
An Analysis of Going from $0 to $1m Revenue in 1 Month - allenleein
https://elizabethyin.com/2019/02/19/an-analysis-of-going-from-0-to-1m-revenue-in-1-month/
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raiyu
Using non real world examples is a big problem.

So let's say you could convert $1 into $1.15 in revenue. You can't invest that
money back into advertising because you forgot about costs and margin. Your
product would need to have 100% margins for this to be true.

Now direct to consumer companies get no where close to that mythical margin
and probably are well below 50% which means that you would need to finance a
tremendous amount of inventory as a cost to get to revenue of $1MM.

So more like you need $25k ad budget and oh yeah we forgot to mention another
$400k invested in inventory.

But saying you need $425k to get $1MM in revenue isn't as catchy as saying all
you need is $25k.

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davidbanham
I would hazard a guess that many of these kinds of companies aren't holding
inventory, though. Dollars to donuts says that they're taking that money from
the customer, ploughing it back into ads, then using cashflow from future
customers to actually order the goods from a dropshipper week or so later.

Some would call it a ponzi scheme, others would call it a kickstarter.

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arielm
This is a really misleading title!

I don’t normally leave negative comments but how did this article even break
the top 10? There’s no correlation between this formula and reality.

99% of ad campaigns have negative ROI, and those that don’t need massive
scale, not a small seed tranche.

Advertising is a powerful but expensive tool, not a solution to becoming an
overnight unicorn.

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treelovinhippie
Step 1) Have $25,000 to gamble on ads in one day. Well, shit.

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catherd
Everyone seems to be reading this in the most literal way possible and
complaining that the numbers aren't real, or that advertising doesn't work
that way, or somehow thinking this is some sort of recommendation for an
advertising based business strategy. It's not.

The point is simple: For the same unit costs, if you get your payment cycle
time down, you will make more money.

It's a mathematical example showing what happens in extreme cases, so that
it's easier to spot the trend. Nothing to do with advertising specifically.

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zeckalpha
Good illustration of the time value of money and why clearing payments sooner
gives compounding results.

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aussieguy1234
You're an engineer and you've built your own product (no dev costs except your
own time). Its serverless and hosting costs are minimal, < $1 per million
requests (source:
[https://aws.amazon.com/lambda/pricing/](https://aws.amazon.com/lambda/pricing/)).

Assuming you convert $1 in ad spend to $1.15 in revenue, would this be
possible?

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chasing
This is interesting, but I'm suspicious of the rosiness of the 1.15x return
math when it implies that if this business starts on day one with a $1 ad buy
they'll have $84bil in revenue after about six months.

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NeedMoreTea
You might run out of search volume a little before $84bil. Maybe even before
$1m. Great business they found though - no refunds!

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evantahler
So this is like the Carnot Cycle for investing then? The "theoretical optimal
maximum" for a cycle, that efficiency will be measured against but can never
be reached?

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wheelerwj
get this garbage out of here.

> Now, in practice, the scenario I’ve outlined is near impossible.

shocking. sensationalized title with nothing to back it up. its a shame too,
because understanding cash flow is very important in business and its a worthy
topic for startup founders.

This author, while I've never seen of or met her before, seems to be otherwise
reputable but this is a garbage content on a level of which I usually see
relegated to indiehackers.

Going from $0 to $1MM in one month for a brand new product from a brand new
startup isn't near impossible, its FUCKING impossible.

Lets break this down a little bit more:

25k a day in adspend: okay great. Except that most ad platforms don't let you
just immediately ramp to 25k per day. So unless you have a) a team of people
who have been researching and building ads and keywords for some time before,
b) an outsourced digital ad agency to ramp for you, or c) you're Google or
Facebook, spending 25k a day isn't going to happen.

Immediate ROI: Sure, you spend $25k on ads, those ads net you a bunch of money
on sales, then you can immediately transfer that revenue right back to ads
right? wrong. Its going to take days or even up to a week to move that money
back into ads. From your credit card process, to your bank, to your ad
platform. So unless you have closer to $125k-$175k in cash or credit set aside
for a weeks worth of ads, you can't turn cash that fast. Even if you ignore
the fact that your card processor is going to freak the fuck out at the rapid
increase in processing and is going to keep a substantial part of your revenue
as a rolling reserve.

You have a company, product, and team that can deal with $1m in sales: The
author just neglects this, which means shes either minimizing the work that
goes to getting a company to this point or.... or i dont know what shes trying
to say. You aren't going to be able to build a company that can deal with $1m
in revenue in 30 days and live to tell about it. You probably spent months or
even years building a team, that built your product, that cost you hundreds of
thousands of dollars.

No, the tried and true, Product Owner (not investor) endorsed method for
getting your first customers is to not use ads, but to do it with good old
fashioned word of mouth and sales.

This type of content is awful because it works to perpetuate the flawed notion
of instant startup success. All you have to do is spend a bunch of money and
you too can be a unicorn. Its completely contrary to how it actually works and
its frustrating seeing founders become demoralized because their startups
don't work like this.

The truth is, it takes time and effort to build your company. Your fist $10k
in revenue is just as hard and just as important as your first $1m in revenue.
Its going to take time, maybe years, before you can get it done. Its
definitely not going to happen in one month.

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Stevvo
The point of the article wasn't to present a realistic scenario; it was just
saying "never underestimate the value of time in making money"

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wheelerwj
the title is:

"An analysis of going from $0 to $1m revenue in 1 month"

which is the opposite of what you are suggesting.

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amanzi
"Now, in practice, the scenario I’ve outlined is near impossible."

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antt
I'm not sure if this is satire or not.

