

Ask HN: How to predict 3-year revenue and growth for an early-stage "search" company? - bravura

Our startup is pre-funding, and still in the prototype phase. We have not deployed.
A potential investor has asked us---among other questions---for a 3-year revenue and growth forecast.
Obviously, this is educated guessing, but I would like to ballpark it by comparing to similar successful ventures.
Could anyone suggest points of comparison and other techniques for predicting 3-year revenue and growth?<p>To situate what we are doing: We are developing an information finding tool that complements search.
Every place on the internet that currently has a search box, could also have our tool in addition (not as a replacement).
Our tool has that sexiness factor that could lead to viral adoption.
Besides having a standalone site, we are also targetting enterprise, and writing an API and plugins for blogging+CMS platforms, Facebook, and iGoogle.
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aristus
Is this investor at all experienced in funding technology startups? There is
such a wide variation that there is no such thing as "similar". At year 3
Google was $50 million in the hole with no revenue in sight.

The question is silly, but it's not useless. Think about how much you will
charge for this thing, or how much traffic, etc. Make up a good per-unit
revenue and multiply. Save it so that in 6 months (let alone 3 years) you can
pull it out and laugh.

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bravura
This investor, a friend of mine, represents non-tech savvy high-net-worth
individuals. Mainly financiers. (My advisors recommended I not shop for tech-
savvy investors until my product is more mature.)

How can I estimate traffic?

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pg_
Do you absolutely need his money to launch?

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bravura
I am not sure what your question is.

Is there a problem with _his_ money specifically?

Unfortunately, I do need money to launch and achieve profitability. Search is
funny like that. Rich Skrenta, founder of the Blekko search engine, made a big
deal out of needing only $5M: “you don’t need a million servers and half of
the phd’s in the field to build a search app. It takes 20 people and $5M of
hardware…if you know what you’re doing.”

$5M might be excessive for my tool, but $0 just won't cut it.

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SwellJoe
Hand-waving and wishful thinking.

At least, that's the method I've seen most folks use, and it seems to tacitly
accepted by the VCs that believe in what you're doing. There are all sorts of
weird human foibles that make us poorly suited for dealing with large numbers,
probabilities, and rate of change as it applies to money. Engineers turned VC
might be more skeptical, but I wouldn't bet on it. Of course, the best VCs
have highly attuned BS detectors...so, you might not be in great shape if you
don't believe it yourself.

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bravura
Traffic estimates would be a good start. How can I estimate traffic?

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jlees
Find something in a similar field and look at theirs?

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frisco
YouNoodle.com? For all it's failings and dubious accuracy, it's basically
exactly what you're asking about.

