

Ask YC: What would you do with 50K - poppysan

Say you had several start-up ideas, most ad-supported, and you had a 50-100K loan to develop it.  What steps would you take to begin generating revenue to support yourself full time?  I am thinking of taking the plunge into full time start-up and have to decide how to begin generating revenues quick enough to support my family.
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kogir
Umm, this is a loan. I assume you'll need to pay it back whether or not you
succeed?

If you're the sole bread winner for your family, then potentially accumulating
a ton of debt is not something to be done lightly.

Test your idea, whatever it may be, before taking the loan.

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staunch
I'd pick an idea that doesn't rely on ad revenue. It takes time to build
enough traffic to generate a good amount of money.

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terpua
Build something SMBs need (like QuickBooks but online).

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breck
I wouldn't go for full time. There are 100,000+ of people trying to create
sites that generate enough ad revenue to be full time. A very small percentage
actually succeed. Try to do it part-time and see where it goes.

In my experience this has been the better path. I worked fulltime on an ad
supported site for 3 months, plunking 10k into it(and living expenses), and
got about $200 in return.

Another site, which I built in a day, has generated over $10K for me in ad
revenue. It's a big crapshoot and going full time probably won't increase your
odds too much. Wait til the traffic is big enough, not your desire.

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gommm
Care to show the website that generated over $10K in ad revenue?

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run4yourlives
He didn't put a time line on things, but 10K a year is relatively common. 10K
a month is a different matter altogether.

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breck
Yup. 10K a month and I'd be in the Bahamas by now.

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mattmaroon
How averse to raising funding later are you? My advice would be to develop
which ever idea you think is best, don't worry about advertising revenue now,
and then try to raise funding. Then you'll get a salary to support the fam.

Don't get me wrong, I'm not opposed to startups going the self-funded route
and pursuing revenue from the get go, but that's almost impossible with ads.
If you really don't want to raise money, go with the best idea you have that
has some other business model.

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dshah
One thing to keep in mind about raising funding: It's often harder to raise
funding than actually building a product/company, and much less fun.

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mattmaroon
Generally true, but if a steady income is a requirement due to family
obligations, it's often easier to raise funding and pay yourself a salary than
it is to build and monetize a site in the short term.

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run4yourlives
50-100K is more than enough to support you for a year. That means you need to
start making $4200 a month by then. You'll know if this is doable by month 6
at the latest. If it doesn't look good, pack it up and find a new/return to
the old job.

You're in a really good position, and for some reason you seem to be waiting
for something...I'm not sure what.

Get out there and build it.

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JacobAldridge
1) Definitely go for a market-led not technology-led business idea (ie, one
where the demand exists, rather than one where you have to invest time and
money educating the market).

2) You then need to Position yourself in the market that's demanding it. This
requires you to develop a consistent profile in the marketplace, so when
people think of 'Generic Need' they immediately associate it with 'poppysan'
before anybody else.

3) Above all, believe in your business. If you're confident, you will invest
emotionally and be productive. If you're not, the market will see you as a
frantic mess to be left alone for a while...and you don't have a while!

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tx
If your business is ad-supported, you'll need hundreds of thousands of uniques
per month to start making any money.

Which means that building such product is the easiest and (by far) the
cheapest part. Promoting something consumer-oriented, building your brand,
attracting those visitors will cost you hundreds of thousand of dollars,
millions even.

The rule of "build it and they will come" does not apply to consumer-targeted
internet-entertainment business. Media businesses require either lots of luck,
or massive investments into PR (and still some luck). Digg, Reddit,
TechCrunch, even CNN - they all had some "lucky event", something out of their
control, which contributed to their boost in popularity. Technology takes the
back seat, unless you have something truly groundbreaking, like Google had.

Sorry to deliver the bad news, but your $50K are irrelevant, find some well-
connected people to support you. Reddit wouldn't have happened without Paul's
PR machine.

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mikkom
If you don't have a solid business plan yet the step one is to write one so
you'll have a solid understanding on what you will actually do - it's not a
bible so you can change it if it needs to be changed.

When you have a business plan that seems to be working, then you'll have to
thing how to implement it, distribute it and so on. These are crucial steps
and all beginning enterpreneuers will be far too positive on these so if you
think there will be X customers that will pay Y amount of money, divide them
by half.

When you have everything planned, you need to think how to finance it - that
is when your 50k will come to play.

I would recommend 253% to keep your day job until you have at least one paying
customer or are getting some decent money from at least something connected to
your project.

Too many projects end like this and it's very, very sad:
<http://www.snotr.com/video/1133>

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RobertRice
One of the worst things that "start your own business" books suggest is taking
out a loan. A very high percentage of startups fail (really. high
percentage!). The last thing you want to do is quit your day job and get a
loan. If the startup fails, you will have no income, no money, and a fat debt.
Hello bankruptcy! Avoid loans until you find some measure of income/revenue
stability. If you absolutely have to go the loan route, fine, just don't quit
your day job.

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jon_dahl
I love the bootstrapping instinct of the YC community, but $50K still doesn't
give you much runway. I've seen several startups struggle because they tried
to bootstrap problems that were too hard.

Here are two suggestions.

First, build something subscription-based that you can finish in about 3
months and 25% of the money. Then support, promote, manage, and improve the
site part-time, and get another part-time job. Or sink all your money into
initial development, get another job, and manage the site on the side.

Second, build a consulting company instead of a product. A healthy
programming/design shop can generate steady paychecks + profits, and you can
reinvest the profits in a product. $50K is more than enough to start a
consulting company.

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aaronblohowiak
it cant be said enough: make something people want.

then again, you could also try: make people want something.

however, you said you were a programmer and not a marketer.

alternatively: want something? make people.

nobody ever went broke betting on people's urge to reproduce.

permutations are fun: something people make? want.

desire in the world comes from attachment to expectation, we are the
fabricators and stewards of that desire. want-creation is a multibillion
dollar industry, ads are just the way to tap into that market with the lowest
barrier to entry.

wheeee: want something people make.

aggregate other people's content. for text, scribd, for video, youtube, for
audio? (i consider this one still out there for grabs.) increasingly, micro-
markets (like etsy) are going to flourish, facilitating trade between
craftsmen and consumers. make your mother proud, become a middleman.

\---

for real advice: dont pay an accountant or a lawyer until you start giving
other people money or taking other people's money. before you do either of
those things, get the go-ahead from both. things take twice as long and come
out half as good as you think.

also, make sure there is always forward progress on what you are actually
intending to provide. you provide someone with resources something (goods or
services) that they perceive as valuable. unless you continue to create
more/better goods or provide more/better services, you're stagnating.

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mde
That's probably a rather common situation for someone getting ready to take
the plunge. I'd quit my job right now if I had 50K to get off the ground. You
could probably live off that for a whole year, working full time on your
idea(s).

I've also got a few ideas, ranging from simple to grandiose. My plan is to
start with the simplest (fastest to create, simplest revenue model, smallest
potential) as a moonlighting effort. I hope that it can generate enough to
keep me alive to buy time to start pursuing the grandiose ideas. YMMV.

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symptic
Make something of value.

It's as simple as that. People will pay for something that they think is worth
their money. When I made www.friendfury.com it went completely viral and made
$600 the first 8 hours and about $200 a day for a few months afterwards until
we stopped promoting it heavily to focus on other projects.

People paid for our subscriptions because it was worth the money to them to
get 500+ friend requests a day on Myspace for whatever reason.

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jamesmhall
I would rethink ad-supported. I cannot see you creating an eCPM greater than
you advertising CPM in less than 6 months without an incredible viral model.
And a lot of the successful viral apps are looking for revenue outside
advertising, because they are not making enough on advertising alone.

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ambition
I highly recommend taking a skim through Seth Godin's "The Bootstrapper's
Bible".

<http://www.changethis.com/8.BootstrappersBible>

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dmpayton
$50-100k? I'd for sure quit my current job and live off it for a year while I
develop my idea(s).

The only problem is, I don't have $50-100k. Or even $5k. (Feel free to help
change that! :o)

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edw519
50-100K doesn't sound like much runway for an ad supported site. I'd say you
have 2 choices: sell subscriptions or build enough of a proof of concept to
find an angel.

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ideas101
Without leaving your full-time job start developing (part-time) ver 1.0 of one
of your idea that has market and can get some revenue (either by ad or
subscription etc.). As soon as you start getting revenue you may leave your
job and find a loan that has minimum interest rate - on the other side start
looking for angel investors to expand your startups. Make sure you do this
with minimum debt and maximum chances of revenue starting right away so that
just in case if you cant find angel or if your startup doesnt get you the
revenue enough to sustain then you're still safe as you can go back to your
full time job. Alternatively you can start thinking about increasing your
household income by selling stuff on ebay, preparing your other family member
to start working (may be part-time), if you have extra space in your house
then rent it to earn some money, etc.

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Herring
I'd make my own theme park! With blackjack! And hookers! In fact, forget the
theme park!

