

New Startup Now Pulling In Over $100k in Monthly Revenues - kumph

I write this not to boast, but for two simple reasons:<p>1) To inspire other YC-rejects, especially single founders.<p>2) To recruit hackers to help me bring this company to the next level.  By which I mean, of course: total world domination.<p>I came up with a simple idea for a iPhone app to recommend iPhone apps at the end of the summer, began working on it the fall, and applied to YC shortly thereafter.  As a single founder, I expected to be rejected, but thought it couldn't hurt to apply.  The rejection email came on November 2nd, and I got the app into the store a week later.<p>At that point, it was pretty clear the app wasn't ready for prime time, so I worked on it and racked my brain for a viable near-term business model and marketing strategy.<p>This was sorted out and tested in microcosm by the end of the year.  I actually pinged pg on New Years' Eve  with my modest but promising stats, requesting late acceptance to YC.  Unfortunately he replied that it was just too late, and so I soldiered on.  I began marketing internationally, in English speaking countries, rolling the eventual profits from one successful country-targeted campaign to go after the next larger country in my list.  Ireland.  Success.  Australia.  Success... Canada.. The U.K...<p>Finally, on the night of February 15, I went after the U.S. That was a pretty intense night. But all worked as predicted.  And one month later, it continues to work.<p>Over 800,000 downloads to date, 4.5 star rating in the store and a nice constant revenue stream of over $100k per month.  Check it out: http://itunes.apple.com/us/app/id399128529?mt=8<p>That's as a single-founder, with no investors, and only the advice I could squeeze out of my friends.<p>But this is just the beginning.<p>Of course there will be: An iPad app.  Android.   Internationalization.   Vast improvement of the recommendation algorithm.   An in-house advertising system.  Marketing pushes to get the app to at least 10x users by the end of the year.<p>We're also going to expand this from just apps to books, movies, music, and so on.  Cars?  Fashion?  Let's see what works.<p>So there's our basic business plan for all the world to see.  And we're not afraid.  Go ahead, try and steal it. You know it's all about execution and position at this point.  And we've got an excellent position and fantastic execution.<p>But who's this "we"?  Right now it's just me---the founder---and the business assistant I just hired.  An excellent developer friend will be hopping on board soon.<p>But really: I want YOU!   Quit your Google!  Quit your Facebook!  Quit your Apple!  Let's forget about getting acquired and build something with which to acquire!  Come with me, fellow hackers, and let's conquer the world!<p>Sound like fun?  Send your resume, along with a brief cover letter explaining why you're interested, to:<p>jobs@kumph.com
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rms
Best startup hiring post I have seen on HN in years.

~~~
taphangum
Don't know why this got downvoted. It is.

Edit: It has obviously been upvoted now. Now i'm getting down voted? lol. HN,
i don't get you sometimes.

~~~
zyfo
No, you're getting your upvotes too. Don't worry.

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JCB_K
"Let's forget about getting acquired and build something with which to
acquire!"

Love that.

~~~
detst
Reading that quote gave me a strong sense of déjà vu. Seems like there was a
similar posting here maybe a couple years ago. Anyone remember this or am I
crazy?

~~~
salemh
There have been many thread discussions on "why not just keep building it? Why
is an exit always on the mind?" etc. Unsure if their was a specific post
focusing on that aspect..Actually, to help other memories, I think it may have
been AVC (or similar, quick google I believe its NOT avc / Fred Wilson) "Build
an empire..not a ___" which discussed why you should build companies long-
term.

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kumph
I see that my title has been edited by one of the admins at HN.

Just so you know, the original title was:

YC W11 Reject Now Pulling In Over $100k in Monthly Revenues

I like that much better, but it conflicted with the submission guidelines, per
emmett's comment.

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gyardley
Are you making money from iTunes affiliate fees and simply passing a cut of it
on to your users, or are you charging application developers for placement?

Right now the biggest cost-per-install networks are doing 50x to 100x your
revenue and growing quickly, and they're hiring every experienced salesperson
they can possibly find. That's your true competition for app developers'
advertising dollars, not the little stuff like 'Daily App Dream'. You probably
need sales more than developers.

~~~
kumph
Those CPI networks are actually our biggest partners. We're AB testing a
couple right now. And it's a good thing there's more than one. Then, to win
your business, they do nice things like give you access to their API or call
you in for a meeting with the CEO.

I see you used to be at Flurry. It was your former CEO, Simon, who asked me to
come in.

~~~
gyardley
Excellent - I didn't think of partnering with the CPI networks, which makes a
lot of sense.

Simon is terrific - given that there wasn't an obvious acquirer for Pinch
Media, merging with Flurry was a great decision.

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taphangum
Awesome-ness. I love these kind of stories.

I'm actually working on an iPhone game, Link:<http://beathub.net>. Was
rejected by YC before (not on this idea though).

Would love to talk more via email about possible partnerships, advice you may
have.

Just started an Ask HN thread also for those who are interested in offering
their advice on this: <http://news.ycombinator.com/item?id=2318920>

Edit: Just got downvoted, i know how this comment can be seen as self
promotional but it isnt. My intention is to be brief and to the point.

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kingsidharth
This is so much better than those YC-rejects bragging about raising a fund as
if that's a prerequisite for success. A positive cash flow is something to
brag about for sure. Congratulations!

~~~
jonknee
To be fair he never said anything about positive cash flow. $100,000 in
revenue when your business model is paying your users can easily not be
profitable.

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minalecs
Awesome work man. I'm with you. I've been seeing this in the top 10 free apps.
Can you share any insight into your marketing strategy, and how you got some
traction ?

~~~
humblest_ever
I too would love to hear this.

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xuki
Dude, get a designer on board.

~~~
kumph
Yes. Send them over.

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emmett
"In titles, please don't describe things by their relation to YC unless
they're actually associated with YC."

<http://ycombinator.com/newsguidelines.html>

~~~
rokhayakebe
I did not downvote you, but if you read the post you would know it is related
to YC.

~~~
emmett
I did read the post. The guideline is specifically about situations like this
one. You should not describe your company in relation to YC unless you are
_actually_ affiliated with YC. Being rejected is not an affiliation. Neither
is being an applicant.

That said, I think there's nothing wrong with this post, but that guideline is
there for a reason.

~~~
zacharycohn
It doesn't say you can't mention YC. It seems like this post only goes so far
as to say "I applied but was rejected."

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joebo
100k per month with a free app? Can you elaborate on the revenue model?

~~~
mscarborough
The Description says:

>>Get $100, €50, and £50 iTunes Gift Certificates with this app! Not just
"another reward app"--take a look at our reviews! Devs pay us to promote their
apps, and we pass it on to you. Check out the rewards section on the flipside.

Not sure how this translates to 100K/month but would be interested to find
out.

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nischalshetty
Ok, I am going to do step 1. Apply to YC and get rejected.

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bvi
Something really refreshing about this post. Congratulations on your success,
and best of luck!

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fsipie
Can anyone explain this business model to me? I find it very confusing, both
in terms of how it works and why people sign up to this. This is not a
criticism, as obviously it's brilliant and profitable, but rather an
indication of my own limited knowledge 8)

Does it work like this?

1\. Devs pay to feature their apps in this app 2\. Users install the app and
can like & install apps for points 3\. After a certain amount of points (which
seems huge) a user gets a free itunes gift voucher

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weaponizedgames
Kumph, congrats, but what's your plan for when Apple clones your features and
look-n-feel to be included inside their own App Store app?

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chocoheadfred
I wonder if you make make more adding functionality from another app that I
use that looks at your installed apps and suggests new ones based on that.
Seems like you take age into account. Why not other factors like gender,
interests, hobbies...in addition to popularity. All of these would be able to
deliver better recommended apps. I would hesitate on just featuring the apps
that pay you the most. Maybe hold out on those really good ones until you are
able to prove success, which you might be able to do now. Too bad I can't see
the app on my droid.

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OoTheNigerian
Clickable <http://itunes.apple.com/us/app/id399128529?mt=8>

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dazzla
I'm a single founder with no investment working on mobile apps for daily
deals. I've been working on my mobile apps (iOS and Android) for longer and
I'm not getting anywhere near that kind of revenue. I would love to talk to
you about marketing. I'm very inspired by your post. Any chance you have time
for a chat?

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nhangen
Love the bravado. And further proof that building something on the iOS
platform is a great way to make some money.

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zone411
Congrats. Are you sure that any possible additional competition because of
this post won't matter to you, though? I am involved with some successful and
already well-established websites and the last thing I would do is share how
much they make on here.

~~~
glenngillen
If the only thing keeping you in the game is the fact that your potential
competition doesn't know you're profitable I think you've got bigger problems
to address.

~~~
zone411
I said no such thing. The reason I said these websites are well-established
was exactly to highlight that I'd be much less afraid of any new entrants than
he likely should be with his app. Even if new competitors took one percent of
the market as a result of such a post, then unless you gained enough in
publicity, it was a bad post to make.

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us
I assume current monetization is by in-app ads? I came to this assumption base
on the fact that the app is free and I have yet to download it. Either that or
you charge people to be in your app.

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jpug98
great post. i have a YC2011 application ready to go, and, as a single founder,
have been wondering if I should apply. Yes, I know, it’s next week. I too
expect to be rejected but think it is worth the shot. And, to follow up on the
end of the post, personally, YC isn’t about the money or the mentorship. It’s
all about who you know. All I know is that I have the next big idea, execution
is 100% of being a business and I think YC offers a lot of those resources
that you can’t find in a lot of other places.

~~~
davidklemke
I found the application process itself to be quite enlightening since they
asked many questions I just hadn't asked myself since I was too busy focusing
on building something. Like you I know my chances are diminished as a single
founder but I'd rather know if I can make the cut or not instead of always
wondering what could have been.

~~~
jpug98
appreciate it brother. i submitted it so we'll see. I'm learning how to code
so either way, i'm building it! The World Is Mine!

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ScottBurson
Very cool. What's particularly interesting, I think, is that it's still
possible to have a big hit like this in the iOS ecosystem, _if_ you understand
that ecosystem very well.

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jswinghammer
This is a pretty good idea. It connects devs who want to sell apps with people
looking to buy more apps. I am always looking for a cool game or app.
Congrats!

~~~
JabavuAdams
Check out my new turn-based fantasy combat game: Sticks 'N Steel.

<http://www.shinyfish.com/sns/>

/shameless-plug

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hnfwerr
Are you applying to YC again? (for the 2011 summer batch)?

~~~
StavrosK
Why would he apply? He has 1.2m revenue per year, his valuation must be much
higher than that, the 30k YC will give him in return for 10%-30% (or whatever
it is) is a pittance.

~~~
gus_massa
From: <http://ycombinator.com/apply.html>

"We usually invest $11,000 + $3000n, [...] in return for between 2% and 10% of
the company. The average is 7%."

~~~
rst
You're forgetting the likely Yuri Milner $150k convertible note, which changes
the math somewhat. (If not, we have a "typical case" $14k investment --- n is
the number of founders --- for at best 2% post, giving a post valuation of
50*$14k = $700k, which is a very raw deal under the circumstances.)

As to whether this is worth it --- depends on the expenses (which presumably
include at least salaries, promotion, and rent). If they aren't spending as
much money as they're taking in (no names, but I do know of iPhone devs in
this position), it's hard to see the point of giving up equity to get more.

~~~
philipDS
Then again, I think you could consider applying to YC. Even though your
revenue > expenses. Don't think of YC as an incubator or a funding machine (or
whatever you'd like to call it). They offer a lot more. I think it's more like
a ticket to a community of entrepeneurs and investors, based in Silicon
Valley.

And yes, the $150k is a nice addition, but would you pick this convertible
debt over the weekly dinners, office hours, alumni help you might get and most
of all connections with possible investors? I wouldn't :)

Now I think about it: the YC FAQ also mentions this money-related question.

------
richcollins
It's too bad the app sucks at its advertised purpose (finding good apps). I
was excited when I read the description and saw how many people were using it.

~~~
eevilspock
Yup, that's what I said in another comment. Sadly no one else here seems to
care about product but only about revenue, however it is achieved.

~~~
richcollins
Right this seems like a zero sum game across the agents involved:

    
    
      - users
      - advertisers
      - "killer apps" company
    

It's obvious from the reviews that the users only care about the gift cards.
So if they get more gift cards than the other parties get back in app sales
commission, the users win. However the terms state you're limited to 3 cards
per year and that you lose your points after 60 days of inactivity, so I'm
guessing that other parties come up on top via this bait and switch technique.
It's also possible that the advertisers get the short end of the stick if
they're just paying for impressions.

~~~
kumph
I'm just about to go on a hike, but let me respond quickly. I do appreciate
tough criticism, but I think there are some rash judgments and misconceptions
here.

1) just because the recommendations aren't suited to you doesn't mean they're
bad in general. Hacker news is very special, sophisticated demographic. The
recs are currently optimized for a more main stream audience. We get lots of
feedback from users attesting to this. Certainly there is lots of room for
improvement tho and that's why I want to hire so badly. We care a great deal
about the product.

2) There's no bait and switch or anything underhanded going on with the gift
cards. We get a certain amount when a user downloads an app, and we credit the
user a certain percentage to work their way toward a reward. We need to expire
point of inactive users to prevent an accounting nightmare. Many users are
getting the cards every day.

Hope that clears things up. I certainly understand the skepticism, and again I
welcome tough criticism.

~~~
ginger19
Out of curiousity, what does it mean for the recs to be optimized for a
mainstream audience instead of a sophisticated one? Different audiences will
like different types of apps, sure, but why wouldn't the same basic
recommendation algorithm work for everyone? Unless of course the assumption is
simply that "mainstream" users are less discriminating, and the
recommendations don't have to be as individually targeted.

------
lubos
congrats man, I'm so happy for you. your attitude is great, finally someone
who dreams real big! go ahead and thumbs up

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nerd_in_rage
So how much profit are you making? 100k/month is no good if you're not making
any money and paying it all out.

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Retailslave
Can I come along for the ride just to observe and learn?

I know nothing and have no skills.

------
sinaiman
This is so awesome and inspiring, congrats!

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eevilspock
Great. Another idea that taps into human irrationality and weakness.

Maybe Netflix should stop trying to come up with quality recommendations, and
come up with a scheme like yours. The real reason to watch movies is to get
paid a few bucks someday.

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OoTheNigerian
Is this the same app someone asked for a review of a while ago?

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myearwood
HN changed the title of the post. That's not cool.

~~~
jtheory
It depends on the situation. The old title went against the site terms, but
also it was just a distraction. What's the point of thumbing your nose at YC
for the initial rejection when at the time it had many strikes against it?

Single founder, yes -- that makes it harder to succeed (certainly not
impossible, but investment is about risk assessment). But more importantly,
notice the step that comes _after_ the YC rejection:

"The rejection email came on November 2nd, and I got the app into the store a
week later.

"At that point, it was pretty clear the app wasn't ready for prime time, so I
worked on it and racked my brain for a viable near-term business model and
marketing strategy."

Once he'd finally hit on the successful approach, it was too late for the YC
cycle. If he'd gotten through the brain-wracking phase earlier in the year,
maybe YC would have selected him in spite of the single-founder risk.

"My idea development process didn't align with the YC application cycle but
now I'm racking in 100K/month in revenue" is more accurate, but doesn't have
much of a ring to it. So why not just focus on the success story? It's a good
one.

------
Estragon
Not exactly a YC-reject in the usual sense, if you just missed the application
deadline...

~~~
zyfo
"The rejection email came on November 2nd" He was rejected. The email to pg
was sent after he released his app, hoping for a second chance.

~~~
Estragon
Oops. Thanks.

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vlad99
This is not a solid business that might get acquired in the end so they are
not interested in 1 hit wonders.

~~~
StavrosK
Unfortunately, "solid business" and "getting acquired" are probably inversely
correlated these days. Is Twitter a solid business?

~~~
drp
Has Twitter been acquired?

edit: This must be misunderstood. My intent was to illustrate that Twitter is
not a good example of a company that has been acquired without a solid
business model. Obviously the news says they've had offers, but just as
obviously no offers have turned into acquisitions. The many intelligent people
who work there and have invested in the company think Twitter has at least the
promise of a solid business.

~~~
StavrosK
Regarding your edit, you said it yourself. Here's a company that has had
multiple acquisition offers, a company which people would consider a bargain
at a billion, and the best it can do towards a business model is "at least
have the promise of a solid business".

If I had a business that generated even 30k/yr in revenue (albeit a
sustainable 30k), I would think really hard before selling it. It pays my
living expenses, after all, and ostensibly leaves me free enough to pursue
other ideas.

This "acquisition fever" we have these days isn't really about good business
models, there are the businesses which try to grow as fast as possible by
burning investor money and disregarding business models (the ones that are
good acquisition targets), and the businesses that start out with a good
business model and aim to be sustainable as fast as possible.

