
Ask HN: Advice on how to best spend $3,000 - cdvonstinkpot
Hi,<p>I&#x27;m working on my startup, at http:&#x2F;&#x2F;superspeedyservers.com which is to be a dedicated server provider.<p>I have $3,000.00 left to invest in the company, and am interested in hearing feedback about which of the following options I&#x27;m considering might be the best way to spend the money, considering my goals.<p>My first thought was to spend this money on completing the purchase of server #1 since I already spent $2,000.00 on SSDs with which to outfit the server.<p>Then I would need to hire a web developer to build the customer portal using an API, @ $1,500.00.<p>I&#x27;m considering launching a fundraising campaign on Fundable.com to raise funds to launch the company with more than just 1 server for rent- maybe a 1&#x2F;2 rackful. But I&#x27;d have to raise alot of money, and give up some equity, which is fine, as long as I&#x27;m not giving up a controlling stake.<p>I think it might help if the company were an LLC rather than a Sole Proprietorship like it is now. That&#x27;s $1,017.00.<p>I think it might help to get the website in a little better shape than it is now, with some custom graphics implemented from some designs I already have that just haven&#x27;t been adapted for use on the site, which could cost $500.00 or so to do.<p>The Fundable campaign itself is $100&#x2F;month, and since I would be asking for alot of money I would be opting for an extended length to help ensure its success- maybe 9 months. So there&#x27;s $900.00.<p>If I get the funds from Fundable.com, I can build faster servers for my customers, &amp; rent them at a greater profit than the 1 server I can build myself, too. As it stands, I have to compromise on the storage subsystem &amp; use small 3Gb&#x2F;s SATAII SLC SSDs, rather than much larger 6Gb&#x2F;s SAS MLC SSDs I can afford if I&#x27;m properly funded, which would bring in $300&#x2F;month more per server.<p>Thanks in advance for your feedback.<p>Regards,<p>-c
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3pt14159
Chris:

This is hard to write, but I feel as if an honest question deserves an honest
answer. You don't have enough money or experience to start this company. You
need a much better design for your website and your purchasing decisions to
date lack business accumen. Spending $2k on SSDs is not a wise choice, and
throwing more money after them is not wise either. You underestimate the
amount of money it will take to launch this by at least one order of
magnitude, if not two, and you overestimate the willingness of investors to
invest in pre-traction startups.

My advice: Take $300 from the $3k and try to make $350 with it. If you fail,
try again until you either have $0k left, or a business that makes some sort
of bare minimum profit.

If that doesn't sound fun to you, then get a job at a startup and learn as
much as you can while you are there.

Sorry for the hard words, I was in your position at some point in my late
teens, and I wish someone had told me the realities.

(The good side is that you will eventually make it. Just keep working hard.)

Best of luck.

~~~
smartwater
I said something in another thread of his; he posts stuff like this all the
time. He has some posts that really SCREAM amateur.

 _I recently blew a 6 figure inheritance on a startup which failed due to
medical problems_
[http://www.techcofounder.com/ads/view_ad.php?id=769](http://www.techcofounder.com/ads/view_ad.php?id=769)

As a customer, that would concern me, especially when it's a one man show. As
a business owner, I wouldn't touch it with a 10 foot pole. You would be more
of a liability than anything.

If I were in his position, I'd prove the concept by reselling DigitalOcean.
They do low cost SSD VPS. That way it won't cost 5k just to see it flop (or
not)

 _Apparently based on people I 've talked to who are familiar with the tech
startup scene, there aren't any dedicated server providers specifically
targeting the tech startup market_

You mean B2B? There are thousands of them. I am having trouble thinking of a
webhost that doesn't target the tech startup market. Geocities or Angelfire
maybe?

In fact, MediaTemple gives free hosting to a lot of tech startups in exchange
for their logo appearing in the footer.

I don't know what to say really. There seems to be a huge disconnect from
reality. Probably not anymore than most teenagers, if that makes you feel
better.

~~~
milesf
Apparently he's around 39 years old, as he was born in 1974
[http://www.techcofounder.com/ads/view_ad.php?id=769](http://www.techcofounder.com/ads/view_ad.php?id=769)

------
alaskamiller
You don't know what you're doing and don't have enough capitalization to try
any of this.

You're also trying a oft-repeated dream in starting a web hosting company.
It's the same story since the 90's, and that ship has already sailed when
costs plummeted and there went your margins.

Worse, this time around you're caught in a position where everyone is making
expensive investments into SSD infrastructure by factors of millions.

Your rack of few SSD raid arrays is not in anyway, shape, or form on the same
level of competing with anyone else offering the same product at your intended
price range.

Sell all your hardware and recoup your money and try something else.

Or if you wish to persist...

1\. Sell all your hardware to recoup costs.

2\. Sign a leasing contract with an established hosting company.

3\. Buy a control panel software for $500.

4\. Hire a designer for $1500 to create logo, webpage, email templates, ads,
and marketing material.

5\. Spend everything else on targeted Facebook ads.

Good luck.

~~~
adventured
You're right about most of what you said, except a few things.

Do not hire a designer for $1,500. It sounds like you don't have much money to
get started, and you're going to need every penny in reserve for problems. You
need to be doing those things yourself, despite the time and effort it will
take.

Don't spend a single dime on Facebook ads, or any other ads. Set up an account
on WebhostingTalk.com and spend hours there every day, with your information
in the footer of every post you make. Also consider posting to the deals
section to get your first customers, to the extent you can afford to. By
virtualizing your dedicated host, you'll have a guaranteed margin, erode that
to provide deals.

Front as little money as absolutely necessary. Do not set up a new box with
your provider until you get an order from a customer.

Once you have enough customers and are making a little money, you can begin
messing around with custom hardware hosted in whatever situation you think is
ideal.

You're not a real web hosting company, and you can't afford to be for a while
yet. You're a customer service layer that rides on another hosting company,
you differentiate yourself by being extremely hands on. Then when the time is
right, you can try fronting the capital needed to begin your own host.

------
alanctgardner2
My biggest question is: who wants this? Do you have a list of potential
customers already? Can you sell your half-rack of capacity if you get funding?

The website you linked to is, frankly, not slick enough or trendy enough to
attract the HN crowd to rent your servers. It doesn't clearly define why I
should pick you over DigitalOcean, Linode or even Amazon. I can understand
that you're probably focused on 'shipping' by building out the platform, but I
think you should work on validating the idea as well. I would use whatever
funding you have to commission a proper landing page that explains a few key
points and captures email addresses. Even better, go out and talk to people
and explain why your project is new, exciting and better. See if they also
think it's new, exciting and better. If not, iterate and repeat.

Basically, rather than stressing about whether to buy MLC or SLC, collect
customers who are concerned about performance first. Then find out what
they're looking for: is it really SSDs, or is it a better core/memory ratio,
or it reliable networking (that last one is highly likely, I've never seen
anyone who's happy with their VPS networking). The best part about this plan
it, besides paying for the website (which shouldn't be more than 500 bucks),
you don't need to sink any more money in right now. Just time.

------
sciurus
To provide some more context, here are previous questions from this poster

Ask HN: What workloads would this VPS config be good for?
[https://news.ycombinator.com/item?id=5592790](https://news.ycombinator.com/item?id=5592790)

Ask HN: How do you keep your servers/sites safe from hackers?
[https://news.ycombinator.com/item?id=5739713](https://news.ycombinator.com/item?id=5739713)

Ask HN: Would any web devs like to co-found this startup with me?
[https://news.ycombinator.com/item?id=5764168](https://news.ycombinator.com/item?id=5764168)

Ask HN: What are the specs on the dedicated servers/VPS' you rent for dev
work?
[https://news.ycombinator.com/item?id=5772439](https://news.ycombinator.com/item?id=5772439)

Ask HN: Help me price my product. What's the most you would pay for this?
[https://news.ycombinator.com/item?id=5776554](https://news.ycombinator.com/item?id=5776554)

~~~
jchung
smartwater's post on the last one is interesting.

------
danaw
I have to ask; why are you building a hosting company? Did you identify some
unfulfilled need in the market? Have you identified and cultivated your early
customers?

If you don't have answers to these questions I strongly recommend not spending
anything until you do. You're risking burning through all your capital before
you have an idea of what you're marketing or who you're marketing to.

Also, you're drastically underestimating the costs and complexities of
starting a hosting company. You could easily burn through thousands of dollars
before you make anything.

~~~
citricsquid
From his post on a co-founder dating type site:

    
    
        Apparently based on people I've talked to who are familiar with the 
        tech startup scene, there aren't ant dedicated server providers specifically 
        targeting the tech startup market, and if I were to enter the field,
        I'd be the only player there
    

Seems he thinks he has identified an unserviced market (unfortunately, it's
not accurate...)

~~~
dev360
surely, this child has never heard about heroku.

------
TallboyOne
I hope this isn't too harsh, but your website is probably the most
untrustworthy, low quality website I have seen in a long, long, LONG, time.

You couldn't even give me PAY me $1000/month to use your hosting, that's how
sketchy it looks. No joke.

~~~
rhubarbcustard
I think that's an honest and fair comment. My websites are important to me - I
need to know I can trust a host to look after them.

I'd spend the money on a design and a marketer - you need to get the message
right.

~~~
wmboy
You could start by spending $50-$100 on a nice WordPress theme to slap on the
front end. Spend money on a designer when you've got some initial paying
customers.

~~~
TallboyOne
True dat, theres already like a million hosting themes online...
[http://themeforest.net/search?utf8=%E2%9C%93&term=hosting](http://themeforest.net/search?utf8=%E2%9C%93&term=hosting)

~~~
UK-AL
Probably the best use of money on an extreme budget, is finding a good one and
then modifying it.

------
bifrost
I'd recommend not buying anything and only leasing servers from someone else
to start. You'll save a ton of money and its not as big of a deal if you don't
succeed. You also forgot the cost of business insurance, support
infrastructure and I suspect you'll spend a LOT more building an api/portal
than $1500...

------
mmcnickle
Chris, please don't take this comment as being mean-spirited, but I'm not sure
you are getting the message from what the other posters are saying. I think it
needs to be spelled out candidly:

This isn't a viable business.

From this and your previous posts it is clear that you don't have the
knowledge required to run a hosting company, you don't have a target market,
and you don't nearly enough money. You're off by at least a factor of 10, if
not closer to 50. No-one wants to rent a server from a one-man-and-a-machine
company.

Please read over the various comments from your past submissions and be honest
about what you read before you continue.

------
GBiT
1\. You dont need to buy servers. You can resell them from other providers
like Leaseweb, OVH, Softlayer. They will give you bigger discount with every
new client. And then you be big company, you will start to do your own
servers.

You will save time on managing server, money on bad hardware etc..

2\. Make good website. Really good, current looks like crap.

3\. You can use WHMCS for managing billing and servers, VPS, etc.. it will be
enough in the beginning. Monthly license only cost 18$/month, and lifetime
350$

~~~
lifeguard
I agree with GBiT. I'll add you can bootstrap with free software:

isp config: [http://www.ispconfig.org/](http://www.ispconfig.org/)

gnucash for accounting: [http://gnucash.org/](http://gnucash.org/)

sugar CRM: [http://www.sugarcrm.com/](http://www.sugarcrm.com/)

Icinga for monitoring: [https://www.icinga.org/](https://www.icinga.org/)

Pick your fonts and colors:
[http://colorschemedesigner.com/](http://colorschemedesigner.com/)

and a logo:
[http://www.logogenerator.com/logo_draft.php](http://www.logogenerator.com/logo_draft.php)

------
IzzyMurad
From my +10 years experience in the hosting industry, I'd say in this case the
best way to spend the $3,000 is to buy Xbox One and some other cool gadgets.

------
noir_lord
Anyone else getting troll vibes here?

This is all so bad it's like a parody of the companies we've all seen or heard
about.

~~~
TallboyOne
Yes... after seeing $4000 for a logo, I think this is too much of a trainwreck
to be true. Then I see past posts by him and it seems it's very real.

~~~
stickydink
Too many old, related, Ask HN posts from OP for this to be a joke.

That, or it's the most well-planned troll I've seen in a long time.

------
treme
Chris,

it seems like you are a do-er, which is fantastic, as most people have the
other problem of having ideas, and not acting on them.

but you seem to be approaching this w/o sufficient knowledge/experience in
business development aka, "theory stuffs".

I highly recommend [http://www.mixergy.com](http://www.mixergy.com) to get a
well rounded opinions, and anecdotes on startups to get a better feel for the
types of things you need to be aware of before/after launching.

keep at it, best of luck.

p.s)
[http://www.bothsidesofthetable.com/](http://www.bothsidesofthetable.com/)

[http://www.gabrielweinberg.com/blog/](http://www.gabrielweinberg.com/blog/)

[http://paulgraham.com/articles.html](http://paulgraham.com/articles.html)

also fantastic places to checkout

~~~
cpayne
+1 on Mixergy! There's lots of case studies on marketing, building a customer
list, customer support etc. etc.

------
henrikschroder
> which will eventually be upgraded to a much faster 6GB/s storage subsystem
> once there are enough earnings that we can reinvest revenue in hardware
> upgrades.

You may have customers who are evaluating your service because you offer SSD
RAIDs. They know what the alternatives cost. They know what it costs to build
it themselves. You've just told them exactly how little money your business
has.

You're letting it show that you're just some guy with some servers in a
colocation somewhere, hoping to rent them out. Why should any customer choose
you, instead of the competition?

------
redbad
You appear to be using the logo form of Sparkasse, a relatively large German
bank.

[http://www.sparkasse.de](http://www.sparkasse.de)

~~~
cdvonstinkpot
That logo design came from a Crowdspring contest where I paid over $4,000 for
a package of designs. There was no way I could've known it was lifted from
their design.

Thanks for bringing it to my attention. I'll contact Crowdspring & let them
know- maybe I can get my $4,000 back.

~~~
yogo
$4k for a logo to put on a website that looks like that? I hope this thread
makes a fantastic case study for others. There are small businesses out there
that are generating revenue, making profits, and wouldn't blow that money on a
logo. This should have come in later when improving your brand image as part
of some marketing initiative.

------
gesman
The ones who are really looking for super speedy servers are not going to
signup with unknown, just created new company.

And you cannot beat run of the mill Go Daddies and Hostgators and Bluehosts
with their prices. UNLESS you offer something really unique, value-added that
others does not have.

------
hluska
Chris....

Lots of people have weighed in on this thread with some wonderful advice. I
encourage you to heed all of the cautions!

I have little new to add, but I want to give you some compliments. Most people
dream big dreams and never do anything to reach them. You, on the other hand,
dreamed a big dream and are clearly working your tail off to achieve it. That
alone is admirable. Add in the fact that you either saved up some money to
invest in your business, or you've found an investor, and you've clearly got a
whole lot of good going on.

This might not be the right startup for you, but I respect and admire your
drive. Keep at it, mate - you have an immense amount of potential and I'll be
cheering for you.

------
UK-AL
Do you want to run a business? Or specifically this business?

Are you a good programmer, but a terrible designer or something?

You're probably better off running freelance/I.T Service business then
attempting this. It won't require any massive capital requirements.

------
jcc80
Customers should be funding your hardware purchases. If you don't have
customers yet then go find some and get enough of them to prepay and agree to
use your service so that you can afford the hardware, etc. Because, if you're
not able to build a list of customers that will prepay then this business is
in trouble. Better to get yourself into that "sales mode" sooner rather than
later. Since the margin for error isn't great ($3k) you definitely want to
focus on getting customers first and leasing servers as the other commenter
suggested.

------
adventured
As others have noted, there is a lot wrong with these plans. I just want to
focus on one point here -

Regarding the $1,017 for incorporation via LLC. You can incorporate for a lot
less than that. See: Legalzoom.com

Keep in mind that will immediately add overhead costs and a little time
consumption to maintaining the company / keeping it in good legal standing. It
might be worth doing because of the bit of a liability shield you will acquire
with it. Personally, I'd go as far as possible without spending that money
(maybe at least until you have a few customers).

------
Sealy
You're entering an incredibly competitive market with a small budget (and very
expensive costs). If I were you, I would spend as much time as you can
learning from the forums at webhostingtalk.com and trying to sell to that
crowd first. They will quickly tell you if your product fits a niche.

------
unshift
forget about the $3k you have left, what about the money you've already put
in? it doesn't look like I can sign up anywhere to get any sort of service, so
you have no way to generate a return on your investment so far -- so why would
you want to put any more in?

my suggestion is to set up yourself a prgmr-like website, do the
administration yourself (by hand), and spend a few hundred dollars trying to
get some traffic and signups. if that starts to work out then take it from
there. realize that more SSDs aren't going to generate any money; signups
will.

a new website would be nice, but you don't have the money for one, and it's
not clear it's worth trying to get one at this point. the pure ASCII look
could actually instill some sort of confidence that your current website does
not.

good luck!

------
LargeWu
If I were you, I would use your $3000 to continue to invest in the time
machine you have invented. Or, at least, I assume you have invented, because
it looks like you went all the way back to 1994 for your website.

------
alex_doom
Why not just use something like Weebly or Strikingly to create a website that
doesn't look horrible. That'll save you 1500 for now, then when you can get a
customized look later on.

------
hack_edu
Would you consider spending half of it on a 2 week vacation somewhere exotic?
:)

If it makes you happy and energized after, it might be even more helpful than
the infusion of cash...

------
gre
For $3k you can have a pretty rockin' boat party.

------
zaman
Hei, you can contact me to get a good design. Mail me folkgraphein@gmail.com,
all I provide via oDesk.com

Zaman

------
forexio
This guy is a moron or a troll... Why are you replying to him. He said he
spent 4k on the logo, no way someone can be that stupid

~~~
lifeguard
I know a man who spent 10s of thousands on google ad campaigns -- for his bee
removal start-up. He was convinced if he was in top three ads customers would
come pouring in. They didn't because he had no real marketing plan.

~~~
forexio
Yea even that makes more sense than 4k on a logo that looks like that.

Come on I'm all for people doing their ideas but this is a joke. Read his
other comments/posts before down voting me whoever did, guy has no clue what
he is doing. Pretty much its like picking a random person on the street and
then picking a random idea for them to do.

------
earwolf
maybe just flush it down the toilet, save time

