That's true.
Ycombinator had a startup that was doing captions for youtube videos! Something even smaller than what I do, and the startup was acquired by youtube for $3 Millions, if my memory is not hanging up.
It's based on facebook, it's one of the business challenges we are aware of, but can be extended to other social media websites and on the websites itself.
we are starting small and then we will replicate and expand as we go.
I am very sorry, but I am certain the GP was being funny. What he meant was that the person suggesting on Facebook may not have had any sway or may have been pushing you off.
I need at least $25,000 to push this startup to it's real potential.
It will give me 18 months, a point I would be able to monetize comfortably without worrying about churn rate.
After 18 months, and after burning $25,000... this is the point I would reach the break even point, and I might get profitable as well. It's well calculated!
Ecommerce is booming in the middle east!
I am providing long free trial - up to 1 year!
Still my sellers/users know very well they will be charged after a trial ends.
I have 10+ paying customers.
It won't work if I get a job. I am working alone on this, and I have to work full time on this. otherwise I would not be able to achieve such progress!
I do everything! I code, I sell, I provide customer service!
Ok. So you need to move up your timetable. Contact your customers, explain the situation. If the service is as valuable to them as you say it is then they will be happy to pay. $25000 over 18 months works out to a shade under $1400/month. Divided by 300 active users works out to less than $5 / month for each. Call it $10 to build in some safety. Let them know that not charging for the product any longer is no longer an option, but that because they are the first 300 they will get a 40% discount on what everybody else will be paying from now on: $25.
If what you say is true then your problems will be solved, if you are making an error of assumption then it will surface and maybe you will be able to address it, or maybe not and then you will have the answer to your question.
> my point is that I expect at least 30% churn rate when I start charging my customers.
That's a huge assumption. It might be 0% it might be 99.9%. Answering that question will give you a much better idea whether or not you should shut down your startup. Willingness and ability to pay for your product are the most important bits. The rest is secondary.
facebook is not charging users for using it.
still it got a ton of investment!
facebook had a serious trouble monetizing it's service.
so no revenue or monetization method is not enough for deciding that this business is not worth it.
Facebook is an advertising platform. You might not be paying for it, but corporations are paying for the data and eyeballs. As it is often said: "If you are not paying, then you are the commodity being sold."
I will make it as my last resort.
I will warn my sellers that I will charge them $6/mo.
This will have a negative impact of high churn rate for sure.
But if I will shut it down, then churn rate would mean nothing - it will be shut down anyway!
OK. First off, the actual figure doesn't matter as much as the trend: if you tell me it's $400 the first month, down to $10 this month, it's worrying; but if it's a steady progression (more each month than the last), that's very good. This is what you want: growth. The only comparison metric is yourself, yesterday: how far further along are you? Nobody else matters — the market is well able to 'absorb' you if you provide value, i.e. solve problems, needs. Which I think you are.
Look, here's my intuition: your obstacle lie more on the business side than the technical side; so the hat you need to grow is the CEO/COO in you, more than the CTO/CIO. It's about organization (your time, your revenue, etc), it's about strategy (how to monetize, attract customers, etc), it's not about the 'what' (the product) but about 'how' you're gonna pull this off.
Just know this: most successful businesses emerge after 2 years of "survival mode" (very, very hard, most don't make it), then about 3 more years until it's "stable enough". On average, statistics, YMMV, etc. Also, most successful entrepreneurs make their first successful company on the third try — they fail twice before making it. Again, averages, stats, YMMV.
Being relentless is certainly more determining of eventual success than anything else.
Listen, you've got something good going on. You've made it this far. It's already a lot more than most will ever do. You gotta pat yourself on the back for that, you gotta give yourself props. You are the man. Look, it's right in front of you, you made this. Don't ever question this: what you've done so far is yours, your achievement, your doing. Whatever comes next won't ever change that. You know, sometimes we win, and sometimes we learn. That's the life of a business, of an entrepreneur, but you know that already, so don't forget it when times are trying you.
I can't do consulting like that but general perspectives:
- step by step: if you're currently generating 10+ × $6/mo, aim for twice that — $120/mo or so. Can you do that? Can you focus on this next goal and reach it? I'm pretty sure you can, going from $60 to $120 isn't crazy wishful thinking, it's totally within your ability. Once you get there, focus on getting to $240. And so on and so forth. It will always feel impossible to go from $100 to $10,000 in one move; but going from $100 to $200 is totally imaginable, doable; then from $200 to $300 or $400; etc. — you eventually reach the $10,000, step by step. That's how growing revenue works best.
- if you're alone, try to 'multiply' time by killing several birds with one stone: most things you do should ideally let you produce several things — for instance, documentation you produce for some purpose may also serve as basis for a blog post or video to increase your digital presence. Years down the road it may become a book, or course (e.g. you may sell in-person B2B training), or a basis for consulting. Now these are examples which may not fit your plans at all, the point is to look for synergies in your work and production, and double-down on these because they're extremely valuable in the long run, they generate compound effects.
- For a pure SaaS, ads indeed make sense, but since you can't spend too much now, I'd look at meetings, conferences, etc. Just show up, meet people, talk about what you do, give cards/links/referals, in other words do the advertising yourself, in person. It's magnitudes of order slower to reach N people, but the level of trust and engagement you'll get in return is also orders of magnitudes better. And it's your best shot at actually meeting people to fund you. Go to any professional meeting where there's a chance you might sell even just 1 subscription, get 1 solid lead. People will trust you infinitely more if they actually know you. And people talk about people they know much more than things — again, compound effect.
You may also get many good business advice by talking to people, find mentors with perspective. Entrepreneurship alone is too damn hard if you ask me, you need to be part of some circle, have peers, people to talk to.
Heck, you may even request to be a talker in some of these meetups and conferences, tell your story, your vision for the product, increase your 'authority', just become known by real people who actually run businesses as CEOs, CTOs, the kind of people who go to business conferences and domain-related meetups. Infiltrate that circle, these should become your peers. Trust me, they have a lot to learn from you — to each their domain —, don't feel like you are "asking" for business but rather "offering" all you have, know, can do.
If your product is basically OK, I'd spend as much time as possible generating leads and following-up on any of them. Increase your customer base. You've become a salesman for the foreseeable future. Remember, it's only about reaching those $120 for now. It's doable.
In the background, use that early feedback on your product to iterate ever-closer to what your customers actually want/need. It's likely to be very different from your initial vision. This will be useful in progressively forming a clear vision for what your next step should be.
Also, deadlines. It does not really matter if your estimates are totally off the mark, but apply gentle pressure on yourself, to keep yourself 'honest' — we're so great at lying to ourselves and justifying our every fault. When do you think you can reach those $120? Great, now commit to that, and work relentlessly for this objective. It's good to have the big picture in the back of your mind — the 'why' you're doing this — but it only moves forward if you push the ball towards the next pole, the very next step, not the last one 10,000 miles away.
Hand-write it 10 times on a sheet of paper: "I will reach $X/mo by DATE". Every day, re-read or re-write it. It's nothing but it just programs your brain to really commit, it's just easier. It makes it real to your brain when you read your own writing, for some reason, so it'll try to make reality conform to it as much as possible. Whatever you do, just live for these $120.
Once you're there, figure out the next step towards e.g. $240.
You haven't really tried until you have it two years.
You can do this. The work you do now will get you closer to success, whether it's this business or the next, or the one after that. Just commit to the next step.
If you want to read books (level up!), I'd recommend this for early stage entrepreneurs:
- The E-Myth Revisited, by Michael E. Gerber. Some of it is a bit outdated maybe, maybe, but it's still a great perspective for first-time founders, especially working solo.
- The Obstacle Is The Way, by Ryan holiday. It's a rather short and simple introduction to Stoicism. If you know nothing about it (or about Zen) I strongly suggest taking a look. It's a philosophy which correlates strongly with successful entrepreneurs, people who make/build things, athletes, soldiers — those who prevailed when faced hard challenges in every way (especially emotional, spiritual even, things that can really take you down, the storms of life and fires in our minds).
As you can see there's one for your business and one for you. I find that it works like that, you need to grow to grow the business, which in turns makes you grow, rinse and repeat.
