

Ask HN: idea for a startup, how important should be the path to revenue? - gilbax

Hi HNers,
So here is the situation : having recently graduated ( in CS ), I'm currently refusing job offers as I want to start a company.<p>I've been reading HN and startup-related news for a while, but it turns out I'm still extremely confused when it comes to my next step : in which direction to go ?&#60;p&#62;I mean, should I think about starting a company that can clearly generate revenus ? Or should I aim at doing something that add value, build traction and then figure out how to monetize it ? ( let's say for instance a web/mobile app for a new kind of social photo sharing )<p>I have the feeling that starting a company based on a "fun" or/and useful product without any idea on monetizing it works only if you're in the Sillicon Valley area. Does anybody else share that feeling ?&#60;p&#62;So basically I'm just wondering if I should really focus on a product that generates revenue from day 1 ( à la Wufoo ), or do something more risky that might one day make money once it has traction ( à la social apps ).<p>Reading blogs/HN etc make me even more confused since a lot advices/recommandation contradict themselves.<p>Any help is appreciated, thanks.
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jbail
If you don't have an idea yet, why are you refusing job offers to start a yet-
to-be-determined company?

Anytime someone asks "What kind of business should I start", the correct
answer is none. You should continue learning, working on things and find your
passion. That passion will create an undeniable pull that will lead you to
starting a business you'll stick with through good times or bad.

~~~
vidar
Sort of like asking "Am I in love?", "Am I popular?", if you have to ask, the
answer is no.

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jonnathanson
There's a short and pat answer, and there's the longer and more thoughtful
answer.

But the short version is this: businesses fail when they run out of cash.
Period. Keeping that in mind, we can logically conclude that you need either
to monetize before the cash runs out (thus becoming organically cash flow
positive) OR gather enough outside funding to support operations until such
time as you become cash flow positive.

How do you get there? Well, ideally, you have a product that solves a clear
need which can be monetized immediately. If not, then you need a product so
compelling that you can get to X users in Y months (where X is an impressively
large number, and Y is an impressively small one) -- thus attracting partners
or investors.

But the bottom line is that you need to generate cash flow or generate funding
as quickly as possible.

And yes, generally speaking, it's easier to keep a "fun" product alive in the
Valley than it is elsewhere, if only because that's where most of the funding
money resides, and because many of the potential funders there have more
speculative appetites. Your odds of getting a cool product without clear
monetization paths funded outside of SV drop significantly. That's not to say,
of course, that getting a cool product funded in SV is easy, because it's not.
You still need a good product, and by "good," I mean a product that solves
clear needs for its users or else provides its users with functionality or
utility that solves problems users didn't even know they had.

Best advice for you is probably to take a job at a startup or larger firm, and
build some cool products in your spare time. If and when one of those products
becomes extremely cool -- and you'll know it when you see it -- that's when
you start looking for users or for funding. No sense in turning down job
offers now on the purely hope-driven premise that you'll build or invent
something later. Build first, -then- act.

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noahc
A lot of it depends on your goals.

Are you wanting to build the next reddit, google or Facebook? You'll probably
need VC money to do that.

Are you trying to build a lifestyle business that pays 20-30k the first year
and could grow after that, skip the VC money and go after a small niche
product like Bingo Card Creator. For this you need to monetize earlier than
with a VC funded type of startup.

The business you build will reflect your goals, so work backward from them.

As always, advice is situational, and so it will contradict. The idea is to
apply the advice to your situation and don't forget to do a gut check to see
if something feels right.

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csomar
Get a job to put your skills into practice and also know better the market.

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ecaroth
As somebody who just got our of school a couple years ago, and is trying get a
startup of my own rolling, I have a few bits of insight. First and foremost,
I'm not sure what your CS education was like but if it was anything like mine
it was mostly useless. The vast majority of skills/knowledge I apply to
development and design now were self-taught or I have picked up working as a
developer for somebody else. It's easy to ready tons of great articles about
practices, methods, etc but until you get your hands dirty and code some stuff
that gets real world usage you may be at a disadvantage. For example, things
like enterprise-level security practices, planning for scale, having
redundancy and fall-backs in place are easy to envision and 'think' you
planned for but until you are actually faced with a situation where those
things happen you aren't fully prepared. My advice: score the best-sounding
full time job you can get and see some live internal tools, business
practices, backup processes, etc. Nothing says you can't code your dream
product in your free time while still getting exposure to a real, working
product/business (and making money to throw at your startup as well!)

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rysmit
Depends on your product. A 37signals strategy would be to bootstrap it and
charge for your product (works well with b2b). Or do what Facebook initially
did which was start with no monetization strategy and scale it. I would say if
you have a great idea in mind that you feel can drive millions of users to use
your web-app, do not charge for it and raise money.

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webwright
In general, ideas without early paths to revenue are riskier (but have higher
upside). Just because they don't have an obvious path to revenue doesn't mean
their isn't one. For example, if you created a fun/viral facebook game, you
could probably find a way to make money. But there are famous examples of high
adoption startups that failed to monetize (recently: Xmarks).

It sounds like you enjoy products/coding more than you enjoy businesses. Be
careful here- Every month that passes in your startup's life, you'll be
spending LESS time on user-facing product/code and more time on
marketing/sales/support/hiring/etc -- all of the things that fuel and sustain
growth.

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Modernnomad84
It's not a business without revenue, it's a hobby. If I were you, I'd look at
lucrative niches and find out how you can do it better or cheaper or just as
good and just grab _some_ market share.

As a graduate of CS, you have a mind that functions in a unique way. If you
set your mind to water delivery, a dry cleaner, or real estate, you would
likely approach it in a way that few of your competitors do. Capitalize on
that.

If you have to 1. create the market and then 2. create a business on top of
it, you are making twice the work for yourself.

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HyprMusic
Go for the job offers. I guarantee you'll find several areas that you'll find
could vastly do with improving and ideas will come flowing in. Learn why they
need improving, and build something to improve them.

If you have to think of a problem to solve, you won't know if you're solving
it unless you've dealt with that problem directly.

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davidlowrey
The sole objective of any business is to make profit. How a business gets to
profitability depends on a lot of variables, but the end goal is always to
make profit.

Ergo, since you can't make a profit without revenue, your path to revenue is
of utmost importance and should be one of the very first things you consider.

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dmitri1981
Definitely focus on revenue. That way you work towards building a profitable
business from day one. If you focus on 'money later' you are in effect first
building a user base and then trying to monetise it. Just because you succeed
at the first stage does not mean the second will be a breeze.

Also, keep in mind that a startup is really an experiment. Every day you
should be learning something new and tweaking your business accordingly. By
focussing on revenue you start learning how to make money from the beginning.
If your initial focus is on a wide userbase, then you learn nothing about the
money-making side which is likely to be very different from just getting
users.

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codyguy
Do you really have plans for both paths you talked about? Doubt it. Do you
have what it takes to execute that plan? If you do have a plan you think can
execute to generate revenue from day one, why don't you test that out? It
probably won't work out the way you think it would. Meanwhile, be careful
rejecting job offers outrightly. If you do have a choice in jobs, look for a
place that might allow you to sharpen some important skills you think you need
as an entrepreneur (preferably get into a startup). A job might be important
especially if you've never shipped anything and a CS degree might not teach
you those practical skills.

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iworkforthem
Since you just graduated, GO FOR IT!

We only live once.

Whining version - there's no kids and family to support now, no house to pay,
no car to pay, etc.

You know you can always get a job later on if things dun work out.

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brudgers
My advice:

Start with something that generates revenue. This will give you experience
with making money. It will give you experience completing a project. In other
words, it will give you a track record.

A track record will help you attract people (co-founders, investors) to your
next idea (or to your initial one). Revenue will allow you to pursue other
ideas or expand your first business.

However, don't take any of this as advice to start your own company in lieu of
taking a job.

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jfi
Unless you have a personal financial runway that you can / are willing to burn
through or investors lined up, you should focus on the revenue-oriented ideas
otherwise you'll simply run out of capital.

When you are deciding what your venture should be, I try to think about risk
vs. reward ... make sure those "fun" (read: risky) projects have the potential
to be home runs, otherwise it is a bad investment of your time and effort.

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logicwins
I would probably think about it terms of how many people would/could use it.
If a million people use your product, monetizing it wouldn't be too hard to
figure out later.

Haven't spent a lot of time thinking about enterprise stuff, so maybe this
doesn't apply to that type of business.

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cheae
If you have ideas for both path, List them all and assesss their potential for
growth and demand. Pick the one which scores better in both metrics and start
building it. You will come across many issues to solve, one of them probably
be cash.

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smartprojector
hey gilbax, from what i have read/realized, successful startups don't aim at
building the world's best business model... u build the model around your
product... i think if your product is good (it solves a pain), your customer's
will buy it... so.. focus on getting a kick a*s product out... and don't just
try to build something just becoz you want to do it... build something that
can actually solve the pain of a million people... and it will bring revenues
in before you know it :)

~~~
ambirex
In addition, try and solve you're own personal pain point. You'll find
yourself to be greatly more motivated and informed to solve your own problem.

