i.e. sell part of the company)? It sounds like
you can grow organically, maybe raising your prices is in order?

~~~
ericcholis
Agreed, it seems like money might not be the barrier here. It also sounds like
you are still bootstrapping (so to speak). You've identified a market, which
seems to grow organically.

Some (traditional business) problems you might have.

\- Sales. Looks like you need boots on the ground to get small businesses to
advertise and owners to list property

\- Acquisition. How are customers (ie renters) finding you.

\- Advertising? Are you at the point where you need to spend money to
advertise? Small scope might be useful here: local ads, flyers, etc...

My suggestion, target your next (physically close) market, apply and refine
your existing strategy. Find a more remote market, and see what's required to
replicate your local success.

------
rainer89
i can accept it , and invest in giving scholarship and fund projects to
students in my country , and train them, so after that you can had low cost
and happy human resources happy to work with u, invest in train people

------
davidhariri
keep.... going?

------
gibbonraver
By a margarita machine.

~~~
sumedh
Is there a joke in here somewhere?

~~~
_random_
The Silicon Valley show reference.

------
factsfinder
First of all make an app on Android and iOS platforms. Then give your venture
a piece of advertising. Meet a bunch of investors, convince them , choose the
best of them that suits your needs and get it done. Soon you can be a
billionaire. SO what are you waiting for just do it already. Thank you :)

