

Ask HN: Micro Startups? - cadalac

I've been wondering if anyone has tried starting a 'micro' startup. By which I mean a startup that's manageable by one person and won't require outside investments. If you have a simple and useful idea that's not too complicated, is it worth going for?
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orangethirty
Here is a short presentation I gave to a group of startup founders about two
weeks ago.

Link to PDF:
[https://docs.google.com/file/d/0B14i92YeDqMoWmZkemFmZXZlSHM/...](https://docs.google.com/file/d/0B14i92YeDqMoWmZkemFmZXZlSHM/edit?usp=sharing)

 __*

Think small: The micro startup. By orangethirty@gmail.com

What is a micro startup?

A micro startup is simply a business that is niche-oriented, and mostly driven
to sell one product. The focus is to develop a business that does not need
much maintenance.

A good example of this is bingo card creator by patio11. The business only
features one product, is about a very specific niche, and does not need much
maintenance.

What are the downsides of a micro startup?

It does not have the same economic potential as a bigger business. It is not
as attractive as building a business that sells millions and millions of
dollars.

What are the upsides?

Due to its lower economic potential, and low maintainability, a micro startup
can simply be left running in autopilot as a source of passive income. It
rarely requires any cost of bringing in a development team to keep it running.
Your costs are basically flat and stay the same for long periods at a time.

Another benefit is that the investment requirement is very low. You can run
many micro startups off of a simple Wordpress or Joomla install. There is no
need for a costly server because an economical web hosting account will almost
always do Taxes and legal structure is also better. You can incorporate your
micro startup under an umbrella corporation. Thus, any financial loss from a
failed micro will benefit you in more ways than being a simple LLC.[1]

There is also no need to bring in Venture Capitalists (Vcs). You will not have
to dilute your stake in the business, or have to respond to the sometimes
incoherent demands of a VC. There is no time wasted raising investment.

You also get to spend more time doing other things not related to the startup.
It will simply not consume your life.

The smaller you think, the better off you will be.

People in Silicon Valley are always talking about changing the world, being
innovative, and disrupting markets. That is why they try and build these huge
businesses that (mostly) end up lacking a proper profit channel.

With a micro startup you do the inverse. You pick a current market niche,
improve on the current offerings, and simply ride along until your sales die.
Rinse and repeat. Although this does not sound very interesting, a lot of
innovation happens at this level. The constant tweaking at the micro level
allows for new products to evolve over time.

Landcade as a live example.

The aim of landcade[2] is to sell optimized online marketing tools. Things
like landing pages, and email campaign templates are adjusted to a level where
they provide a good starting point for businesses to develop from. Instead of
relying in a lot of A/B testing to get the basics down, landcade simply gives
you a great starting point that has already been A/B tested. All you have to
do is to fine tune them.

Landcade is not disruptive, but it improves on the current offerings. Places
like Theme Forrest don't have this sort of product readily available. The
business is also not engineered to grow into a multimillion company. It is
designed to generate a thousand dollars in profits. Not per month, but during
its lifetime.

Could it make more money than that? I don't care what it could do. All I focus
is in getting my investment back (of $200) and profiting.

Is building micro startups worth it?

Yes. The reason is that micro startups usually fare better than bigger ones in
terms of return on investment (ROI). I run, and have run several of them. Each
micro startup has managed to at least double the initial investment amount
(including cost of time spent developing the product at a rate of $50/hour).

This is a very smart investment strategy, because it requires small
investments that mimic the functionality of compounding interest. You invest
$200 on one, profit $800. Then you invest another $200 on another, and profit
$600. You made not have made a lot of money in terms of actual amounts, but
the ROI is very high. As you gather experience, you are then able to build
business that produce thousands of dollars worth of profits from a very low
investment. My best personal example (which will remain unnamed) is
(producing) set to generate up to $60K on one year. All with an investment of
around $1700. Not millions of dollars, but enough profits to allow for a
significant improvement in quality of life.

How do you know which micro startup to build?

Another great benefit from micro startups is that you don't waste much time
creating a product. Nothing is created from scratch, but improved upon.
Landcade improves on online marketing tools. It does not create a whole new
type of product itself.

Let's use one of the many ideas I have in store. One of the many problems
people have these days is storing personal files. Things like images, videos,
and documents. All of the big offerings out there are doing a fairly standard
job of serving a very wide audience. But they really miss the mark in serving
smaller ones. My idea involves creating a generic file cloud that can be re-
packaged/re-purposed for specific niches. Imagine if you were a wedding
photographer. Your live hood is the files that your camera outputs. Meaning
that you need to store those files in a special place. I would develop a web
app that would allow photographers like you to upload your files (following
your requirements), and give you other additional functionality that other
services don't provide. All of it aimed at catering to your needs. I know what
you are thinking. This product could turn into another one where photographers
could simply upload and buy the printed images from the service. (which would
be another micro startup running in parallel).

The smaller the idea, the more focused it is, the bigger the potential to
profit.

How do you market a micro startup?

This is the easiest part. You don't really need to spend that much time (or
money) marketing it. The focus is spent on creating key relations within the
target niche market, and providing (for a limited time) small loss-lead
promotions to drive in traffic. Say a “get a free 30-day trial of the file
cloud” specially targeted to photographers.

The really awesome thing about this is that the smaller the niche, the easier
it is to find your customers. Wedding photographers are simply a web search
away. One simple email campaign can have your micro startup profiting from
week one. There are also little to none costs from marketing campaigns, due to
how you can do direct 1-on-1 marketing with your niche market.

[1]Talk to your lawyer and accountant. [2]<http://landcade.com>. Optimized
online marketing tools. Has not yet launched.

~~~
dear
Is that another name for lifestyle business?

~~~
orangethirty
No. These are not lifestyle businesses. These are just micro-businesses that
are very low maintenance. I currently operate a couple, and am about to launch
another. Its times better than any big business Ive had before.

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Brian_Curliss
That's all I do. If you have a simple and useful idea that's not too
complicated, it is totally worth going for.

Tip: document everything. Document so well anyone can run your 'micro
startup'. You never know when you will get a new idea and want to hire someone
to take over your company.

~~~
cadalac
It also seems like a useful idea from the start since you can have a definite
procedure for yourself to follow.

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AznHisoka
I might be facetious, but to me there's no difference.

90% of entrepreneurs here think their startup is by no means a "micro
startup". They aim high, aim for growth... yet most of them fail, they can't
even call themselves a small, lifestyle success.

So aim high, aim to be a "startup". You'll probably end up as a micro-startup
as a result.

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bennyg
My question: why is outside investing considered the norm around here?

It feels like so many people are worried about "playing the game" if you will,
ie getting funding, creating a "startup" and moving to the bay. To what end?
To just make a bunch of money? Everything seems backward. Taking VC funding is
but one of an infinite number of ways to sustain a business (keyword:
sustain). Personally I don't even think about funding, marketing, any of that
jazz until I have a badass prototype that is not only fun for me to use, but
gets others excited as well. That feels like what should be the norm to me. It
all seems funky when people are thinking of business opportunities before
thinking of a product, then seeing an opportunity to make money off of it.

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saluki
Definitely worth going for . . .

Start listening to the archives for StartUpsForTheRestOfUs.com great
information there.

There are also some good talks on microconf.com from last years conference.

Mixergy.com has lots of interviews. Subscribe on iTunes. Andrew is a great
interviewer and each interview has at least a few gems you can apply to your
startup. Start with the Bidsketch interview lots of good information.

Amy Hoy has great advice as well. <http://unicornfree.com/30x500>

There are a lot of information you can read through online and lots of
interviews and podcasts to catch up on.

After you have caught up on all the information out there you can consider
signing up for paid courses.

Consider one of Amy Hoy's one day conferences or her 30x500 class. I haven't
signed up yet but I am considering it.

There is also Micropreneur Academy micropreneur.com that you could consider
signing up for. Rob gives great advice on the podcast and his website.
SoftwareByRob.com so I would expect good results from the academy.

I would recommend to find a mentor. Someone who's done this before to share
ideas with and keep you moving forward on your business.

It is a process so depending on your runway you'll probably need to consult
part time or work part time as you scale up your startup.

You should also follow Brennan Dunn at planscope.io/blog/ he has lost of good
information/ideas.

Follow nathanbarry.com as well.

I have transitioned from my original career over the past 5 years to
consulting full time and am currently building my first SaaS app.

This is the talk that inspired me the most start with this one.

David Heinemeier Hansson's startup school talk from 2008.

It's a little dated but very inspiring.
<https://www.youtube.com/watch?v=0CDXJ6bMkMY>

Good luck.

~~~
cadalac
I appreciate the positive comments and suggestions from everyone. I would say
I'm really beyond the stage where I need a 'push' or motivating articles. I've
been following YC for many years. I've read probably every one of PGs essays.

The questions I'm asking myself are more like this: Should I set up a server
in my basement or use a service? Will my personal internet provider have
sufficient bandwith? (media is involved.) Will I need a lawyer to write the
user licence agreement? How much will it cost? Which business type should I
use? (I need to balance the liability issue with simplicity.) How will should
I set up the payment methods? What potential legal issues could happen? how
could they be avoided. These are the hard questions that I feel I need to work
on. Most podcast / articles / essays etc don't go into these technical
details.

~~~
chatmasta
The articles you read do not include technical implementation details because
those details are prohibitively complex without reading and comprehending a
significant amount of technical documentation. You can learn this stuff on
your own, but it's going to take a while. I would recommend comprehending some
basic technical overviews and hiring a technical consultant to help you with
all of your questions.

There's nothing inherently wrong with weak technical knowledge. A lack of
technical knowledge simply indicates a lack of domain experience.
Unfortunately, you're asking these questions on Hackernews, where many (most?)
readers are technical domain experts.

Most of your questions indicate that you have weak technical domain expertise.
Specifically, "Should I set up a server in my basement or use a service?" is a
question that indicates a lack of exposure to the wide technical field of
infrastructure. For that reason, I recommend hiring a technical consultant to
help you with initial planning and setup.

~~~
cadalac
Yup, or finding a technical co-founder.

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veesahni
If you have the needed skills, it's definitely worth going for. I've been
bootstrapping a small startup over the last year and it's been an amazing
experience.

I think the abundance of cheaply available technology also expands the scope
of what could be considered as a 'micro' startup, given your definition of
being one-man-manageable and not requiring outside investments. Consider the
technology available today: Infrastructure as a service, database as a
service, search as a service, platform as a service, web-encoding as a
service, (you get the idea).

Leverage expert service providers, focus on cash flow from day 1 and take
control your destiny :)

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hashtree
Micro startups can make seven figures, even with one person. There are some
truly amazing business models out there that I never see many hit upon. HN
members, in particular, seem to miss them. However, I expect that there are
folks who do work in these areas but have the sense to keep quiet about them.

I see most going for pie in the sky type ventures that often have no sound
business model (not always true). While it is true that sometimes they are
bought out for a billion or your app will make 100k, it is so infrequent I am
surprised more don't go after the low hanging fruit all around them.

~~~
hkarthik
Care to share any examples of the kinds of things that the HN crowd tends to
gloss over?

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ky3
Check out Amy Hoy [1] and Don Lancaster [2].

Both place strong stress on "manageability by one person" and avoiding outside
investments/interference.

Two lesser-known conferences with previous-year videos online are LessConf and
MicroConf. Worth checking out.

[1] <http://unicornfree.com>

[2]
[https://www.hnsearch.com/search#request/all&q=lancaster+...](https://www.hnsearch.com/search#request/all&q=lancaster+incredible&sortby=create_ts+desc)

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kohanz
Might I recommend: <http://www.startupsfortherestofus.com/> as an excellent
podcast for this field. As the intro of each episode states:

 _"Welcome to Startups for the Rest of Us, the podcast that helps developers,
designers and entrepreneurs be awesome at launching software products, whether
you’ve built your first product or you’re just thinking about it. And we’re
here to share our experiences to help you avoid the same mistakes we’ve
made."_

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amac
I run a one man start-up. It's hard but rewarding. You want to hire at some
point, find people who are better than you ideally.

------
patio11
What do you hope to get out of the experience?

~~~
cadalac
More money and work that will require critical thinking. Here's my situation:
I've been working in my previous field for the last few years at a minimal
salary due to the job market. I lost my job recently. Being frugal, I have the
finances saved to start a micro startup, or I can just get another underpaying
job.

~~~
patio11
Well, good news, both of those are achievable. There are many people who run
small software/etc businesses, including at incomes which would be reasonable
for professionals in the US (and points below and beyond that). The work does
tend to be much better than a rote job, at least in terms of intellectual
engagement. You also get quite a bit of freedom in how you arrange your day-
to-day affairds.

~~~
orangethirty
Yes, freedom is also a side benefit. I don't really have to do much with my
micros. Very little code maintenance. Actually spend more time answering
emails than anything, but its about 30 minutes a day, if that.

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27182818284
The best definition for what distinguishes a startup from, say, a small
business chain of 4 barber shops managed by one person is the massive growth a
startup sees. I very much subscribe to the notions in
<http://www.paulgraham.com/growth.html>

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jstanley
I guess you could call <http://notlate.co.uk/> that. It is a simple service to
provide decent timetable files to students at my university. Hoping to
monetise it starting next semester by selling advertising space in the
calendar files.

