4 ms·

I may be totally out of touch, but why would someone give someone else $100,000 for an app? And why wouldn't $100k be enough? By the end they needed $700,000 "b

I may be totally out of touch, but why would someone give someone else $100,000 for an app? And why wouldn't $100k be enough? By the end they needed $700,000 "bare minimum." I just don't get how this can cost so much. Making something like this in one's spare time while getting paid with a salaried "real" job seems like it would totally be sufficient to get moving. But assuming it really takes $700k on hand to get these bank sponsors, why not just change the model slightly. For example, integrate with Square cash or something similar. Square is dead simple to use and the money arrives instantly, not sure if it's integrate-able in this manner though, but the concept stands. And then maybe when the company is really successful with tens of thousands of subscribers, partner with someone to add direct bank account integration. Sorry if this sounds callous because I really don't mean it to be, I'm just flabbergasted the amount of money involved for some app someone came up with randomly.

vinceguidry 10y ago
You really need about a million dollars to make a marketable product. (not a lifestyle business) You can either put a million dollars of your own blood, sweat and tears in, in which case it'll be the wildest ride of your life, or you can deploy capital. It looks like it's just code but it's not. There's a dizzying array of skills and knowledge you must be able to deploy effectively. If your product is not in an established industry and niche, if a bank can't understand you, that makes everything much, much harder. There's a reason franchises do so well. When you get started, you don't know what's going to hose you. It's easy in retrospect to say that they shouldn't have messed around with a business model requiring a bank partnership to get started without already having that partnership before building anything, but they didn't understand that going in.
- gearoidoc 10y ago
  "You really need about a million dollars to make a marketable product." wat? There are countless examples which disproves this (eg. Basecamp)
  - jerf 10y ago
    "You can either put a million dollars of your own blood, sweat and tears in, in which case it'll be the wildest ride of your life, or you can deploy capital."
    - gearoidoc 10y ago
      Same thing. Are you telling me that to "make a marketable product" you would need to pay 10 engineers $100k for a year? Hell, just hire 5 engineers at $100k a year (which is expensive) and that still leaves you with a decent budget for marketing/sales/running costs. Certainly enough to make a marketable product. It's blatantly untrue no matter what way you cut it.
      - ssalazar 10y ago
        > Are you telling me that to "make a marketable product" you would need to pay 10 engineers $100k for a year? Engineering, product design, graphic design (these are not the same), marketing, and sales are all needed in various proportions, depending on the product, to make a "marketable product." Between all of those roles you could easily chew up $1million in 1 year when you account for e.g. ~2x salary:total cost of employee ratio and standard Silicon Valley compensation levels.
        gearoidoc 10y ago
        > Engineering, product design, graphic design (these are not the same), marketing, and sales are all needed in various proportions, depending on the product, to make a "marketable product." I'm well aware. I've done this many times. > Between all of those roles you could easily chew up $1million in 1 year You could easily chewup $100 million too. Does that mean we should go ahead and say we can't make a marketable product for $100m? Of course not. Constraints are a fact of life - whether that be time/money/whatever. The challenge is getting to market given the resources at your disposal. > standard Silicon Valley compensation The business in question is based is OR. Also, and I'm going to sound facetious here but I'm really not trying to be, most businesses are not based in SV.
- mgkimsal 10y ago
  > It's easy in retrospect to say that they shouldn't have messed around with a business model requiring a bank partnership to get started without already having that partnership before building anything, but they didn't understand that going in Doesn't have to be in retrospect. Why didn't any of the dozens of experienced investors they met with tell them this? "You're too early" is too wishy washy for them to have got the message.
  - cookiecaper 10y ago
    Because it's rarely in someone's self-interest to give honest feedback, which is true for investors, potential employers, departing employees, and almost anyone else in a position to issue some type of denial. Instead, they part with something ambiguous, non-committal, and ideally flattering because it covers their butts and allows them to backpedal if necessary. Since the stated reason for declining the relationship is airy, you can't really get in a shouting match over it if the applicant/founder/whatever disagrees, and you don't offend them and preclude the possibility of future engagement. Politically and socially, it's almost always best to speak in platitudes, be ambiguous and non-committal, and refuse to give concrete information or rationale that could be used in the future to show that you were wrong about something. People usually do have a specific objection when they're turning down a request, but they just know that it doesn't help them to tell it to you, which is why it's always wise to cherish those who care enough about you to be honest.
    - bayonetz 10y ago
      This is so true. Honest feedback is so rare yet so useful I'm surprised there aren't more people in the business of selling it. The number of people who could use a good business coach, therapist, etc. far exceeds the number of people actually making use of one.
    - Udik 10y ago
      > Because it's rarely in someone's self-interest to give honest feedback, which is true for [...] almost anyone in a position to issue some type of denial. Instead, they part with something ambiguous, non-committal, and ideally flattering because it covers their butts and allows them to backpedal if necessary. I broke up with a girl a few hours ago and this sounds so cruelly true.
monk_e_boy 10y ago
It did seem like a heck of a lot of money for an app that didn't really solve a big problem. It solved a small niggle, paying a child immediately over the app rather than wait and pay in cash a few hours later. Maybe $700k is less than it sounds. Or maybe piggybank had some cunning plan to make a lot of money.
- jsprogrammer 10y ago
  I don't think the app ever solved that problem. From the article, it sounds like the company spent most of its time trying to find a partner to implement that feature, but ran out of cash after being strung along by multiple Fortune 500 companies.
- hrabago 10y ago
  A small problem is a good thing if you have lots of people with similar problems, in which case your market can grow really large.
outworlder 10y ago
> I just don't get how this can cost so much. Salaries. Adds up fast when you have, or need to have, multiple people working for you. Even more so in SF. There are also lawyer fees. And in their case, office. I assume it's harder to raise capital if you are in mom's basement, specially after getting angel funding.

vinceguidry 10y ago

You really need about a million dollars to make a marketable product. (not a lifestyle business) You can either put a million dollars of your own blood, sweat and tears in, in which case it'll be the wildest ride of your life, or you can deploy capital. It looks like it's just code but it's not. There's a dizzying array of skills and knowledge you must be able to deploy effectively. If your product is not in an established industry and niche, if a bank can't understand you, that makes everything much, much harder. There's a reason franchises do so well. When you get started, you don't know what's going to hose you. It's easy in retrospect to say that they shouldn't have messed around with a business model requiring a bank partnership to get started without already having that partnership before building anything, but they didn't understand that going in.

gearoidoc 10y ago
"You really need about a million dollars to make a marketable product." wat? There are countless examples which disproves this (eg. Basecamp)
- jerf 10y ago
  "You can either put a million dollars of your own blood, sweat and tears in, in which case it'll be the wildest ride of your life, or you can deploy capital."
  - gearoidoc 10y ago
    Same thing. Are you telling me that to "make a marketable product" you would need to pay 10 engineers $100k for a year? Hell, just hire 5 engineers at $100k a year (which is expensive) and that still leaves you with a decent budget for marketing/sales/running costs. Certainly enough to make a marketable product. It's blatantly untrue no matter what way you cut it.
    - ssalazar 10y ago
      > Are you telling me that to "make a marketable product" you would need to pay 10 engineers $100k for a year? Engineering, product design, graphic design (these are not the same), marketing, and sales are all needed in various proportions, depending on the product, to make a "marketable product." Between all of those roles you could easily chew up $1million in 1 year when you account for e.g. ~2x salary:total cost of employee ratio and standard Silicon Valley compensation levels.
      - gearoidoc 10y ago
        > Engineering, product design, graphic design (these are not the same), marketing, and sales are all needed in various proportions, depending on the product, to make a "marketable product." I'm well aware. I've done this many times. > Between all of those roles you could easily chew up $1million in 1 year You could easily chewup $100 million too. Does that mean we should go ahead and say we can't make a marketable product for $100m? Of course not. Constraints are a fact of life - whether that be time/money/whatever. The challenge is getting to market given the resources at your disposal. > standard Silicon Valley compensation The business in question is based is OR. Also, and I'm going to sound facetious here but I'm really not trying to be, most businesses are not based in SV.
mgkimsal 10y ago
> It's easy in retrospect to say that they shouldn't have messed around with a business model requiring a bank partnership to get started without already having that partnership before building anything, but they didn't understand that going in Doesn't have to be in retrospect. Why didn't any of the dozens of experienced investors they met with tell them this? "You're too early" is too wishy washy for them to have got the message.
- cookiecaper 10y ago
  Because it's rarely in someone's self-interest to give honest feedback, which is true for investors, potential employers, departing employees, and almost anyone else in a position to issue some type of denial. Instead, they part with something ambiguous, non-committal, and ideally flattering because it covers their butts and allows them to backpedal if necessary. Since the stated reason for declining the relationship is airy, you can't really get in a shouting match over it if the applicant/founder/whatever disagrees, and you don't offend them and preclude the possibility of future engagement. Politically and socially, it's almost always best to speak in platitudes, be ambiguous and non-committal, and refuse to give concrete information or rationale that could be used in the future to show that you were wrong about something. People usually do have a specific objection when they're turning down a request, but they just know that it doesn't help them to tell it to you, which is why it's always wise to cherish those who care enough about you to be honest.
  - bayonetz 10y ago
    This is so true. Honest feedback is so rare yet so useful I'm surprised there aren't more people in the business of selling it. The number of people who could use a good business coach, therapist, etc. far exceeds the number of people actually making use of one.
  - Udik 10y ago
    > Because it's rarely in someone's self-interest to give honest feedback, which is true for [...] almost anyone in a position to issue some type of denial. Instead, they part with something ambiguous, non-committal, and ideally flattering because it covers their butts and allows them to backpedal if necessary. I broke up with a girl a few hours ago and this sounds so cruelly true.

monk_e_boy 10y ago

It did seem like a heck of a lot of money for an app that didn't really solve a big problem. It solved a small niggle, paying a child immediately over the app rather than wait and pay in cash a few hours later. Maybe $700k is less than it sounds. Or maybe piggybank had some cunning plan to make a lot of money.

jsprogrammer 10y ago
I don't think the app ever solved that problem. From the article, it sounds like the company spent most of its time trying to find a partner to implement that feature, but ran out of cash after being strung along by multiple Fortune 500 companies.
hrabago 10y ago
A small problem is a good thing if you have lots of people with similar problems, in which case your market can grow really large.

outworlder 10y ago

> I just don't get how this can cost so much. Salaries. Adds up fast when you have, or need to have, multiple people working for you. Even more so in SF. There are also lawyer fees. And in their case, office. I assume it's harder to raise capital if you are in mom's basement, specially after getting angel funding.